-----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, Tbhj8dK9aTtjCX5wdcUwYf1LAM0rIL41SBhXKoBAwMk4RvLCKusB5DvIn+pFBVkK kMPgiwsZRAHlS1dptO4ZpQ== 0000893816-04-000053.txt : 20040713 0000893816-04-000053.hdr.sgml : 20040713 20040713170327 ACCESSION NUMBER: 0000893816-04-000053 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20040713 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: 333-117340 FILM NUMBER: 04912477 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_debt.txt REGISTRATION STATEMENT FOR CONVERTIBLE DEBT AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 13, 2004 REGISTRATION NO. 333- ================================================================================ 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 of (I.R.S. Employer incorporation or organization) Identification No.) 2 CHRISTIE HEIGHTS STREET LEONIA, NJ 07605 TELEPHONE: (201) 840-4700 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) NICHOLAS J. LETIZIA SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY 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 LATHAM & WATKINS LLP 885 THIRD AVENUE NEW YORK, NEW YORK 10022 TELEPHONE: (212) 906-1200 APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE TO THE PUBLIC: From time to time after this Registration Statement becomes effective. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please 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 Aggregate Amount of Securities to be Registered Registered Price per Unit (1) Offering Price (1) Registration Fee (2) - ------------------------------ -------------------- ------------------------- ------------------------------ -------------------- 4.00% Convertible Senior $72,000,000 100% $72,000,000 $9,122.40 Notes due 2024 - ------------------------------ -------------------- ------------------------- ------------------------------ -------------------- Common Stock, par value 4,687,502 (4) (4) (4) $0.01 per share (3) shares (4) ============================== ==================== ========================= ============================== ====================
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933. (2) Computed in accordance with Section 6(b) of the Securities Act of 1933 by multiplying 0.0001267 by the proposed maximum aggregate offering price. (3) Represents the number of shares of common stock that are currently issuable upon conversion of the notes. Pursuant to Rule 416(a) under the Securities Act, this registration statement shall be deemed to cover any additional number of shares of common stock as may be issued from time to time upon conversion of the debentures as a result of stock splits, stock dividends or similar transactions. No additional consideration will be received for the common stock and therefore no registration fee is required pursuant to Rule 457(i). (4) Reflects the number of shares of common stock issuable upon conversion of the exchange notes being registered hereunder. Each $1,000 principal amount at maturity of a note may be converted for 65.1042 shares of common stock, subject to adjustments. No additional registration fee is required pursuant to Rule 457(i) under the Securities Act. 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 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. SUBJECT TO COMPLETION, DATED JULY 13, 2004 The information in this prospectus is not complete and may be changed. We 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 is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. $72,000,000 4.00% Convertible Senior Notes due 2024 -------------------- This prospectus covers resales of our 4.00% Convertible Senior Notes due 2024 and shares of our common stock into which the notes are convertible by the selling securityholders named in this prospectus. All of the net proceeds from the sale of the securities by this prospectus will be received by the selling securityholders. We will not receive any proceeds from the resale of the notes or the common stock hereunder. The notes are convertible, at the option of the holders, into shares of our common stock initially at a conversion price of $15.36 per share (equivalent to an initial conversion rate of approximately 65.1042 shares of common stock per $1,000 principal amount), subject to adjustment as described in this prospectus, only in the following circumstances: o if the sale price of our common stock measured over a specified number of trading days is above 130% of the applicable conversion price; o on or before July 15, 2019, if the ratio of the trading price of the notes to the conversion value of the notes, measured over a specified number of trading days, is below 98%; o if your notes have been called for redemption; or o upon the occurrence of specified corporate transactions. Upon conversion, we will have the right to deliver to holders, at our option, cash, common stock or a combination of both. The notes bear interest at a rate of 4.00% per year. Interest on the notes is payable on January 15 and July 15 of each year, beginning on January 15, 2005. The notes will mature on July 15, 2024. We may redeem some or all of the notes for cash at anytime on or after July 15, 2007 at a price equal to 100% of the principal amount plus accrued but unpaid interest and, in the case of redemption prior to July 15, 2009, an additional amount; provided, however, we may only redeem notes prior to July 15, 2009 if the market price of our common stock has been at least 150% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period. Upon any such provisional redemption, we will make an additional payment equal to $173.83 per $1,000 principal amount of notes redeemed, less the amount of any interest actually paid on these notes before the provisional redemption date. Holders may require us to purchase all or a portion of their notes on July 15, 2009, 2014 and 2019 at a purchase price equal to 100% of the principal amount plus accrued but unpaid interest. In addition, upon a change of control, in certain circumstances, holders may require us to repurchase all or a portion of their notes at a repurchase price equal to 100% of the principal amount plus accrued and unpaid interest and additional interest, if any, plus, under certain circumstances, a make whole premium. If holders require us to repurchase notes, subject to certain exceptions, we may choose to pay the repurchase price in cash, shares of our common stock or a combination of cash and shares of our common stock. Our common stock is listed on the Nasdaq National Market under the symbol "IFOX." The last reported sale price of our common stock on July 9, 2004 was $12.47 per share. The notes are our senior unsecured obligations and rank equal in right of payment with all our existing and future senior unsecured indebtedness. --------------------------- Prior to this offering, the notes were eligible for trading on the PORTAL(sm) Market of the National Association of Securities Dealers, Inc. The notes sold by means of this prospectus are not expected to remain eligible for trading on the PORTAL(sm) Market. We do not intend to list the notes for trading on any national securities exchange or on the Nasdaq National Market. --------------------------- Investing in the notes involves risks. Risk Factors begin on page [7] of this prospectus. --------------------------- 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 , 2004. ii TABLE OF CONTENTS PAGE Documents Incorporated by Reference.......................................iv Available Information.....................................................iv Special Note Regarding Forward-Looking Statements..........................v Summary....................................................................1 Risk Factors...............................................................7 Use of Proceeds...........................................................17 Recent Market Prices of Common Stock and Dividend Policy..................17 Ratio of Earnings to Fixed Charges........................................18 Description of the Notes..................................................19 Description of Capital Stock..............................................47 Material United States Federal Income Tax Considerations..................49 Selling securityholders...................................................57 Plan of Distribution......................................................59 Validity of the Securities................................................62 Experts...................................................................62 --------------------------- In making your investment decision, you should rely on the information contained in this prospectus, including the information we are incorporating by reference, and your own examination of us and the terms of the notes. We have not authorized anyone to provide you with any other information., If you receive any unauthorized information, you must not rely on it. You should not assume that the information contained in this prospectus is accurate as of any date other than date on the front cover of this prospectus. iii DOCUMENTS INCORPORATED BY REFERENCE We are "incorporating by reference" into this prospectus certain information we file with the United States Securities and Exchange Commission (the "SEC"), which means that we are disclosing important information to you by referring you to those documents. The information incorporated by reference is deemed to be part of this prospectus, except for any information superseded by information contained directly in this prospectus. These documents contain important information about us and our finances. This prospectus incorporates by reference: o Our annual report on Form 10-K for the year ended December 31, 2003 filed on March 30, 2004, as amended by our Annual Report on Form 10-K/A, filed on April 13, 2004. o Our quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2004, filed on May 14, 2004, as amended by our Quarterly Report on Form 10-Q/A, filed on May 17, 2004. o Our current reports on Form 8-K and Form 8-K/A, as the case may be, filed on March 4, 2004, March 18, 2004, March 26, 2004, April 1, 2004, April 7, 2004, as amended by our Current Report on Form 8-K/A filed on June 10, 2004, May 17, 2004, June 23, 2004, June 30, 2004 and July 6, 2004, respectively. o Our proxy statement on Schedule 14A filed on April 29, 2004, as amended by our revised proxy statement on Schedule 14A/A filed on May 17, 2004. All documents we file with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act from the date of this prospectus to the end of the offering of the notes and common stock under this document shall also be deemed to be incorporated herein by reference and will automatically update information in this prospectus. You may request a copy of these filings, at no cost, by writing or calling us at the following address or telephone number: Secretary Infocrossing, Inc. 2 Christie Heights Street Leonia, NJ 07605 (201) 840-4700 Exhibits to the filings will not be sent, however, unless those exhibits have specifically been incorporated by reference in this document. AVAILABLE 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. iv SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Statements made in this prospectus, including the financial statements and notes included elsewhere in this prospectus, other than statements of historical fact, are forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance, including statements relating to products, customers, suppliers, business prospects and effects of acquisitions. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "should," "expect," "anticipate," "intend," "plan," "believe," "estimate," "potential," or "continue," the negative of these terms or other comparable terminology. These statements involve a number of risks and uncertainties, including incomplete or preliminary information; changes in government regulations and policies; continued acceptance of our products and services in the marketplace; competitive factors; new products; technological changes; our dependence upon third-party suppliers; intellectual property rights; difficulties with the integration of ITO Acquisition Corporation d/b/a Systems Management Specialists ("SMS"); business and economic conditions generally; and other risks and uncertainties including those set forth below that could cause actual events or results to differ materially from any forward-looking statement. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus and are based on information currently and reasonably known to us. We undertake no obligation to release any revisions to or update these forward-looking statements to reflect events or circumstances that occur after the date of this prospectus or to reflect the occurrence or effect of anticipated or unanticipated events. v SUMMARY This summary highlights certain 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 elsewhere in this prospectus. Unless stated otherwise, references in this prospectus to "Infocrossing," "Company," "we," "our" or "us" refer to Infocrossing, Inc., a Delaware corporation, and its subsidiaries. Each trademark, trade name or service mark of any other company appearing in this prospectus belongs to its holder. GENERAL We are a provider of information technology ("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. During our nearly twenty year history, we have developed significant expertise in managing complex computing environments, beginning with traditional data center outsourcing services and evolving to a comprehensive set of managed solutions. We support a variety of clients 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 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 range of IT functions, bundled into a customized, long-term contractual arrangements that provide for predictable and recurring monthly revenue. 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. Our services are organized into six "solution" areas: Mainframe Outsourcing--We combine the scalability and reliability of mainframe systems with the management of hardware, systems software, and communications. AS/400 and iSeries Management--provide specialized support and outsourcing resources for midrange systems 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. With our IFOXcenter management tools, we can remotely manage systems located at our customers' own data centers or at a third-party location. Business Process Outsourcing--Clients contract with us to perform business processes that are not core to their business. These functions commonly include services such as payroll, accounts receivable management, payment processing, logistics, data entry and customer care services. Business Continuity--business continuity solutions help keep systems and business operations functioning in the face of disaster. We offer 24 X 7, high-availability services including disaster-planning assistance. Consulting Services--provide review and implementation services for enterprise IT infrastructures to reduce costs and improve services. From design through implementation and on-going support, we bring expertise in network architecture, infrastructure integration, automation process control, operating systems, database administration, and system stress testing. OUR STRATEGY By leveraging our IT data center infrastructure, skilled operations team, and management tools across multiple clients, we believe that we achieve 1 economies of scale that improve clients' operations and dramatically reduce their IT costs. We seek to gain additional operating efficiencies by using standardized processes, sharing operational resources across multiple computing platforms, and investing in administration tools that enable the efficient management of clients' systems regardless of where they are located. Sharing technology and staff across our broad client base reduces operating costs, streamlines service delivery and presents us with attractive margin opportunities. SERVICE DELIVERY We have three fully constructed data centers that meet the stringent environmental and security requirements of enterprise clients. They feature currently state-of-the-art physical components and have high standards for security and reliability. Our data centers have fully redundant power supply systems, redundant ingress and egress Internet access across multiple providers, N+1 fire suppression systems, and 24-hour security services. Our operations team is a highly skilled, process driven organization that is trained across multiple computing platforms and operating systems. We have developed a proprietary suite of management tools that enables us to monitor and manage clients' IP networking systems and components from a centralized network operations center, regardless of whether the systems are located in our data centers, at the clients' site, or at a third-party facility. This enables us to expand services and grow our data-center infrastructure without having to replicate the network operations center at each site. VALUE PROPOSITION We believe that the recent growth of the IT outsourcing market has been driven by a slowdown in capital spending on existing IT infrastructure, increasing complexity of information technology systems, escalating requirements for speed, volume and distribution of data, and the desire of enterprises to focus on their core competencies. We believe that our flexibility, responsiveness and range of services, from basic data room outsourcing to business process outsourcing, permit customers to realize these benefits without incurring significant investment or organizational change. Reduce Costs--We seek to deliver a lower cost solution to our customers by leveraging our infrastructure, personnel, processes, and tools across multiple clients to gain economies of scale. Improve Service Delivery--We believe that our customers enjoy improvement in service delivery because of our sole focus on delivering selective IT services and our highly trained and experience technical resources. Re-deploy Resources--By turning over non-core activities to us, we believe our clients can concentrate on activities central to their value proposition and increase their competitive position. Access to Technology--We believe outsourcing with us enables our clients to benefit from new technologies and best practices without the costs and risks associated with implementing these solutions in-house. Increased Flexibility--We believe that our services enable our clients to respond rapidly to changing markets, mergers and acquisitions, and major organizational changes by providing a flexible, multi-platform infrastructure that can rapidly scale or transition. MARKETING AND SALES Our marketing efforts currently target a broad range of large and medium-size enterprises through our internal sales force as well as a limited number of channel partners. While we have developed industry specific services in several industries including financial services, publishing, manufacturing, 2 consumer products, and health care, we believe our technical capabilities and service excellence extends across all industries. RECENT BUSINESS DEVELOPMENTS On April 2, 2004 we completed our acquisition of SMS. The acquisition combined two regional service providers with complementary services to create a single outsourcing company with national scale, multi-platform expertise and a full complement of outsourcing solutions. Immediately following the acquisition of SMS, we appointed Patrick A. Dolan as our President and Chief Operating Officer. Mr. Dolan, who previously served as a manager of ITO Holdings, LLC and the Chairman and Chief Executive Officer of SMS, was also appointed to serve as the President of SMS. In addition, Robert B. Wallach, our former President, was promoted to the position of Vice-Chairman of our board of directors. On June 30, 2004, the company completed a private offering of $60 million in aggregate principal amount of convertible senior notes due 2024. At that time, the company granted the initial purchaser a 30-day option to purchase up to an additional $12 million of convertible notes. This option was exercised, in full, on June 30, 2004 and a private offering of the additional $12 million in aggregate principal amount of convertible notes was completed on July 6, 2004. --------------------------- 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. 3 THE NOTES The summary below describes, among other things, the principal terms of the notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The "Description of the Notes" section of this prospectus contains a more detailed description of the terms and conditions of the notes. ISSUER.......................... Infocrossing, Inc. SECURITIES OFFERED.............. $72,000,000 aggregate principal amount of 4.00% Convertible Senior Notes due 2024. MATURITY DATE................... July 15, 2024. RANKING......................... The notes are the senior unsecured obligations of Infocrossing and rank equal in right of payment with all of our existing and future senior unsecured indebtedness of Infocrossing. As of March 31, 2004, Infocrossing had approximately $28 million of senior debt outstanding. INTEREST RATE................... 4.00% per year. Interest is payable on January 15 and July 15 of each year, beginning January 15, 2005. CONVERSION RIGHT................ You may convert your notes into shares of our common stock, initially at the conversion price of $15.36 per share, equal to a conversion rate of approximately 65.1042 shares per $1,000 principal amount of notes, prior to the close of business on their stated maturity date under any of the following circumstances: o during any fiscal quarter if the market price per share of our common stock for a period of at least 20 consecutive trading days during the 30 consecutive trading day period ending on the last day of the preceding fiscal quarter is more than 130% of the applicable conversion price; o on or before July 15, 2019, during the five business-day period following any 10 consecutive trading-day period in which the trading price for the notes during such ten-day period was less than 98% of the applicable conversion value (as described in this prospectus) for the notes during that period, subject to certain limitations; o if your notes have been called for redemption; or o upon the occurrence of specified corporate transactions described below under "Description of the Notes--Conversion Rights." Upon a conversion, we will have the right to deliver to holders, at our option, (1) cash, (2) shares of our common stock or (3) a combination thereof. See "Description of the Notes--Conversion Rights." The conversion price will be adjusted to reflect stock dividends, stock splits, issuances of rights to purchase shares of common stock and other events. In addition, if, after the effectiveness date of the shelf registration statement of which this prospectus is a part and prior to the end of the 18th month thereafter, the market price of our common stock is less than 68.23% ($10.48 initially, subject to adjustment) of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period, the conversion price shall immediately be reduced by 17.38% (to $12.69 initially, subject to adjustment); provided that (i) this adjustment shall only be applicable to notes that have been sold or otherwise distributed pursuant to the registration statement referred to above or pursuant to Rule 144(k) under the Securities Act (and such adjustment shall apply to all such notes, regardless of whether they are so sold or distributed before or after adjustment), and (ii) there shall be no more than one such reduction of the conversion price during the term of the notes. You may only convert notes to the extent that you will not 4 beneficially own, immediately following such conversion, outstanding shares constituting more than 19.9% of our common stock. SINKING FUND.................... None. OPTIONAL REDEMPTION BY INFOCROSSING.................. We may redeem some or all of the notes for cash at any time on or after July 15, 2007 at a price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest (including additional interest) and, in the case of redemption prior to July 15, 2009, an additional amount, all as set forth under "Description of the Notes--Optional Redemption by Infocrossing;" provided, however, we may only redeem notes prior to July 15, 2009 if the market price of our common stock has been at least 150% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period. Upon any such provisional redemption, we will make an additional payment equal to $173.83 per $1,000 principal amount of notes redeemed, less the amount of any interest actually paid on these notes before the provisional redemption date. OPTIONAL REPURCHASE RIGHT OF HOLDERS....................... You may require us to repurchase for cash all or a portion of your notes on July 15, 2009, 2014 and 2019 at a repurchase price equal to 100% of the principal amount of the notes plus any accrued and unpaid interest (including additional interest) to, but excluding, the date of repurchase. See "Description of the Notes--Repurchase at Option of Holders--Optional Put." Upon such a repurchase, we will have the right to deliver to holders, at our option, (1) cash, (2) shares of our common stock or (3) a combination thereof CHANGE OF CONTROL REPURCHASE RIGHT OF HOLDERS.............. You may require us, subject to certain conditions, to repurchase for cash all or a portion of your notes upon a change of control of Infocrossing in certain circumstances and subject to certain conditions. In such case, we will pay a repurchase price equal to 100% of the principal amount of the notes plus accrued and unpaid interest (including additional interest) to, but excluding, the repurchase date plus, under certain circumstances, a make-whole premium. See "Description of the Notes--Repurchase at Option of Holders--Change of Control Put." MAKE WHOLE PREMIUM UPON A CHANGE OF CONTROL............. Upon the occurrence of a change of control prior to July 15, 2009, under certain circumstances, we will pay, in addition to the repurchase price, a make whole premium on notes converted in connection with, or tendered for repurchase upon, the change of control. The make whole premium will be payable, in the same form of consideration into which our common stock has been exchanged or converted, on the repurchase date for the notes after the change of control, both for notes tendered for repurchase and for notes converted in connection with the change of control. The amount of the make whole premium, if any, will be based on our stock price on the effective date of the change of control. A description of how the make whole premium will be determined and a table showing the make whole premium that would apply at various stock prices and change of control effective dates is set forth under "Description of the Notes--Determination of the Make Whole Premium." No make whole premium will be paid if the price of our common stock is less than or equal to 82.62% of the conversion price or if the price of our common stock is equal to or exceeds 227.86% of the conversion price. COVENANTS....................... The indenture does not contain any financial covenants, other than the limitation on the incurrence of additional indebtedness described below under "Description of the Notes--Covenant Limiting the Incurrence of Additional Indebtedness," and does not restrict us or our subsidiaries from paying dividends or issuing or repurchasing our other securities. EVENTS OF DEFAULT............... If there is an event of default on the notes, 5 the principal amount of the notes plus accrued and unpaid interest (including additional interest) to the date of acceleration may be declared immediately due and payable subject to certain conditions set forth in the indenture. These amounts automatically become due and payable in the case of certain types of bankruptcy or insolvency events of default involving Infocrossing. FORM, DENOMINATION AND REGISTRATION.................. The notes will be issued in fully registered form, in denominations of $1,000 and will be represented by one or more global notes, deposited with the trustee as custodian for The Depository Trust Company ("DTC") and registered in the name of Cede & Co., DTC's nominee. Beneficial interests in the global notes will be shown on, and any transfers will be effected only through, records maintained by DTC and its participants. See "Description of the Notes-- Form, Denomination and Registration." USE OF PROCEEDS................. All of the net proceeds from the sale of the securities by this prospectus will be received by the selling securityholders. We will not receive any of the proceeds from any sale by any selling securityholder of the securities covered by this prospectus. NASDAQ NATIONAL MARKET SYMBOL FOR OUR COMMON STOCK.......... Our common stock is traded on the Nasdaq National Market under the symbol "IFOX." 6 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, results of operations and prospects could be materially and adversely affected. In such case, you may lose all or part of your investment. You should also refer to the other information set forth or incorporated by reference in this prospectus, including our consolidated financial statements and the related notes incorporated by reference in this prospectus. This prospectus and the documents incorporated by reference herein, 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 of certain factors, including the risks faced by us described below and elsewhere in this prospectus. RISKS RELATED TO OUR BUSINESS LOSS OF MAJOR CLIENTS COULD REDUCE OUR REVENUES AND CAUSE ADDITIONAL LOSSES FOR OUR BUSINESS. Our customers include commercial enterprises, institutions, and government agencies. For the three months ended March 31, 2004 and for the year ended December 31, 2003, one client, ADT Security Services, Inc., accounted for more than 10% of our consolidated revenue. For the years ended December 31, 2002 and December 31, 2001, two clients, ADT and Alicomp, a division of Alicare, Inc., each accounted for more than 10% of our consolidated revenue. For both the two-month period ended December 31, 2000 and the fiscal year ended October 31, 2000, Alicomp and International Masters Publishers, Inc. each 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. We cannot be sure that we will be able to retain long-term relationships or secure renewals of short-term relationships with ADT or our other major clients in the future. OUR CONTRACTS CONTAIN TERMINATION PROVISIONS AND PRICING RISKS THAT COULD CAUSE US TO LOSE OUR IT OUTSOURCING CONTRACTS OR LOSE MONEY ON OUR REMAINING IT OUTSOURCING CONTRACTS. Many of our IT outsourcing 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 IT outsourcing 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 material. WE OPERATE IN HIGHLY COMPETITIVE MARKETS IN THE IT OUTSOURCING INDUSTRY WHICH COULD CAUSE US TO LOSE EXISTING CUSTOMERS OR PREVENT US FROM OBTAINING NEW CUSTOMERS. We operate in highly competitive markets in the IT outsourcing industry. Our current and potential competitors include other independent computer service 7 companies and divisions of diversified enterprises, as well as the internal information technology departments of existing and potential customers. Among the most significant of our competitors are IBM Corporation, Electronic Data Systems Corporation, Affiliated Computer Services, Inc., Computer Sciences Corp. and SunGard Data Systems, Inc. In general, the IT 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. For example, our larger competitors may be able to enter into agreements with software licensors on more favorable terms than us because the cost of software licensing depends on usage. 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 IN THE IT OUTSOURCING INDUSTRY COULD CAUSE OUR BUSINESS TO LOSE MONEY OR COULD REQUIRE US TO INVEST ADDITIONAL CAPITAL IN NEW TECHNOLOGY. 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. For example, the introduction of new software applications for a particular computer platform will make other computer platforms less attractive to companies desiring to use the new applications. 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 AND AS A RESULT, OUR COMPETITORS MAY BE ABLE TO USE OUR SYSTEMS AND PROCESSES TO COMPETE AGAINST US AND HURT OUR BUSINESS. 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 CAUSE US TO LOSE MONEY AND LOWER OUR STANDING IN THE IT OUTSOURCING INDUSTRY. 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 8 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: 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. Furthermore, any ongoing intellectual property litigation could cause us to lose customers and harm our reputation within the IT outsourcing industry. FAILURE TO PROPERLY MANAGE GROWTH COULD CAUSE OUR BUSINESS TO LOSE MONEY. 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 AND COULD POSSIBLY RESULT IN A LOSS OF MONEY AND RESOURCES. We intend to consider selective acquisition opportunities going forward such as our recent acquisition of SMS. Therefore, 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 CAUSE OUR BUSINESS TO LOSE MONEY OR CAUSE US TO INVEST CAPITAL TO REPLACE SUCH PERSONNEL. 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. In addition, loss of key members of management could require us to invest capital to search for a suitable replacement. Such a search could serve as a distraction to the remaining members of management preventing them from focusing on the ongoing development of our business which, in turn, could cause us to lose money. 9 OUR BUSINESS DEPENDS ON OUR ABILITY TO RECRUIT, TRAIN, AND RETAIN SKILLED PERSONNEL TO PERFORM IT OUTSOURCING SERVICES; OUR FAILURE TO DO SO COULD INCREASE OUR COSTS AND LIMIT OUR 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. From the fourth quarter of 1999 through the third quarter of 2003, we incurred significant net losses. As of March 31, 2004, we had an accumulated deficit of approximately $75.3 million, although we had positive net worth of approximately $61.1 million. For the two quarters ended March 31, 2004, we had net income totaling approximately $2.0 million. The quarters ended December 31, 2003 and March 31, 2004, respectively, were the first quarters of positive earnings after sixteen consecutive quarters of net losses. 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, WHICH COULD LIMIT OUR GROWTH. 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. 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 the addition or loss of customers and the time in the quarter that an addition or loss occurs; variability of fees and expenses with respect to contractual arrangements when our fees are not fixed; and an increase in depreciation or amortization because of the acquisition of new equipment or software licenses and one time non-recurring and unusual charges whether incurred in the ordinary course of business or not. 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. RISKS RELATED TO INVESTMENT IN THE NOTES AND OUR COMMON STOCK THE NOTES DO NOT CONTAIN FINANCIAL COVENANTS, OTHER THAN A COVENANT LIMITING THE INCURRENCE OF ADDITIONAL INDEBTEDNESS BY US, AND THERE IS LIMITED PROTECTION IN THE EVENT OF A CHANGE OF CONTROL. The indenture does not contain any financial covenants, other than the limitation on the incurrence of additional indebtedness described under "--Covenant Limiting the Incurrence of Additional Indebtedness." In particular, the indenture does not contain covenants that limit our ability to pay dividends or make distributions on or redeem our capital stock and, therefore, protect you in the event of a highly leveraged transaction or other similar transaction. In addition, the requirement that we offer to repurchase the notes upon a change of control is limited to the transactions specified in the definition of a "change of control" under "Description of Notes--Repurchase at Option of Holders--Change of Control Put." Accordingly, we could enter into certain transactions, such as 10 acquisitions, refinancings or a recapitalization, that could affect our capital structure and the value of our common stock but would not constitute a change of control. OUR ABILITY TO REPURCHASE THE NOTES WITH CASH UPON A CHANGE OF CONTROL MAY BE LIMITED. In certain circumstances involving a change of control of Infocrossing, you may require us to repurchase all or a portion of your notes to the extent set forth in this prospectus. If a change in control were to occur, we cannot assure you that, if required, we will have sufficient cash or other financial resources at that time or would be able to arrange financing to pay the repurchase price of the notes in cash. Our ability to repurchase the notes in that event may be limited by law, by the indenture, by the terms of other agreements relating to our senior debt and by indebtedness and agreements that we may enter into in the future which may replace, supplement or amend our existing or future debt. If a change in control occurs at a time when we are prohibited from repurchasing or redeeming the notes, we could seek the consent of lenders to repurchase the notes or could attempt to refinance the borrowings that contain this prohibition. If we do not obtain a consent or refinance these borrowings, we could remain prohibited from repurchasing the notes. Our failure to repurchase the notes would constitute an event of default under the indenture governing the notes, which might constitute a default under the terms of our other indebtedness at that time. THE MAKE WHOLE PREMIUM PAYABLE ON NOTES CONVERTED IN CONNECTION WITH, OR TENDERED FOR REPURCHASE UPON, A CHANGE OF CONTROL MAY NOT ADEQUATELY COMPENSATE YOU FOR THE LOST OPTION TIME VALUE OF YOUR NOTES AS A RESULT OF SUCH CHANGE OF CONTROL. If a change of control occurs prior to July 15, 2009, under certain circumstances, we will pay a make whole premium on notes converted in connection with, or tendered for repurchase upon, such change of control. The amount of the make whole premium will be determined based on the date on which the change of control becomes effective and the price paid per share of our common stock in the transaction constituting the change of control, as described below under "Description of the Notes--Determination of the Make Whole Premium." Although the make whole premium is designed to compensate you for the lost option time value of your notes as a result of such change of control, the amount of the make whole premium is only an approximation of such lost value and may not adequately compensate you for such loss. In addition, if a change of control occurs on or after July 15, 2009 or if the price paid per share of our common stock in the transaction constituting the change of control is greater than or equal to 227.86% of the conversion price or less than or equal to 82.62% of the conversion price, no make whole premium will be paid. YOUR RIGHT TO FULLY CONVERT NOTES MAY BE LIMITED. Because you may only convert notes to the extent that you will not beneficially own, immediately following such conversion, outstanding shares constituting more than 19.9% of our common stock, you may not be able to fully convert your notes. THERE IS NO ESTABLISHED TRADING MARKET FOR THE NOTES AND WE WILL NOT SEEK TO HAVE THE NOTES RATED. There is no existing market for the notes and there can be no assurance as to the liquidity of any markets that may develop for the notes, the ability of holders of the notes to sell their notes, or the prices at which holders would be able to sell their notes. Future trading prices of the notes will depend on many factors, including, among other things: o our ability to register the resales of the notes; o prevailing interest rates; o our operating results; o the market for similar securities; and 11 o the price of our common stock. Additionally, the notes have not been rated and we will not seek to have the notes rated. Credit rating agencies evaluate the companies in our industry as a whole and provider credit ratings based on their overall view of our industry. Since we will not have the notes rated, you will not get the benefited of such a view. OUR SIGNIFICANT AMOUNT OF INDEBTEDNESS AND INTEREST EXPENSE WILL LIMIT OUR CASH FLOW AND COULD ADVERSELY AFFECT OUR OPERATIONS AND OUR ABILITY TO MAKE FULL PAYMENT ON YOUR NOTES. We currently have a significant level of debt and interest expense. On an as adjusted basis giving effect to the acquisition of SMS and the offering of the notes and the application of the proceeds, we would have had approximately $79.8 million in indebtedness outstanding as of March 31, 2004. Our significant indebtedness poses risks to our business, including the risks that: o we could use a substantial portion of our consolidated cash flow from operations to pay principal and interest on our debt, thereby reducing the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes; o insufficient cash flow from operations may force us to sell assets, or seek additional capital, which we may be unable to do at all or on terms favorable to us; o our level of indebtedness may make us more vulnerable to economic or industry downturns; and o our debt service obligations increase our vulnerabilities to competitive pressures, because many our competitors are less leveraged than we are. In addition, other than as disclosed under "Covenant Limiting the Incurrence of Additional Indebtedness," the indenture governing the notes does not limit our ability to incur additional indebtedness in the future. If new indebtedness is incurred, the related risks that we now face could intensify. See our financial statements and the related notes incorporated by reference in this prospectus. Our ability to make required payments on the notes and to satisfy any other debt obligations will depend on our future operating performance and our ability to obtain additional debt or equity financing on commercially reasonable terms. TO SERVICE OUR DEBT, WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS. Our ability to make payments on or to refinance our indebtedness and to fund our operations and planned capital expenditures depends on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We expect to continue to require substantial amounts of cash. Our primary cash requirements include capital expenditures, ongoing operating expense, required income tax payments, and interest and principal payments under our indebtedness. Our primary sources of future liquidity are expected to be cash, current assets, cash generated from future operating activities and further issuances of debt or equity securities, depending on capital market conditions. Additionally, the type, timing and terms of any future financing selected by us will be dependent upon our cash needs, the availability of other financing sources and the prevailing conditions in the financial markets. We cannot assure you that any of these sources or our anticipated primary sources of future liquidity will be available to us at any given time or that the terms on which these sources may be available will be favorable to us. 12 YOUR RIGHT TO RECEIVE PAYMENTS ON THESE NOTES IS EFFECTIVELY SUBORDINATED TO THE RIGHTS OF OUR EXISTING AND FUTURE SECURED CREDITORS. Holders of our secured indebtedness will have claims that are prior to your claims as holders of the notes to the extent of the value of the assets securing that other indebtedness. Notably, our existing or future senior secured term loans are or may be secured by liens on substantially all of our assets. The notes are effectively subordinated to all such secured indebtedness. In the event of any distribution or payment of our assets in any foreclosure, dissolution, winding-up, liquidation, reorganization, or other bankruptcy proceeding, holders of secured indebtedness will have prior claim to those of our assets that constitute their collateral. Holders of the notes will participate ratably with all holders of our unsecured indebtedness that is deemed to be of the same class as the notes, and potentially with all of our other general creditors, based upon the respective amounts owed to each holder or creditor, in our remaining assets. In any of the foregoing events, we cannot assure you that there will be sufficient assets to pay amounts due on the notes. As a result, holders of notes may receive less, ratably, than holders of secured indebtedness. As of March 31, 2004, we had approximately $28.0 million of debt. As of March 31, 2004, after giving pro forma effect to the SMS acquisition and the offering of the notes and the application of the proceeds, we would have had approximately $79.8 million of debt. THE NOTES EFFECTIVELY RANK JUNIOR TO ALL EXISTING AND FUTURE LIABILITIES OF OUR SUBSIDIARIES. The notes effectively rank junior to all existing and future liabilities of our subsidiaries, including trade payables. In the event of a bankruptcy, liquidation or dissolution of a subsidiary and following payment of its liabilities, the subsidiary might not have sufficient assets remaining to make any payments to us so that we can meet our obligations as the holding company, including our obligations to you under the notes. As of March 31, 2004, our subsidiaries had approximately $0.45 million of debt excluding any intercompany debt. As of March 31, 2004, after giving pro forma effect to the SMS acquisition and the offering of the notes and the application of the proceeds, our subsidiaries would have had approximately $5.2 million of debt excluding any intercompany debt. The indenture governing the notes limits, but does not prohibit, the ability of our restricted subsidiaries to incur additional debt. OUR STOCK PRICE IS VOLATILE AND COULD DECLINE. The price of our common stock has been, and is likely to continue to be, volatile. For example, our stock price in the first quarter of 2002 was as low as $3.91 per share and as high as $14.78 per share in the second quarter of 2004. 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. Because the notes are convertible into shares of our common stock, volatility or depressed prices for our common stock could have a similar effect on the trading price of the notes. Holders who receive common stock upon conversion also will be subject to the risk of volatility and depressed prices of our common stock. In addition, the existence of the notes may encourage short selling in our common stock by market participants because the conversion of the notes could depress the price of our common stock. 13 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. AVAILABILITY OF SIGNIFICANT AMOUNTS OF OUR COMMON STOCK FOR SALE COULD CAUSE ITS MARKET PRICE TO DECLINE. As of July 9, 2004, there were 18,550,509 shares of our common stock outstanding. 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 July 9, 2004, Zach Lonstein, our Chairman and Chief Executive Officer, beneficially owned 1,566,469 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 other restrictions. Zach Lonstein may require us to register his shares for resale, under certain conditions, pursuant to a resale registration rights agreement that we entered into with him. THE CONDITIONAL CONVERSION FEATURES OF THE NOTES COULD RESULT IN YOU RECEIVING LESS THAN THE VALUE OF THE COMMON STOCK INTO WHICH A NOTE IS CONVERTIBLE. The notes are convertible into common stock only if specified conditions are met. If the specific conditions for conversion are not met you will not be able to convert your notes, and you may not be able to receive the value of the common stock into which the notes would otherwise be convertible. UPON CONVERSION OF THE NOTES, WE MAY PAY CASH IN LIEU OF ISSUING SHARES OF OUR COMMON STOCK OR A COMBINATION OF CASH AND SHARES OF OUR COMMON STOCK. THEREFORE, HOLDERS OF THE NOTES MAY RECEIVE NO SHARES OF OUR COMMON STOCK OR FEWER SHARES THAN THE NUMBER INTO WHICH THEIR NOTES ARE CONVERTIBLE. We have the right to satisfy our conversion obligation to holders by issuing shares of common stock, by paying the cash value of the common stock into which the notes are convertible or by a combination thereof. Accordingly, upon conversion of all or a portion of the notes, holders may not receive any shares of our common stock, or they might receive fewer shares of common stock relative to the conversion value of the notes. Further, our liquidity may be reduced to the extent that we choose to deliver cash rather than shares of common stock upon the conversion of the notes. IF WE ELECT TO SETTLE UPON CONVERSION IN CASH OR A COMBINATION OF CASH AND COMMON STOCK, THERE WILL BE A DELAY IN SETTLEMENT. Upon conversion, if we elect to settle in cash or a combination of cash and our common stock, there will be a significant delay in settlement. In addition, because the amount of cash or common stock that a holder will receive in these circumstances will be based on the sales price of our common stock for an extended period between the conversion date and the settlement date, holders will bear the market risk with respect to the value of the common stock for such extended period. See "Description of the Notes--Conversion Rights." BEFORE CONVERSION, HOLDERS OF THE NOTES WILL NOT BE ENTITLED TO ANY SHAREHOLDER RIGHTS, BUT WILL BE SUBJECT TO ALL CHANGES AFFECTING OUR SHARES. If you hold notes, you will not be entitled to any rights with respect to shares of our common stock into which the notes you hold may be convertible, including voting rights and rights to receive dividends or distributions. However, the common stock you receive upon conversion of your notes will be subject to all changes affecting our common stock. Except for limited cases under the adjustments to the conversion price, you will be entitled only to rights that we may grant with respect to shares of our common stock if and when we deliver shares to you upon your election to convert your notes into shares. For example, if we seek approval from shareholders for a potential merger, or if 14 an amendment is proposed to our certificate of incorporation or by-laws that requires shareholder approval, holders of notes will not be entitled to vote on the merger or amendment. IF WE PAY CASH DIVIDENDS ON OUR COMMON STOCK, YOU MAY BE DEEMED TO HAVE RECEIVED A TAXABLE DIVIDEND WITHOUT THE RECEIPT OF ANY CASH. If we were to change our dividend policy and pay cash dividends on our common stock, an adjustment to the conversion rate may result, and you may be deemed to have received a taxable dividend subject to United States federal income tax without the receipt of any cash. If you are a non-U.S. holder (as defined in "Material United States Federal Income Tax Considerations"), such deemed dividend may be subject to United States federal withholding tax at a 30% rate or such lower rate as may be specified by an applicable treaty. See "Material United States Federal Income Tax Considerations." CONVERSION OF THE NOTES WILL DILUTE THE OWNERSHIP INTEREST OF EXISTING SHAREHOLDERS AND FUTURE ISSUANCES OF OUR SECURITIES COULD DILUTE YOUR OWNERSHIP. The conversion of some or all of the notes will dilute the ownership interest of existing shareholders. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the notes may encourage short selling by market participants because the conversion of the notes could depress the price of our common stock. Additionally, we may decide to raise additional funds through public or private debt or equity financing to fund our operations. If we raise funds by issuing equity securities, the percentage ownership of current stockholders will be reduced, and the new equity securities may have rights prior to those of the common stock issuable upon conversion of the notes. We cannot predict the effect, if any, that future sales of our common stock or notes, or the availability of shares of our common stock or notes for future sale, will have on the market price of our common stock or notes. Sales of substantial amounts of our common stock (including shares issued upon the exercise of stock options or warrants or the conversion of the notes), or the perception that such sales could occur, may adversely affect prevailing market prices for our common stock and notes. 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. BECAUSE THE NOTES ARE REPRESENTED BY GLOBAL NOTES REGISTERED IN THE NAME OF A DEPOSITARY, YOU WILL NOT BE A "HOLDER" UNDER THE INDENTURE AND YOUR ABILITY TO TRANSFER OR PLEDGE THE NOTES COULD BE LIMITED. The notes are represented by one of more global securities registered in the name of Cede & Co. as nominee for The Depository Trust Company ("DTC"). Except in the limited circumstances described in this prospectus, owners of beneficial interests in the global securities are not entitled to receive physical delivery of notes in certificated form and will not be considered "holders" of the notes under the indenture for any purpose. Instead, owners must rely on the procedures of DTC and its participants to protect their interests under the indenture. In addition, because the laws of some states require that certain persons take physical delivery in definitive form of securities they own, you may be unable to transfer your notes to those persons. Your ability to pledge your interest in the notes to persons or entities that do not participate in the DTC system may also be adversely affected by the lack of a certificate. THE NOTES MAY CONSTITUTE A CONTINGENT PAYMENT DEBT INSTRUMENT, IN WHICH CASE YOU MAY BE REQUIRED TO RECOGNIZE A SIGNIFICANT AMOUNT OF ADDITIONAL INCOME ON A CONSTANT YIELD BASIS AND TO TREAT AS ORDINARY INCOME RATHER THAN CAPITAL GAIN ANY INCOME REALIZED ON THE TAXABLE DISPOSITION OF THE NOTES. If a change of control occurs, you may require us to repurchase for cash all or a portion of your notes. If there is a repurchase pursuant to a change of control and certain conditions are met, we will be required to pay a make-whole 15 premium in addition to 100% of the principal amount plus any accrued and unpaid interest. Although the matter is not free from doubt, we intend to take the position that the likelihood that such make-whole premium would be paid is remote. However, there is no assurance that our position would be respected by the Internal Revenue Service or, if challenged, upheld by a court. If the Internal Revenue Service were to challenge our position and successfully assert that such likelihood is not remote, the notes may constitute a contingent payment debt instrument. In such event, if you are a U.S. holder (as defined under "Material United States Federal Income Tax Considerations"), you would be required to include amounts in income, as original issue discount, on a constant yield to maturity basis, based on a rate comparable to the rate at which we would issue fixed rate nonconvertible, non-contingent notes with similar terms and conditions. Such amounts would be significantly in excess of cash received while the notes are outstanding. In addition, you will recognize ordinary income upon a sale, exchange, conversion, redemption or repurchase of the notes at a gain. In computing such gain, the amount realized by a U.S. holder will include, in the case of a conversion, the amount of cash and the fair market value of the common stock received. You are strongly urged to consult your own tax advisors as to the U.S. federal, state and other tax consequences relating to the notes. For more information, see "Material United States Federal Income Tax Considerations." PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS, THE STOCKHOLDER AGREEMENT AND DELAWARE LAW COULD DETER TAKEOVER ATTEMPTS AND PREVENT STOCKHOLDERS FROM OBTAINING A PREMIUM FOR THEIR SHARES. 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. o Delaware law limits transactions between us and persons that acquire significant amounts of our stock without approval of our board of directors. 16 USE OF PROCEEDS All of the net proceeds from the sale of the securities by this prospectus will be received by the selling securityholders. We will not receive any of the proceeds from any sale by any selling securityholder 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 sale prices for our common stock as reported by The Nasdaq National Market. On July 9, 2004 the last reported sale price for our common stock was $12.47 per share. HIGH LOW 2002 First Quarter......................................... $7.000 $3.910 Second Quarter........................................ 6.890 4.555 Third Quarter......................................... 10.050 5.607 Fourth Quarter........................................ 8.100 5.990 2003 First Quarter......................................... 7.150 5.890 Second Quarter........................................ 7.300 6.220 Third Quarter......................................... 8.500 7.040 Fourth Quarter........................................ 12.130 7.280 2004 First Quarter......................................... 13.750 10.020 Second Quarter........................................ 14.780 9.880 Third Quarter (through July 9, 2004).................. 13.580 12.380 - -------------------------------------------------------------------------------- As of July 9, 2004, we had approximately 136 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. 17 RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth our consolidated ratio of earnings to fixed changes for the periods indicated:
RATIO OF EARNINGS TO FIXED CHARGES Two Month Three Months Fiscal Years Periods Ended Years Ended Ended Ended March 31, December 31, October 31, December 31, 2004 2003 2002 2001 2000 1999 2000 1999 Ratio of Earnings to Fixed Charges.......... 1.5 1.2 1.1 (a) (a) 1.9 (a) (a) - -------------------------------------------------------------------------------------------------------------------- (a) Fixed Charges in excess of Earnings.... - - - $35,827 $17,156 - $4,440 $562
In accordance with Regulation S-K 503(d), fixed charges are the sum of interest expense, including amortization of capitalized expenses relating to indebtedness, an estimate of interest within operating leases for equipment and facilities, and dividends accrued on redeemable preferred stock. Earnings are the sum of pretax income from continuing operations plus the fixed charges. For those periods where earnings are insufficient to cover fixed charges, the amount by which fixed charges exceed earnings is shown. 18 DESCRIPTION OF THE NOTES We issued the notes under an indenture, dated as of June 30, 2004, between us and Wells Fargo Bank, National Association, as trustee. The terms of the notes include those provided in the indenture, the notes and those provided in the resale registration rights agreement which we have entered into with the initial purchaser. The following description is only a summary of the material provisions of the notes, the indenture and the resale registration rights agreement. we urge you to read these documents in their entirety because they, and not this description, define your rights as holders of these notes. You may request copies of these documents at our address set forth above under the caption "Summary." When we refer to "Infocrossing," "we," "our" or "us" in this section, we refer only to Infocrossing, Inc., a Delaware corporation, and not its subsidiaries. BRIEF DESCRIPTION OF THE NOTES The notes issued: o consist of $72,000,000 aggregate principal amount; o bear interest at a rate of 4.00% per year; o are our senior unsecured obligations, ranking equally with all of our existing and future senior unsecured indebtedness (and effectively junior to secured debt to the extent such debt is fully secured) and senior in right of payment to any subordinated indebtedness, but as indebtedness of Infocrossing, the notes are effectively subordinated to all existing and will be effectively subordinated to all future indebtedness and liabilities of our subsidiaries; o are convertible into our common stock at an initial conversion price of $15.36 per share, subject to adjustment as described below under "Conversion Rights," in the following circumstances: o if the market price (as defined below) of our common stock is above 130% of the conversion price measured over a specified number of trading days; o if the ratio of the trading price (as defined below) of the notes to the conversion value of the notes is less than 98% measured over a specified number of trading days; o if your notes have been called for redemption; and o upon the occurrence of specified corporate transactions; o in addition to the adjustments to the conversion price referred to above, if, after the effectiveness date of the shelf registration statement of which this prospectus is a part and prior to the end of the 18th month thereafter, the market price of our common stock is less than 68.23% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period, the conversion price shall immediately be reduced by 17.38% (to $12.69 initially, subject to adjustment); provided that (i) this adjustment shall only be applicable to notes that have been sold or otherwise distributed pursuant to the registration statement referred to above or pursuant to Rule 144(k) under the Securities Act (and such adjustment shall apply to all such notes, regardless of whether they are so sold or distributed before or after adjustment), and (ii) there shall be no more than one such reduction of the conversion price during the term of the notes; o if you convert your notes in connection with a change in control, you will receive accrued and unpaid interest to, but not including, the conversion 19 date and, under certain circumstances, a make whole premium, which will be in an amount determined as set forth below under"Determination of the Make Whole Premium" and which will be payable on the conversion repurchase date in the same form of consideration into which all or substantially all of our common stock has been exchanged or converted; o be redeemable at our option in whole or in part at a price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest (including additional interest) and, in the case of redemptions prior to July 15, 2009, an additional amount, all as set forth under " --Optional Redemption by Infocrossing;" provided, however, that we may only redeem notes prior to July 15, 2009 if the market price of our common stock has been at least 150% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period; o be subject to repurchase by us at your option on July 15, 2009, 2014 and 2019 or if a change of control occurs as set forth below under "Repurchase at Option of Holders;" and o be due on July 15, 2024, unless earlier converted, redeemed by us at our option or repurchased by us at your option. The indenture does not contain any financial covenants, other than the limitation on the incurrence of additional indebtedness described below under "Covenant Limiting the Incurrence of Additional Indebtedness," and does not restrict us or our subsidiaries from paying dividends or issuing or repurchasing our other securities. In addition, the indenture does not protect you in the event of a highly leveraged transaction or a change in control of Infocrossing except to the extent described below under "Repurchase at Option of Holders - Change of Control Put." No sinking fund is provided for the notes. The notes are not be subject to defeasance. The notes were issued only in registered form in denominations of $1,000 and any integral multiple of $1,000 above that amount. No service charge will be made for any registration of transfer or exchange of notes, but we may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. You may present definitive notes for conversion, registration of transfer and exchange, without service charge, at our office or agency in New York City, which shall initially be the office or agency of the trustee in New York City. For information regarding conversion, registration of transfer and exchange of global notes, see "Form, Denomination and Registration." You may not sell or otherwise transfer the notes or the shares of the common stock issuable upon conversion of the notes except in compliance with the provisions set forth under the resale registration rights agreement. INTEREST The notes bear interest from June 30, 2004 at the rate of 4.00% per year. We will pay interest semiannually, in arrears, on January 15 and July 15 of each year to the holders of record at the close of business on the preceding January 1 and July 1, respectively, beginning January 15, 2005. There are two exceptions to the preceding sentence: o In general, we will not make a separate cash payment for accrued and unpaid interest or additional interest, if any, on any notes that are converted into our common stock. See "Conversion Rights." If a holder of notes converts its notes after a record date for an interest payment but prior to 20 the corresponding interest payment date, it will receive interest accrued and paid on these notes on the interest payment date, notwithstanding the conversion of these notes prior to such interest payment date, because that holder will have been the holder of record on the corresponding record date. But, at the time such holder surrenders these notes for conversion, it will be required to remit to us an amount equal to the interest that will be paid on the interest payment date. The preceding sentence does not apply to a holder which has delivered a notice of conversion to us, or which converts, after a record date for an interest payment date but prior to the corresponding interest payment date, notes that, prior to such conversion, we call for redemption on a redemption date that is on or prior to the third business day after such interest payment date. o We will pay accrued and unpaid interest and additional interest, if any, to a person other than the holder of record on the record date if we redeem, or holders elect to require us to repurchase, the notes on a date that is after the record date and on or prior to the corresponding interest payment date. In this instance, we will pay accrued and unpaid interest on the notes being redeemed to, but excluding, the redemption date to the same person to whom we will pay the principal of these notes. Except as provided below, we will pay interest on: o the global notes to DTC in immediately available funds; o any definitive notes having an aggregate principal amount of $5,000,000 or less by check mailed to the holders of these notes; and o any definitive notes having an aggregate principal amount of more than $5,000,000 by wire transfer in immediately available funds if requested by the holder of those notes. At maturity, we will pay interest on the definitive notes at our office or agency in New York City, which initially will be the office or agency of the trustee in New York City. We will pay principal on: o the global notes to DTC in immediately available funds; and o the definitive notes at our office or agency in New York City, which initially will be the office or agency of the trustee in New York City. o Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. CONVERSION RIGHTS GENERAL You may convert any outstanding notes (or portions of outstanding notes) into shares of our common stock, initially at the conversion price of $15.36 per share, equal to a conversion rate of approximately 65.1042 shares per $1,000 principal amount of notes, under the circumstances summarized below. The conversion price will be subject, however, to adjustment as described below under "Conversion Price Adjustments." We will not issue fractional shares of our common stock upon conversion of notes. Instead, we will pay cash to you in an amount equal to the market value of that fractional share based upon the market price of our common stock on the trading day immediately preceding the conversion date. You may convert notes only in denominations of $1,000 and whole multiples of $1,000. You may, subject to certain limitations described below, surrender notes for conversion into our common stock prior to the close of business on their stated maturity date if any of the following conditions are satisfied: o during any fiscal quarter, if the market price (as described below) of our common stock for at least 20 trading days in the 30 consecutive trading-day period ending on the last day of the preceding fiscal quarter was more than 130% of the applicable conversion price; 21 o on or before July 15, 2019, during the five business-day period following any 10 consecutive trading-day period in which the trading price (as described below) for the notes during such ten-day period was less than 98% of the applicable conversion value (as described below) for the notes during that period; o if we have called your notes for redemption; or o upon the occurrence of any of the corporate transactions summarized below. If you have exercised your right to require us to repurchase your notes as described under "Repurchase at Option of Holders," you may convert your notes into our common stock only if you withdraw your notice of exercise of repurchase and convert your notes prior to the close of business on the applicable repurchase date. LIMITATION ON RIGHT TO CONVERT NOTES You may only convert notes to the extent that you will not beneficially own, immediately following such conversion, outstanding shares constituting more than 19.9% of our common stock and when you deliver any note for conversion, you will be deemed to represent that, immediately following conversion, you will not beneficially own outstanding shares constituting more than 19.9% of our common stock. To the extent you attempt to convert notes which would result in your beneficially owning outstanding shares constituting more than 19.9% of our common stock, the purported conversion will be void and you will not acquire any rights in the shares of our common stock that would result in your beneficially owning outstanding shares constituting more than 19.9% of our common stock. CONVERSION UPON SATISFACTION OF MARKET PRICE CONDITIONS A holder may convert any of its notes into our common stock during any fiscal quarter if the market price of our common stock for at least 20 trading days in the 30 consecutive trading-day period ending on the last trading day of the preceding fiscal quarter exceeds 130% of the applicable conversion price. The applicable conversion price is, for each trading day on which the market price of our common stock is measured, the conversion price in effect on such trading day at the time the market price is determined. On or before July 15, 2019, a holder also may convert its notes into our common stock during the five business-day period following any 10 consecutive trading-day period in which the trading price for the notes for such ten-day period was less than 98% of the applicable conversion value (as described in this prospectus) for the notes during that period. Notwithstanding anything to the contrary herein, the conversion agent shall have no obligation to determine the trading price of the notes unless we have requested that it make such determination; and we have no obligation to make such request unless so requested by a holder. At such time as a written request is made by a holder, we shall instruct the conversion agent to determine the trading price per note beginning on the next trading day and on each successive trading day until the trading price per note is greater than or equal to 98% of the applicable conversion value for 10 consecutive trading days. "Conversion value" is equal to the product of the market price for our common stock on a given day multiplied by the then current conversion rate, which is the number of shares of common stock into which each notes is then convertible. The applicable conversion value is, for each trading day on which the trading price of the notes is measured, the conversion value in effect on such trading day at the time the trading price is determined. The "market price" of our common stock on any date of determination means: o the closing sale price (or, if no closing sale price is reported, the last reported sale price) of a security (regular way) on the Nasdaq National Market on that date; o if that security is not listed on the Nasdaq National Market on that date, the closing sale price as reported in the composite transactions for the principal U.S. securities exchange on which that security is listed; 22 o if that security is not so reported, the last price quoted by Interactive Data Corporation for that security or, if Interactive Data Corporation is not quoting such price, a similar quotation service selected by us; o if that security is not so quoted, the average of the mid-point of the last bid and ask prices for that security from at least two dealers recognized as market-makers for that security; or o if that security is not so quoted, the average of that last bid and ask prices for that security from a dealer engaged in the trading of convertible securities. The "trading price" of the notes on any date of determination means the average of the secondary market bid quotations per notes obtained by us or the calculation agent for $1,000,000 principal amount of the notes at approximately 4:00 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers we select, provided that, if: o at least three such bids cannot reasonably be obtained by us or the calculation agent, but two such bids are obtained, then the average of the two bids shall be used, and o if only one such bid can reasonably be obtained by us or the calculation agent, this one bid shall be used. If: o either we or the calculation agent cannot reasonably obtain at least one bid for $1,000,000 principal amount of the notes from a nationally recognized securities dealer or, o in our reasonable judgment, the bid quotations are not indicative of the secondary market value of the notes, then the trading price of the notes will equal (a) the then-applicable conversion rate of the notes multiplied by (b) the market price of our common stock on such determination date. The conversion agent will initially be Wells Fargo Bank, National Association. We may change the conversion agent, but the conversion agent will not be our affiliate. The conversion agent will solicit bids from securities dealers that are believed by us to be willing to bid for the notes. CONVERSION UPON NOTICE OF REDEMPTION A holder may surrender for conversion any notes which we call for redemption at any time until the close of business on the day that is one business day prior to the redemption date, even if the notes are not otherwise convertible at that time. If a holder already has delivered, however, a notice informing us of its exercise of its repurchase rights, as described below under " Repurchase at Option of Holders," with respect to a notes, the holder may not surrender that notes for conversion until the holder has withdrawn the notice in accordance with the indenture. CONVERSION UPON SPECIFIED CORPORATE TRANSACTIONS If: o we distribute to all holders of our common stock certain rights entitling them to purchase, for a period expiring within 60 days of the date of distribution, shares of our common stock at a price less than the market price of the common stock at the time of the announcement of that distribution; o we elect to distribute to all holders of our common stock, cash or other assets, debt notes or certain rights to purchase our notes, which distribution has a per share value exceeding 5% of the market price of the common stock on the business day preceding the declaration date for such distribution; or 23 o a change of control as described under "Repurchase at Option of Holders--Change of Control Put" occurs, but holders of notes do not have the right to require us to repurchase their notes as a result of such change of control because at least 90% of the consideration received in the change of control consists of capital stock that is freely traded and the notes become convertible into that capital stock, each as more fully described under "Repurchase at Option of Holders - Change of Control Put," then we must notify the holders of notes at least 20 days prior to the ex-dividend date for the distribution or within 20 business days of the occurrence of the change of control, as the case may be. Once we have given that notice, holders may convert their notes at any time until either (a) the earlier of close of business on the business day prior to the ex-dividend date and our announcement that the distribution will not take place, in the case of a distribution, or (b) within 20 business days of the change of control notice, in the case of a change of control. In the case of a distribution, no adjustment to the ability of a holder of notes to convert will be made if the holder participates or will participate in the distribution without conversion. In addition, if we are party to a consolidation, merger or binding share exchange pursuant to which our common stock will be converted into cash, securities or other property, a holder may convert notes at any time from and after the date which is 15 days prior to the anticipated effective date of the transaction until 15 days after the effective date of the transaction. If we are a party to a consolidation, merger or binding share exchange pursuant to which our common stock is converted into cash, notes or other property, then at the effective time of the transaction, the right to convert a notes into common stock will be changed into a right to convert the notes into the kind and amount of cash, notes or other property which the holder would have received if the holder had converted such notes immediately prior to the transaction. If the transaction also constitutes a "change of control" (as defined below) the holder can require us to repurchase all or a portion of its notes as described under "Repurchase at Option of Holders - Change of Control Put." In addition, if the transaction constitutes a change of control and meets certain other conditions, a holder may be entitled to receive a make whole premium. CONVERSION PROCEDURES Except as provided below, if you convert your notes into our common stock on any day other than an interest payment date, you will not receive any separate cash payment for interest that has accrued on these notes since the prior interest payment date. By delivering to the holder the number of shares issuable upon conversion, determined by dividing the principal amount of the notes being converted by the conversion price, together with a cash payment, if any, in lieu of fractional shares, we will satisfy our obligation with respect to the converted notes. That is, accrued but unpaid interest (including additional interest) will be deemed to be paid in full rather than canceled, extinguished or forfeited. If you convert after a record date for an interest payment but prior to the corresponding interest payment date, you will receive on the interest payment date interest accrued and paid on such notes, notwithstanding the conversion of such notes prior to such interest payment date, because you will have been the holder of record on the corresponding record date. But, at the time of surrender of such notes for conversion, you must pay us an amount equal to the interest that will be paid on the notes being converted on the interest payment date. The preceding sentence does not apply to a holder that converts, after a record date for an interest payment date but prior to the corresponding interest payment date, notes that we call for redemption prior to such conversion on a redemption date that is on or prior to the third business day after such interest payment date. Accordingly, if we call your notes for redemption in such circumstances and you choose to convert your notes, you will receive on the date that has been fixed for redemption the amount of interest you would have received if you had not converted your notes. You will not be required to pay any transfer taxes or duties relating to the issuance or delivery of our common stock if you exercise your conversion rights, but you will be required to pay any transfer tax or duties which may be payable relating to any transfer involved in the issuance or delivery of the common stock in a name other than your own. If you convert any notes within two years after its original issuance, the common stock issuable upon conversion will not be issued or delivered in a name other than yours unless the applicable restrictions on transfer have been satisfied. See "Notice to Investors." Certificates representing shares of common stock will be issued or delivered only after all applicable transfer taxes and duties, if any, payable by you have been paid. 24 To convert interests in global notes, you must deliver to DTC the appropriate instruction form for conversion pursuant to DTC's conversion program. To convert a definitive notes, you will be required to: o complete the conversion notice on the back of the notes (or a facsimile of it); o deliver the completed conversion notice and the notes to be converted to the specified office of the conversion agent; o pay all funds required, if any, relating to interest on the notes to be converted to which you are not entitled, as described in the second preceding paragraph; and o pay all transfer taxes or duties, if any, as described in the preceding paragraph. The conversion date will be the date on which all of the foregoing requirements have been satisfied. The notes will be deemed to have been converted immediately prior to the close of business on the conversion date. We will deliver, or cause to be delivered, to you a certificate for the number of shares of common stock into which the notes are converted (and cash in lieu of any fractional shares) as soon as practicable on or after the conversion date. The conversion agent, which will be initially Wells Fargo Bank, National Association, will, on our behalf, determine if the notes are convertible as a result of the market price of our common stock on a daily basis, in the case of the right to convert upon satisfaction of market price conditions, and at the end of each quarter, in the case of the other bases upon which holders may convert their notes, in each case, notifying us and the trustee. CONVERSION PRICE ADJUSTMENTS We will adjust the initial conversion price for certain events, including: (1) issuance of our common stock as a dividend or distribution on our common stock; (2) certain subdivisions, combinations or reclassifications of our common stock; (3) issuances to all holders of our common stock of certain rights or warrants to purchase our common stock (or securities convertible into our common stock), at less than (or having a conversion price per share less than) the then current market price of our common stock; (4) distributions to all holders of our common stock of shares of our capital stock (other than our common stock), evidences of our indebtedness or assets (including securities, but excluding: o the rights and warrants to the extent included pursuant to paragraph (3) above; o any dividends and distributions in connection with a reclassification, change, consolidation, merger, combination, sale or conveyance resulting in a change in the conversion consideration pursuant to the fourth succeeding paragraph; o any dividends or distributions paid exclusively in cash; or o common stock distributions to the extent included pursuant to paragraph (1) above); (5) dividends or other distributions consisting exclusively of cash to all or substantially all holders of our common stock (other than dividends or distributions made in connection with our liquidation, dissolution or winding-up); and (6) purchases of our common stock pursuant to a tender offer made by us or any of our subsidiaries to the extent that the same involves an aggregate consideration that, together with any cash and the fair 25 market value of any other consideration paid in any other tender or exchange offer by us or any of our subsidiaries for our common stock expiring within the 12 months preceding such tender offer for which no adjustment has been made, exceeds an amount equal to 5% of our market capitalization on the expiration of such tender offer. In addition, if, after the effectiveness date of the shelf registration statement of which this prospectus is a part and prior to the end of the 18th month thereafter, the market price of our common stock is less than 68.23% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period, the conversion price shall immediately be reduced by 17.38%; provided that (i) this adjustment shall only be applicable to notes that have been sold or otherwise distributed pursuant to the registration statement referred to above or pursuant to Rule 144(k) under the Securities Act (and such adjustment shall apply to all such notes, regardless of whether they are so sold or distributed before or after such adjustment), and (ii) there shall be no more than one such reduction of the conversion price during the term of the notes. The effect of this provision will be that if, after the effectiveness date of the shelf registration statement of which this prospectus is a part and prior to the end of the 18th month thereafter, the market price of our common stock is, for at least 20 trading days during any 30 consecutive trading day period, less than $10.48 (which is 82.59% of the market price of our common stock on the date the notes are first offered for sale), the conversion price will, immediately be reduced to equal $12.69 (the price of our common stock on the date the notes are first offered for sale). The preceding sentence assumes that there are no adjustments to the conversion price because of events described in clauses (1) through (6) above. To the extent any such events do so occur, the conversion price will be adjusted to reflect such events as provided in the indenture and the $12.69 amount in the preceding sentence will become an amount equal to the product of $12.69 multiplied by a fraction, the numerator of which is the adjusted conversion price and the denominator of which is the conversion price prior to adjustment. We will not make an adjustment in the conversion price unless the adjustment would require a change of at least 1% in the conversion price; provided that we will carry forward any adjustments that are less than 1% of the conversion price and make such carried forward adjustments, regardless of whether the aggregate adjustment is less than 1%, within one year of the first such adjustment carried forward or if we have called the notes for redemption. Except as stated above, we will not adjust the conversion price for the issuance of our common stock or any securities convertible into or exchangeable for our common stock or carrying the right to purchase any of the foregoing. In the event that we distribute shares of capital stock of a subsidiary of ours, the conversion rate will be adjusted, if at all, based on the market value of the subsidiary stock so distributed relative to the market value of our common stock in each case over a measurement period following the distribution. In the event we elect to make a distribution described in paragraph (3) or (4) above, which, in the case of paragraph (4) above, has a per share value equal to more than 5% of the market price of our shares of common stock on the day preceding the declaration date for the distribution, then, if the distribution would also trigger a conversion right under "Conversion Upon Specified Corporate Transactions," or if the notes are otherwise convertible, we will be required to give notice to the holders of notes at least 20 days prior to the ex-dividend date for the distribution and, upon the giving of notice, the notes may be surrendered for conversion at any time until the close of business on the business day prior to the ex-dividend date or until we announce that the distribution will not take place. No adjustment to the conversion price or the ability of a holder of a notes to convert will be made if the holder will otherwise participate in the distribution without conversion or in certain other cases. If we: o reclassify or change our common stock (other than changes resulting from a subdivision or combination); or o consolidate or combine with or merge into any person or sell or convey to another person all or substantially all of our property and assets, and the holders of our common stock receive stock, other securities or other property or assets (including cash or any combination thereof) with respect to or in exchange for their common stock, the holders of the notes may convert the notes into the consideration they would have received if they had converted 26 their notes immediately prior to such reclassification, change, consolidation, combination, merger, sale or conveyance. We may not become a party to any such transaction unless its terms are consistent with the foregoing. If a taxable distribution to holders of our common stock or other transaction occurs which results in any adjustment of the conversion price, you may, in certain circumstances, be deemed to have received a distribution subject to U.S. income tax as a dividend. In certain other circumstances, the absence of an adjustment may result in a taxable dividend to the holders of our common stock. See "Certain United States Federal Income Tax Considerations." Because a constructive dividend deemed received by a non-U.S. holder (as defined under "Certain United States Federal Income Tax Considerations") would not give rise to any cash from which any applicable withholding tax could be satisfied, we may set-off any such withholding tax against cash payments payable on the notes. We may from time to time, to the extent permitted by applicable law, reduce the conversion price or increase the conversion rate of the notes by any amount for any period of at least 20 days; provided, however, our board of directors will not exercise such right to reduce the conversion price in such a manner that will violate NASD Rule 4350(i) or any similar or successor rule as then in effect. In that case, we will give at least 15 days' notice of such decrease. We may make such reductions in the conversion price, in addition to those set forth above, as our board of directors deems advisable to avoid or diminish any income tax to holders of our common stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes. If we adjust the conversion price or conversion ratio pursuant to the above provisions, we will issue a press release through Dow Jones & Company, Inc, Business Wire or Bloomberg Business News (or, if such organizations are not in existence at the time of issuance of such press release, such other news or press organization as is reasonably calculated to broadly disseminate the relevant information to the public) containing the relevant information and make this information available on our web site or through another public medium as we may use at that time. PAYMENT UPON CONVERSION Upon conversion, we may choose to deliver shares of our common stock, cash in lieu of shares of our common stock, or a combination thereof, as described below. Conversion On or Prior to the Final Notice Date In the event that we receive your notice of conversion on or prior to the date that is 20 days prior to maturity (the "final notice date"), if we choose to satisfy all or any portion of our obligation (the "conversion obligation") in cash, we will notify you through the trustee of the dollar amount to be satisfied in cash (which must be expressed either as 100% of the conversion obligation or as a fixed dollar amount) at any time on or before the date that is two business days following receipt of your notice of conversion (the "cash settlement notice period"). If we timely elect to pay cash for any portion of the shares otherwise issuable to you, you may retract the conversion notice at any time during the two business day period beginning on the day after the final day of the cash settlement notice period (the "conversion retraction period"). No such retraction can be made (and a conversion notice shall be irrevocable) if we do not elect to deliver cash in lieu of shares (other than cash in lieu of fractional shares). If the conversion notice has not been retracted, then settlement (in cash and/or shares) will occur on the business day following the final day of the 10 trading day period beginning on the day after the final day of the conversion retraction period (the "cash settlement averaging period"), unless we elect to deliver upon conversion only shares of our common stock, in which case settlement in shares will occur as promptly as practicable after the expiration of the cash settlement notice period. Settlement amounts will be computed as follows: o If we elect to satisfy the entire conversion obligation in shares, we will deliver to you a number of shares equal to the aggregate principal amount of notes to be converted divided by the conversion price. In addition, we will pay cash for all fractional shares of common stock as described above. 27 o If we elect to satisfy the entire conversion obligation in cash, we will deliver to you cash in an amount equal to the product of: o a number equal to the aggregate principal amount of notes to be converted divided by the conversion price, and o the average sale price of our common stock during the cash settlement averaging period. o If we elect to satisfy a fixed portion (other than 100%) of the conversion obligation in cash, we will deliver to you such cash amount (the "cash amount") and we will satisfy the balance of the conversion obligation by delivering shares of our common stock based on an average of the sale price during the cash settlement averaging period. In addition, we will pay cash for all fractional shares of common stock as described above. Because, in this case, the number of shares of our common stock that we deliver on conversion will be calculated over a 10 trading day period, holders of notes bear the market risk that our common stock will decline in value between each day of the cash settlement averaging period and the day we deliver the shares of common stock upon conversion. Conversion After the Final Notice Date With respect to conversion notices that we receive after the final notice date, we will not send individual notices of our election to satisfy all or any portion of the conversion obligation in cash. Instead, at any time on or before the final notice date, if we choose to satisfy all or any portion of the conversion obligation with respect to conversions after the final notice date in cash, we will send a single notice to the trustee of the dollar amount to be satisfied in cash (which must be expressed either as 100% of the conversion obligation or as a fixed dollar amount). In the event that we receive your notice of conversion after the final notice date, settlement amounts will be computed and settlement dates will be determined in the same manner as set forth above under "Conversion on or Prior to the Final Notice Date" except that the "cash settlement averaging period" shall be the 10 trading day period beginning on the trading day after receipt of your notice of conversion. If your conversion notice is received after the final notice date, you will not be allowed to retract the conversion notice. Settlement (in cash and/or shares) will occur on the business day following the final day of such cash settlement averaging period, unless we elect to deliver upon conversion only shares of our common stock, in which case settlement in shares will occur as promptly as practicable after the second business days following receipt of your notice of conversion. OPTIONAL REDEMPTION BY INFOCROSSING We may, at our option, redeem for cash some or all of the notes at any time on or after July 15, 2007; provided, however, that we may only redeem notes prior to July 15, 2009 if: o the market price of our common stock has been at least 150% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period; and o the shelf registration statement covering resales of the notes and the shares of common stock issuable upon conversion of the notes is effective and available for use and is expected to remain effective and available for use for the 30 days following the redemption date. If we elect to redeem any notes, we will give at least 20 but not more than 60 days' notice of redemption and the notes shall be redeemed at a redemption price equal to 100% of the principal amount of the notes redeemed. In addition, we will pay interest on the notes being redeemed, including those notes which are converted into our common stock after the date the notice of the redemption is mailed and prior to the redemption date. This interest will include accrued and unpaid interest (including additional interest) to, but excluding, the redemption date. If the redemption date is an interest payment date, we will pay the interest to the holder of record on the corresponding record date, which may or may not be the same person to whom we will pay the redemption price. 28 If we redeem notes prior to July 15, 2009, we will also make an additional payment on the redemption date with respect to the notes called for redemption, such payment to be made to the persons who were the holders of such notes on the redemption notice date, in an amount equal to $173.83 per $1,000 principal amount of notes, less the amount of any interest actually paid on such notes prior to the redemption date. We will be obligated to make this additional payment on all notes called for redemption prior to July 15, 2009, including any notes converted after the notice date and on or before the redemption date. Any notice of redemption shall include, among other things, (1) a statement regarding your right to convert the notes, (2) the date by which the notes called for redemption may be converted and (3) should you elect to convert your notes that we have called for redemption (i) whether we will elect to deliver our settlement in common stock or cash and (iii) in the case we elect to satisfy our obligation in cash, the date on which the cash settlement averaging period will commence. If we do not redeem all of the notes, the trustee will select the notes to be redeemed in principal amounts of $1,000 or whole multiples of $1,000 by lot, on a pro rata basis or by such other method that the trustee determines is fair and appropriate. If any notes are to be redeemed in part only, we will issue a new note in principal amount equal to the unredeemed principal portion thereof. If a portion of your notes is selected for partial redemption and you convert a portion of your notes, the converted portion will be deemed to be taken from the portion selected for redemption. We may not redeem the notes if we have failed to pay any interest on the notes, and such failure to pay is continuing. REPURCHASE AT OPTION OF HOLDERS OPTIONAL PUT On July 15, 2009, 2014 and 2019, holders may require us to repurchase for cash all of their notes not previously called for redemption, or any portion of those notes that is equal to $1,000 or a whole multiple of $1,000, at a repurchase price equal to 100% of the principal amount of those notes plus any accrued and unpaid interest (including additional interest) on those notes to, but excluding, the repurchase date. Holders may submit their notes for repurchase to the paying agent at any time from the opening of business on the date that is 20 business days prior to the applicable repurchase date until the close of business on the repurchase date. CHANGE OF CONTROL PUT If a change of control occurs, holders may require us to repurchase for cash all of their notes not previously called for redemption, or any portion of those notes that is equal to $1,000 or a whole multiple of $1,000, at a repurchase price equal to 100% of the principal amount of the notes to be repurchased plus any accrued and unpaid interest (including additional interest) on those notes to, but excluding, the repurchase date, plus a make whole premium under the circumstances described below. A "change of control" will be deemed to have occurred at such time after the original issuance of the notes when any of the following has occurred: (1) the acquisition by any person, including any syndicate or group deemed to be a "person" under Section 13(d)(3) of the Exchange Act, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of shares of our capital stock entitling that person to exercise 50% or more of the total voting power of all shares of our capital stock entitled to vote generally in elections of directors, other than any acquisition by us, any of our subsidiaries or any of our employee benefit plans (except that such person shall be deemed to have beneficial ownership of all notes that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); or 29 (2) the first day on which a majority of the members of our board of directors are not continuing directors; or (3) the consolidation or merger of us with or into any other person, any merger of another person into us, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of our properties and assets to another person, other than: (a) any transaction: (i) that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of our capital stock; and (ii) pursuant to which holders of our capital stock immediately prior to such transaction have the right to exercise, directly or indirectly, 50% or more of the total voting power of all shares of our capital stock entitled to vote generally in elections of directors of the continuing or surviving person immediately after giving effect to such issuance; or (b) any merger solely for the purpose of changing our jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of common stock solely into shares of common stock of the surviving entity. However, a change of control of the type described in clause (1) or (3) above will not entitle holders to require us to repurchase their notes if at least 90% of the consideration in the transaction or transactions constituting a change of control consists of shares of common stock traded or to be traded immediately following such change of control on a national securities exchange or the Nasdaq National Market and, as a result of the transaction or transactions, the notes become convertible solely into such common stock (and any rights attached thereto). Beneficial ownership shall be determined in accordance with Rules 13d-3 and 13d-5 under the Exchange Act. The term "person" includes any syndicate or group which would be deemed to be a "person" under Section 13(d)(3) under the Exchange Act. "Continuing directors" means, as of any date of determination, any member of the board of directors of Infocrossing who: o was a member of the board of directors on the date of the indenture; or o was nominated for election or elected to the board of directors with the approval of a majority of the continuing directors who were members of the board at the time of new director's nomination or election. The definition of "change of control" includes a phrase relating to the conveyance, sale, transfer, lease or disposition of "all or substantially all" of our properties and assets. There is no precise, established definition of the phrase "substantially all" under applicable law. In interpreting this phrase, courts, among other things, make a subjective determination as to the portion of assets conveyed, considering many factors, including the value of assets conveyed, the proportion of an entity's income derived from the assets conveyed and the significance of those assets to the ongoing business of the entity. To the extent the meaning of such phrase is uncertain, uncertainty will exist as to whether or not a change of control may have occurred and, accordingly, as to whether or not the holders of notes will have the right to require us to repurchase their notes. DETERMINATION OF THE MAKE WHOLE PREMIUM If a change in control occurs prior to July 15, 2009 and more than 10% of the consideration in the transaction or transactions constituting a change of control consists of cash or property other than shares of common stock traded or 30 to be traded immediately following such change of control on a national securities exchange or the Nasdaq National Market, we will pay a make whole premium to the holders of the notes in addition to the purchase price of the notes on the date of purchase. The make whole premium will also be paid to holders of the notes who convert their notes into common stock as described under "--Conversion Rights--Conversion Upon Specified Corporate Transactions." The make whole premium shall be equal to a percentage (the "additional premium") of the principal amount of the notes. The additional premium will be in addition to, and not in substitution for, any cash, securities, or other assets otherwise due to holders of notes upon conversion or repurchase. The additional premium will be determined by reference to the table below and is based on the date on which the change in control becomes effective (the "effective date") and the price paid per share of our common stock in the transaction constituting the change in control (the "stock price"). If holders of our common stock receive only cash in the transaction constituting the change in control, the stock price will equal the cash amount paid per share; in all other cases, the stock price will equal the average closing sale price of our common stock (as defined under "Conversion Rights - Conversion Upon Satisfaction of Market Price Condition") over the ten trading-day period ending on the trading day preceding the effective date. The following table illustrates what the additional premiums would be for various percentages of the conversion price.
ADDITIONAL PREMIUM UPON CHANGE IN CONTROL (EXPRESSED AS A PERCENTAGE OF PRINCIPAL AMOUNT) Stock price (expressed as a percentage of the conversion price) Effective Date 82.62% 89.13% 100.00% 123.70% 149.74% 182.29% 227.86% JUNE 30, 2004.................... 0.00% 4.52% 12.56% 7.95% 4.55% 1.87% 0.00% JULY 15, 2004.................... 0.00 4.47 12.50 7.90 4.51 1.84 0.00 JANUARY 15, 2005................. 0.00 4.00 11.99 7.39 4.10 1.58 0.00 JULY 15, 2005.................... 0.00 3.64 11.56 6.93 3.72 1.34 0.00 JANUARY 15, 2006................. 0.00 3.36 11.16 6.47 3.33 1.11 0.00 JULY 15, 2006.................... 0.00 3.11 10.76 5.98 2.93 0.88 0.00 JANUARY 15, 2007................. 0.00 2.82 10.26 5.37 2.46 0.63 0.00 JULY 15, 2007.................... 0.00 2.48 9.66 4.64 1.92 0.37 0.00 JANUARY 15, 2008................. 0.00 1.97 8.78 3.65 1.26 0.11 0.00 JULY 15, 2008.................... 0.00 1.29 7.51 2.30 0.53 0.00 0.00 JANUARY 15, 2009................. 0.00 0.25 5.33 0.17 0.00 0.00 0.00 JULY 15, 2009.................... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 - -------------------------------------------------------------------------------------------------------------------------
The exact stock price and effective date may not be set forth on the table. In such event: o If the stock price is between two stock prices on the table or the effective date is between two dates on the table, the additional premium will be determined by straight-line interpolation between additional premium amounts set forth for the higher and lower stock prices and the two dates, as applicable, based on a 365 day year. o If the stock price (expressed as a percentage of the conversion price) is equal to or in excess of 227.86%, no additional premium will be paid. o If the stock price (expressed as a percentage of the conversion price) is less than or equal to than 82.62%, no additional premium will be paid. Because the stock prices set forth in the table above are expressed as percentages of the conversion price, the stock price amounts will change when the conversion price of the notes is adjusted, as described above under " - --Conversion Rights--Conversion Price Adjustments." 31 We will pay the make whole premium solely in the same form of consideration into which all or substantially all of the shares of our common stock have been exchanged or converted in connection with the transaction constituting the change in control. If holders of our common stock have the right to elect the form of consideration received in the transaction constituting the change in control, then for purposes of determining the form of consideration to be delivered in respect of the make whole premium, the consideration into which a share of our common stock has been exchanged or converted shall be deemed to equal the aggregate consideration distributed in respect of all shares of our common stock divided by the total number of shares of common stock participating in the distribution. For purposes of determining the value of the consideration to be delivered in respect of the additional premium, the value will be calculated as follows: o securities that are traded on a United States national securities exchange or approved for quotation on the Nasdaq National Market or any similar system of automated dissemination of quotations of securities prices will be valued based on the average closing price or last sale price, as applicable, over the ten trading-day period ending on the trading day preceding the repurchase date; o other securities, assets or property (other than cash) will be valued based on 98% of the average of the fair market value of such securities, assets or property (other than cash) as determined by two independent nationally recognized investment banks selected by the trustee; and o 100% of any cash. REPURCHASE RIGHT PROCEDURES Within 20 business days after the occurrence of a change of control, we will be required to give notice to all holders of the occurrence of the change of control and of their resulting repurchase right. The repurchase date will be 20 business days after the date we give that notice. With respect to other repurchase rights, we will be required to give notice 20 business days prior to any repurchase date to all holders. The notices will be delivered to the holders at their addresses shown in the register of the registrar and to beneficial owners as required by applicable law stating, among other things, the procedures that holders must follow to require us to repurchase their notes as described below. If holders have the right to cause us to repurchase their notes as described above, we will issue a press release through Dow Jones & Company, Inc, Business Wire or Bloomberg Business News (or, if such organizations are not in existence at the time of issuance of such press release, such other news or press organization as is reasonably calculated to broadly disseminate the relevant information to the public) containing the relevant information and make this information available on our web site or through another public medium as we may use at that time. To elect to require us to repurchase notes, each holder must deliver the repurchase notice so that it is received by the paying agent no later than the close of business on the repurchase date and must state certain information, including: o the certificate numbers of the holders' notes to be delivered for repurchase; o the portion of the principal amount of notes to be repurchased, which must be $1,000 or an integral multiple of $1,000; and o that the notes are to be repurchased by us pursuant to the applicable provision of the indenture. A holder may withdraw any repurchase notice by delivering a written notice of withdrawal to the paying agent prior to the close of business on the repurchase date. The notice of withdrawal must state certain information, including: 32 o the principal amount of notes being withdrawn; o the certificate numbers of the notes being withdrawn; and o the principal amount, if any of the notes that remain subject to the repurchase notice. The Exchange Act requires the dissemination of certain information to securityholders and that an issuer follow certain procedures if an issuer tender offer occurs, which may apply if the repurchase rights summarized above become available to holders of the notes. In connection with any offer to require us to repurchase notes as summarized above we will, to the extent applicable: o comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act which may then be applicable; and o file a Schedule TO or any other required schedule or form under the Exchange Act. Our obligation to pay the repurchase price for notes for which a repurchase notice has been delivered and not validly withdrawn is conditioned upon the holder delivering the notes, together with necessary endorsements, to the paying agent at any time after delivery of the repurchase notice. We will cause the repurchase price for the notes to be paid promptly following the later of the repurchase date or the time of delivery of the notes, together with such endorsements. If the paying agent holds money sufficient to pay the repurchase price of the notes for which a repurchase notice has been given on the business day following the repurchase date in accordance with the terms of the indenture, then, immediately after the repurchase date, the notes will cease to be outstanding and interest on the notes will cease to accrue, whether or not the notes are delivered to the paying agent. Thereafter, all other rights of the holder shall terminate, other than the right to receive the repurchase price upon delivery of the notes. We may, to the extent permitted by applicable law and the agreements governing our other debt, at any time purchase the notes in the open market or by tender at any price or by private agreement. Any notes so purchased by us may, to the extent permitted by applicable law, be reissued or resold or may be surrendered to the trustee for cancellation. Any notes surrendered to the trustee may not be reissued or resold and will be canceled promptly. LIMITATIONS ON REPURCHASE RIGHTS The repurchase rights described above may not necessarily protect holders of the notes if a highly leveraged or another transaction involving us occurs that may adversely affect holders. Our ability to repurchase notes upon the occurrence of a change in control is subject to important limitations. The occurrence of a change of control could cause an event of default under, or be prohibited or limited by, the terms of our existing or future debt. Further, we cannot assure you that, in that event, we would have the financial resources, or would be able to arrange financing, to pay the repurchase price for all the notes that might be delivered by holders of notes seeking to exercise the repurchase right. Any failure by us to repurchase the notes when required following a change of control would result in an event of default under the indenture. Any such default may, in turn, cause a default under our other debt. In addition, our ability to repurchase notes for cash may be limited by restrictions on our ability to obtain funds for such repurchase through dividends from our subsidiaries and other provisions in the agreements governing our other debt. The change of control repurchase provision of the notes may, in certain circumstances, make more difficult or discourage a takeover of our company. The change of control repurchase feature, however, is not the result of our knowledge of any specific effort to accumulate shares of our common stock, to obtain control of us by means of a merger, tender offer solicitation or otherwise or by management to adopt a series of anti-takeover provisions. Instead, the change of control purchase feature is a standard term contained in convertible securities similar to the notes. 33 CONSOLIDATION, MERGER AND ASSUMPTION The indenture provides that we may not consolidate with or merge into any other person or convey, transfer, sell, lease or otherwise dispose of all or substantially all of the properties and assets of the company and its Restricted Subsidiaries taken as a whole, to another person unless, among other things: o the resulting, surviving or transferee person is organized and existing under the laws of the United States, any state thereof or the District of Columbia; o that person assumes all of our obligations under the indenture and the notes; and o Infocrossing or such successor is not then or immediately thereafter in default under the indenture and no event which, after notice or lapse of time, would become an event of default under the indenture, shall have occurred and be continuing. The covenant described above includes a phrase relating to the conveyance, transfer, sale, lease or disposition of "all or substantially all" of our properties and assets. There is no precise, established definition of the phrase "substantially all" under applicable law. In interpreting this phrase, courts, among other things, make a subjective determination as to the portion of assets conveyed, considering many factors, including the value of assets conveyed, the proportion of an entity's income derived from the assets conveyed and the significance of those assets to the ongoing business of the entity. To the extent the meaning of such phrase is uncertain, uncertainty will exist as to whether or not a change of control may have occurred and, accordingly, as to whether or not the holders of notes will have the right to require us to repurchase their notes. This "Consolidation, Merger and Assumption" covenant will not apply to: (1) a merger of the company with an Affiliate solely for the purpose of reincorporating the company in another jurisdiction; or (2) any consolidation or merger, or any sale, assignment, transfer, conveyance, lease or other disposition of assets between or among the company and its Restricted Subsidiaries. COVENANT LIMITING THE INCURRENCE OF ADDITIONAL INDEBTEDNESS The company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt); provided, however, that the company and its Subsidiaries may incur Indebtedness (including Acquired Debt) if the company's Debt to EBITDA Ratio at the time of incurrence of such Indebtedness, after giving pro forma effect to such incurrence or issuance as of such date and to the use of proceeds therefrom as if the same had occurred at the beginning of the most recently ended four full fiscal quarter period of the company for which internal financial statements are available, would have been no greater than 3.5 to 1. The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (1) the incurrence by the company of additional Indebtedness and letters of credit under one or more Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the company and its Restricted Subsidiaries thereunder) not to exceed $45.0 million, $30.0 million of which shall be used in connection with the direct or indirect acquisition of Equity Interests of a Person engaged in, or assets related to, the information technology services business, business process outsourcing or businesses complimentary or ancillary thereto or for the acquisition by the company or any of its Subsidiaries of new customers or customer contracts; 34 (2) the incurrence by the company and its Restricted Subsidiaries of Existing Indebtedness; (3) the incurrence by the company of Indebtedness represented by the notes to be issued on the date of the indenture (and any additional notes purchased by the initial purchaser pursuant to its 30-day option to purchase additional notes); (4) the incurrence by the company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used in the business of the company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $7.5 million at any time outstanding; (5) the incurrence by the company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by the indenture to be incurred under the first paragraph of this covenant or clauses (2), (3), (4), (5) or (12) of this paragraph; (6) the incurrence by the company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the company and any of its Restricted Subsidiaries; provided, however, that if the company is the obligor on such Indebtedness, such Indebtedness must be expressly subordinated to payment of any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the notes to the extent provided in the indenture; (7) the incurrence by the company or any of its Restricted Subsidiaries of Subordinated Indebtedness; (8) the incurrence by the company or any of its Restricted Subsidiaries of Hedging Obligations; (9) the guarantee by the company or any of its Restricted Subsidiaries of Indebtedness of the company or a Restricted Subsidiary of the company that was permitted to be incurred by another provision of this covenant; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed; (10) the incurrence by the company or any of its Restricted Subsidiaries of Indebtedness in respect of workers' compensation claims, self-insurance obligations, bankers' acceptances, performance and surety bonds in the ordinary course of business; (11) the incurrence by the company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five business days; and (12) the incurrence by the company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (12), not to exceed $5.0 million. For purposes of determining compliance with this "--Covenant Limiting the Incurrence of Additional Indebtedness," in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (12) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, the company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this covenant. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in 35 accounting principles, will not be deemed to be an incurrence of Indebtedness for purposes of this covenant. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the company or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be: (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; and (2) the principal amount of the Indebtedness, in the case of any other Indebtedness. "Acquired Debt" means, with respect to any specified Person, Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person will be deemed to be control. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. "Asset Sale" means: (1) the sale, lease, conveyance or other disposition of any assets or rights; and (2) the issuance of Equity Interests in any of the company's Restricted Subsidiaries or the sale of Equity Interests in any of its Subsidiaries. Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale: (1) any single transaction or series of related transactions that involves assets having a fair market value of less than $1.0 million; (2) a transfer of assets between or among the company and its Restricted Subsidiaries; (3) an issuance of Equity Interests by a Restricted Subsidiary of the company to the company or to a Restricted Subsidiary of the company; (4) the sale or lease of products, services or accounts receivable in the ordinary course of business and any sale or other disposition of damaged, worn-out or obsolete assets in the ordinary course of business; and (5) the sale or other disposition of cash or cash equivalents. "Capital Lease Obligation" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty. 36 "Capital Stock" means: (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock. "Consolidated Cash Flow" means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication: (1) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus (2) the Fixed Charges of such Person and its Restricted Subsidiaries for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income; plus (3) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; minus (4) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business, in each case, on a consolidated basis and determined in accordance with GAAP. "Consolidated Indebtedness" means, with respect to any Person as of any date of determination, the sum, without duplication, of (i) the total amount of Indebtedness of such Person and its Subsidiaries plus (ii) the total amount of Indebtedness of any other Person, to the extent that such Indebtedness has been guaranteed by the referent Person or one or more of its Restricted Subsidiaries. "Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that: (1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person; (2) the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders; 37 (3) the cumulative effect of a change in accounting principles will be excluded; and (4) notwithstanding clause (1) above, the Net Income of any Unrestricted Subsidiary will be excluded, whether or not distributed to the specified Person or one of its Subsidiaries. "Credit Agreement" means, that certain Amended And Restated Term Loan Agreement, dated as of April 2, 2004, among the company, the several banks and other financial institutions from time to time parties to the Credit Agreement and CapitalSource Finance LLC, a Delaware limited liability company, as agent for the lenders thereunder including any related notes, Guarantees, collateral documents, instruments and agreements executed in connection therewith, and, in each case, as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time. "Credit Facilities" means, one or more debt facilities (including, without limitation, the Credit Agreement), commercial paper facilities or other credit extensions, in each case with banks or other institutional lenders or investors providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables), notes, bonds or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced, increased or refinanced in whole or in part from time to time. "Debt to EBITDA Ratio" means, as of any date of determination, the ratio of (a) the Consolidated Indebtedness of the company as of such date to (b) the Consolidated Cash Flow of the company for the four most recent full fiscal quarters ending immediately prior to such date for which internal financial statements are available, determined on a pro forma basis (x) in accordance with Regulation S-X under the Securities Act or (y) as otherwise determined in good faith by the chief financial officer of the company after giving effect to all acquisitions or dispositions of assets made by the company and its Restricted Subsidiaries from the beginning of such four-quarter period through and including such date of determination (including any related financing transactions) as if such acquisitions and dispositions had occurred at the beginning of such four-quarter period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Existing Indebtedness" means up to $10.0 million in aggregate principal amount of Indebtedness of the company and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the date of the indenture. "Fixed Charges" means, with respect to any specified Person for any period, the sum, without duplication, of: (1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations in respect of interest rates; plus 38 (2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; plus (3) any interest on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries whether or not such Guarantee is called upon. "Guarantee" means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise). "Hedging Obligations" means, with respect to any specified Person, the obligations of such Person incurred in the normal course of business and not for speculative purposes under: (1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements; (2) other agreements or arrangements designed to manage interest rates or interest rate risk; and (3) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices. "Indebtedness" means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent: (1) in respect of borrowed money; (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (3) in respect of banker's acceptances; (4) representing Capital Lease Obligations; (5) representing the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services are completed; or (6) representing any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes the Guarantee by the specified Person of any Indebtedness of any other Person. "Net Income" means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however: (1) any gain (or loss), together with any related provision for taxes on such gain (or loss), realized in connection with: (a) any Asset Sale; or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and (2) any extraordinary gain (or loss), together with any related provision for taxes on such extraordinary gain (or loss). 39 "Non-Recourse Debt" means Indebtedness: (1) as to which neither the company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender; (2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness of the company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and (3) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the company or any of its Restricted Subsidiaries. "Permitted Refinancing Indebtedness" means any Indebtedness of the company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge other Indebtedness of the company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness renewed, refunded, refinanced, replaced, defeased or discharged (plus all accrued interest on the Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith); (2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged; (3) if the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged is subordinated in right of payment to the notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the notes on terms at least as favorable to the holders of notes as those contained in the documentation governing the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged; and (4) such Indebtedness is incurred either by the company or by the Restricted Subsidiary who is the obligor on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the date of the indenture, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subordinated Indebtedness" means Indebtedness that (x) is made expressly subordinate in right of payment to the notes and (y) does not provide at any time for the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal or premium, if any, thereon until at least 91 days after July 15, 2009 excluding for this purpose pursuant to any provision 40 similar to the provisions of the covenant applicable to the notes described under "--Repurchase at the Option of the Holders--Change of Control Put," provided that the company honors its obligations with respect to the notes. "Subsidiary" means, with respect to any specified Person: (1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders' agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof). "Unrestricted Subsidiary" means any Subsidiary of the company that is designated by the board of directors of the company as an Unrestricted Subsidiary pursuant to a resolution of the board of directors, but only to the extent that such Subsidiary: (1) has no Indebtedness other than Non-Recourse Debt; (2) is not party to any agreement, contract, arrangement or understanding with the company or any Restricted Subsidiary of the company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the company; (3) is a Person with respect to which neither the company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the company or any of its Restricted Subsidiaries. "Voting Stock" of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the board of directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (2) the then outstanding principal amount of such Indebtedness. DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES As of the date of the indenture, all of our Subsidiaries were "Restricted Subsidiaries." However, under the circumstances described below, we will be permitted to designate certain of our Subsidiaries as "Unrestricted Subsidiaries." Our Unrestricted Subsidiaries will not be subject to all of the restrictive covenants in the indenture. The board of directors of the company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a default under the indenture. The board of 41 directors of the company may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if that redesignation would not cause a default under the indenture. Any designation of a Subsidiary of the company as an Unrestricted Subsidiary will be evidenced to the trustee by filing with the trustee a certified copy of a resolution of the board of directors giving effect to such designation and an officers' certificate certifying that such designation complied with the preceding conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of the indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the company as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption " --Covenant Limiting the Incurrence of Additional Indebtedness," the company will be in default of such covenant. The board of directors of the company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary of the company; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the company of any outstanding Indebtedness of such Unrestricted Subsidiary, and such designation will only be permitted if (1) such Indebtedness is permitted under the covenant described under the caption "--Covenant Limiting the Incurrence of Additional Indebtedness," calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no default or event of default would be in existence following such designation. EVENTS OF DEFAULT Each of the following constitutes an event of default under the indenture: o our failure to convert notes into shares of our common stock upon exercise of a holder's conversion right; o our failure to pay when due the principal of or premium, if any, on any of the notes at maturity, upon redemption or exercise of a repurchase right or otherwise; o our failure to pay an installment of interest (including additional interest) on any of the notes for 30 days after the date when due; o our failure to provide notice of the occurrence of a change in control on a timely basis; o our failure or failure by any Restricted Subsidiary to perform or observe any other term, covenant or agreement contained in the notes or the indenture for a period of 60 days after written notice of such failure, requiring us to remedy the same, shall have been given to us by the trustee or to us and the trustee by the holders of at least 25% in aggregate principal amount of the notes then outstanding; o our default under any indebtedness for money borrowed by us or any of our Restricted Subsidiaries that is a "significant subsidiary" or any group of two or more Restricted Subsidiaries that, taken as a whole, would constitute a significant subsidiary, the aggregate outstanding principal amount of which is in an amount in excess of $10.0 million, for a period of 30 days after written notice to us by the trustee or to us and the trustee by holders of at least 25% in aggregate principal amount of the notes then outstanding, which default: o is caused by a failure to pay when due principal or interest on such indebtedness by the end of the applicable grace period, if any, unless such indebtedness is discharged; or o results in the acceleration of such indebtedness, unless such acceleration is waived, cured, rescinded or annulled; and o certain events of bankruptcy, insolvency or reorganization with respect to us or any of our Restricted Subsidiaries that is a significant subsidiary or any group of two or more Restricted Subsidiaries that, taken as a whole, would constitute a significant subsidiary. 42 The indenture provides that the trustee will, within 90 days of the occurrence of a default, give to the registered holders of the notes notice of all uncured defaults known to it, but the trustee shall be protected in withholding such notice if it, in good faith, determines that the withholding of such notice is in the best interest of such registered holders, except in the case of a default in the payment of the principal of, or premium, if any, or interest on, any of the notes when due or in the payment of any redemption or repurchase obligation. If an event of default specified in the last clause above occurs and is continuing, then automatically the principal of all the notes and the interest thereon shall become immediately due and payable. If an event of default shall occur and be continuing, other than with respect to the last clause above (the default not having been cured or waived as provided under "--Modifications and Amendments" below), the trustee or the holders of at least 25% in aggregate principal amount of the notes then outstanding may declare the notes due and payable at their principal amount together with accrued and unpaid interest and additional interest, if any, and thereupon the trustee may, at its discretion, proceed to protect and enforce the rights of the holders of notes by appropriate judicial proceedings. Such declaration may be rescinded or annulled with the written consent of the holders of a majority in aggregate principal amount of the notes then outstanding upon the conditions provided in the indenture. The indenture contains a provision entitling the trustee, subject to the duty of the trustee during default to act with the required standard of care, to be indemnified by the holders of notes before proceeding to exercise any right or power under the indenture at the request of such holders. The indenture provides that the holders of a majority in aggregate principal amount of the notes then outstanding through their written consent may direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred upon the trustee. We are required to furnish annually to the trustee a statement as to the fulfillment of our obligations under the indenture. MODIFICATIONS AND AMENDMENTS CHANGES REQUIRING APPROVAL OF EACH AFFECTED HOLDER The indenture, including the terms and conditions of the notes, may not be modified or amended without the written consent or the affirmative vote of the holder of each note affected by such change to: o change the maturity of the principal of or the date any installment of interest is due on any notes; o reduce the principal amount of repurchase price or redemption price of or interest on any notes; o change the currency of payment of such notes or interest thereon; o alter the manner of calculation or rate of accrual of interest or additional interest on any notes or extend the payment of any such amount; o impair the right to institute suit for the enforcement of any payment on or with respect to any notes; o modify our obligations to maintain an office or agency in The City of New York; o except as otherwise permitted or contemplated by provisions concerning corporate reorganizations, adversely affect the right of holders to convert the notes other than as provided in the indenture; o modify the redemption provisions of the indenture in a manner adverse to the holders of notes; or o reduce the percentage in aggregate principal amount of notes outstanding necessary to modify or amend the indenture or to waive any past default. 43 CHANGES REQUIRING MAJORITY APPROVAL Except as otherwise provided in respect of changes requiring the approval of each affected holder and changes requiring no approval, the indenture, including the terms and conditions of the notes, may be modified or amended either: o with the written consent of the holders of at least a majority in aggregate principal amount of the notes at the time outstanding; or o by the adoption of a resolution at a meeting of holders by at least a majority in aggregate principal amount of the notes represented at such meeting. CHANGES REQUIRING NO APPROVAL The indenture, including the terms and conditions of the notes, may be modified or amended by us and the trustee, without the consent of the holder of any note, for the purposes of, among other things: o adding to our covenants for the benefit of the holders of notes; o surrendering any right or power conferred upon us; o providing for conversion rights of holders of notes if any reclassification or change of our common stock or any consolidation, merger or sale of all or substantially all of our assets occurs; o providing for the assumption of our obligations to the holders of notes in the case of a merger, consolidation or conveyance, sale, transfer or lease of all or substantially all of our assets; o reducing the conversion price, provided that the reduction will not adversely affect the interests of the holders of notes (after taking into account tax and other consequences of such reduction); o complying with the requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act of 1939, as amended; o making any changes or modifications necessary in connection with the registration of the notes under the Securities Act as contemplated in the resale registration rights agreement, provided that such change or modification does not, in the good faith opinion of our board of directors, adversely affect the interests of the holders of notes in any material respect; o curing any ambiguity or correcting or supplementing any defective provision contained in the indenture, provided that such modification or amendment does not, in the good faith opinion of our board of directors and the trustee, adversely affect the interests of the holders of notes in any material respect; o adding guarantees with respect to the notes; or o adding or modifying any other provisions with respect to matters or questions arising under the indenture which we and the trustee may deem necessary or desirable and which will not adversely affect the interests of the holders of notes. GOVERNING LAW The indenture and the notes are governed by, and construed in accordance with, the laws of the State of New York. 44 INFORMATION CONCERNING THE TRUSTEE AND THE TRANSFER AGENT Wells Fargo Bank, National Association, as trustee under the indenture, has also been appointed by us as paying agent, conversion agent, registrar and custodian with regard to the notes. Continental Stock Transfer & Trust Company is the transfer agent and registrar for our common stock. The trustee or its affiliates may from time to time in the future provide banking and other services to us in the ordinary course of their business. RULE 144A INFORMATION We will furnish to the holders, beneficial holders and prospective purchasers of the notes or the common stock into which the notes are convertible, upon their request, the information required by Rule 144A(d)(4) under the Securities Act until such time as these securities are no longer "restricted securities" within the meaning of Rule 144 under the Securities Act, assuming these securities have not been owned by an affiliate of Infocrossing. FORM, DENOMINATION AND REGISTRATION DENOMINATION AND REGISTRATION The notes will be issued in fully registered form, without coupons, in denominations of $1,000 principal amount and whole multiples of $1,000. GLOBAL SECURITIES; BOOK-ENTRY FORM The notes will be represented by one or more fully registered global notes. Each global note will be deposited with, or on behalf of, the depositary and registered in the name of the depositary or its nominee or will remain in the custody of the trustee pursuant to the FAST Balance Certificate Agreement between the depositary and the trustee. Your beneficial interest in a debt security will be shown on, and transfers of beneficial interests will be effected only through, records maintained by the depositary or its participants. Payments of principal of, premium, if any, and interest, if any, on the notes represented by a global note will be made by us or our paying agent to the depositary or its nominee. The Depository Trust Company, often referred to as DTC, will be the initial depositary. So long as Cede & Co., as nominee of DTC, is the registered owner of the global securities, Cede & Co. for all purposes will be considered the sole holder of the global securities. Except as provided below, owners of beneficial interests in the global securities: o will not be entitled to have certificates registered in their names; o will not receive or be entitled to receive physical delivery of certificates in definitive form; and o will not be considered holders of the global securities. The laws of some states require that certain persons take physical delivery of securities in definitive form. Consequently, the ability of an owner of a beneficial interest in a global security to transfer the beneficial interest in the global security to such persons may be limited. We will wire, through the facilities of the trustee, payments of principal and interest payments on the global securities to Cede & Co., the nominee of DTC, as the registered owner of the global securities. None of Infocrossing, the trustee and any paying agent will have any responsibility or be liable for paying amounts due on the global securities to owners of beneficial interests in the global securities. It is DTC's current practice, upon receipt of any payment of principal of and interest on the global securities, to credit participants' accounts on the payment date in amounts proportionate to their respective beneficial interests in the notes represented by the global securities, as shown on the records of DTC, unless DTC believes that it will not receive payment on the payment date. Payments by DTC participants to owners of beneficial interests in notes 45 represented by the global securities held through DTC participants will be the responsibility of DTC participants, as is now the case with securities held for the accounts of customers registered in "street name." If you would like to convert your notes into common stock pursuant to the terms of the notes, you should contact your broker or other direct or indirect DTC participant to obtain information on procedures, including proper forms and cut-off times, for submitting those requests. Because DTC can only act on behalf of DTC participants, who in turn act on behalf of indirect DTC participants and other banks, your ability to pledge your interest in the notes represented by global securities to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interest, may be affected by the lack of a physical certificate. Neither Infocrossing nor the trustee (nor any registrar, paying agent or conversion agent under the indenture) will have any responsibility for the performance by DTC or direct or indirect DTC participants of their obligations under the rules and procedures governing their operations. DTC has advised us that it will take any action permitted to be taken by a holder of notes, including, without limitation, the presentation of notes for conversion as described below, only at the direction of one or more direct DTC participants to whose account with DTC interests in the global securities are credited and only for the principal amount of the notes for which directions have been given. DTC has advised us as follows: DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for DTC participants and to facilitate the clearance and settlement of securities transactions between DTC participants through electronic book-entry changes to the accounts of its participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other organizations, such as the initial purchaser of the notes. Certain DTC participants or their representatives, together with other entities, own DTC. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through, or maintain a custodial relationship with, a participant, either directly or indirectly. Although DTC has agreed to the foregoing procedures in order to facilitate transfers of interests in the global securities among DTC participants, it is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. If DTC is at any time unwilling or unable to continue as depositary and a successor depositary is not appointed by us within 90 days, we will cause notes to be issued in definitive form in exchange for the global securities. None of Infocrossing, the trustee or any of their respective agents will have any responsibility for the performance by DTC, direct or indirect DTC participants of their obligations under the rules and procedures governing their operations, including maintaining, supervising or reviewing the records relating to, or payments made on account of, beneficial ownership interests in global securities. According to DTC, the foregoing information with respect to DTC has been provided to its participants and other members of the financial community for informational purposes only and is not intended to serve as a representation, warranty or contract modification of any kind. 46 DESCRIPTION OF CAPITAL STOCK GENERAL As of July 9, 2004, the Company was authorized to issue: o 50,000,000 shares of common stock, $0.01 par value, of which 18,550,509 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 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 of 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 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 2/3% of the outstanding voting stock that is not owned by the interested stockholder. 47 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; 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. REGISTRAR AND TRANSFER AGENT Continental Stock Transfer & Trust Company, 2 Broadway, New York, New York 10004 is the registrar and transfer agent for the common stock. 48 MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The following is a summary of the material u.s. federal income tax considerations relating to the purchase, ownership and disposition of the notes and common stock into which the notes are convertible, but is not a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed, possibly retroactively, so as to result in U.S. federal income tax consequences different from those set forth below. We have not sought any ruling from the Internal Revenue Service ("IRS") with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS will agree with such statements and conclusions. This summary is limited to holders who purchase notes or the common stock into which the notes are convertible for cash and who hold the notes and the common stock into which such notes are convertible as capital assets. This summary also does not address the tax considerations arising under the laws of any foreign, state or local jurisdiction or United States federal estate or gift tax laws. In addition, this discussion does not address tax considerations applicable to an investor's particular circumstances or to investors that may be subject to special tax rules, including, without limitation: o partnerships or other pass-through entities or investors in such entities; o banks, insurance companies or other financial institutions; o persons subject to the alternative minimum tax arising from the purchase, ownership or disposition of the notes or the common stock; o tax-exempt organizations; o dealers in securities or currencies; o traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; o regulated investment companies; o real estate investment trusts; o "controlled foreign corporations;" o "foreign personal holding companies;" o "passive foreign investment companies;" o certain former citizens or long-term residents of the United States; o U.S. holders (as defined below) whose functional currency is not the U.S. dollar; o persons who hold the notes or the common stock as a position in a hedging transaction, "straddle," "conversion transaction" or other risk reduction transaction; or o persons deemed to sell the notes or the common stock under the constructive sale provisions of the Code. If a holder is an entity treated as a partnership for U.S. federal income tax purposes, the tax treatment of each partner of such partnership will generally depend upon the status of the partner and upon the activities of the 49 partnership. A holder that is a partnership, and partners in such partnerships, should consult their own tax advisors regarding the tax consequences of the purchase, ownership and disposition of the notes and common stock. THIS SUMMARY OF MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. YOU ARE URGED TO CONSULT YOUR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION, AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES AND COMMON STOCK ARISING UNDER THE FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY. POTENTIAL APPLICATION OF RULES GOVERNING CONTINGENT PAYMENT DEBT INSTRUMENTS If a change of control occurs, you may require us to repurchase for cash all or a portion of your notes. If there is a repurchase pursuant to a change of control and certain conditions are met, we will be required to pay a make-whole premium in addition to 100% of the principal amount plus any accrued and unpaid interest. Although the matter is not free from doubt, we intend to take the position that the likelihood that such make-whole premium would be paid is remote. Under the indenture governing the notes, we and each holder of the notes agree, for U.S. federal income tax purposes, to treat the notes as indebtedness that is not subject to the regulations governing contingent payment debt instruments. However, there is no assurance that our position would be respected by the IRS or, if challenged, upheld by the court. If the IRS were to challenge our position and successfully assert that such likelihood is not remote, the notes may constitute contingent payment debt instruments. If the notes are treated as contingent payment debt instruments, you would be required to include amounts in income, as original issue discount, on a constant yield to maturity basis, whether or not any corresponding cash is received and regardless of your method of accounting. The yield would determined based on the rate at which we would issue a fixed rate nonconvertible debt instrument with no contingent payments but with terms and conditions similar to the notes. Such amounts would be significantly in excess of cash received while the notes are outstanding. In addition, you will recognize ordinary income upon a sale, exchange, conversion, redemption or repurchase of the notes at a gain. In computing such gain, the amount realized by a U.S. holder will include, in the case of a conversion, the amount of cash and the fair market value of the common stock received. The following discussion assumes that our position that the likelihood that a make-whole premium would be paid upon a repurchase following a change of control is remote is respected. You are strongly urged to consult your own tax advisors as to the potential application of the rules governing contingent payment debt instruments. CONSEQUENCES TO U.S. HOLDERS The following is a summary of the material U.S. federal income tax consequences that will apply to you if you are a U.S. holder of the notes or our common stock. Certain consequences to "non-U.S. holders" of the notes or common stock are described under "consequences to non-U.S. holders" below. The term "U.S. holder" means a beneficial owner of a note or common stock who or that is: o an individual who is a citizen or resident of the United States; o a corporation or other entity taxable as a corporation for U.S. federal income tax purposes that is created or organized in the United States or any political subdivision thereof; o an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or o a trust if (1) the administration of the trust is subject to the primary supervision of a U.S. court and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. 50 PAYMENTS OF INTEREST Stated interest on the notes generally will be taxable to you as ordinary income at the time it is accrued or received in accordance with your method of accounting for U.S. federal income tax purposes. MARKET DISCOUNT If you acquire a note at a cost that is less than the stated redemption price at maturity of the note, the amount of such difference is treated as market discount for U.S. federal income tax purposes, unless such difference is less than .0025 multiplied by the stated redemption price at maturity multiplied by the number of complete years to maturity of the note (from the date of acquisition). Under the market discount provisions of the Code, if you acquire a note at a market discount you will be required to treat as ordinary income any gain recognized on the disposition of that note to the extent of the accrued market discount on that note at the time of maturity or disposition that you have not previously included in income. In addition, if you dispose of a note with market discount in one of certain otherwise nontaxable transactions you must include accrued market discount in income as ordinary income as if you had sold the note at its then fair market value. You may elect to include market discount in income over the life of the note. Once made, this election applies to all market discount obligations you acquire on or after the first taxable year to which the election applies and may not be revoked without the consent of the IRS. In general, market discount will be treated as accruing on a straight line basis over the remaining term of the note at the time of acquisition, or, at your election, under a constant yield method. If such an election is made, it will apply only to the note with respect to which it is made, and may not be revoked. If you acquire a note at a market discount, and you do not elect to include accrued market discount in income over the life of the note, you may be required to defer the deduction of a portion of the interest on any indebtedness incurred or maintained to purchase or carry the note until maturity or until you dispose of the note in a taxable transaction. If you acquire a note with market discount and receive common stock upon conversion of the note, the amount of accrued market discount not previously included in income with respect to the converted note through the date of conversion will be treated as ordinary income when you dispose of the common stock to the extent of gain recognized upon the disposition of such stock. AMORTIZABLE PREMIUM If you purchase a note at a premium over the sum of all amounts payable on the note after the acquisition date (other than stated interest payments), you generally may elect to amortize that premium (referred to as Section 171 Premium) from the purchase date to the note's maturity date under a constant yield method that reflects semiannual compounding based on the note's payment period. Amortizable premium will not include any amount attributable to a note's conversion feature. The amount attributable to the conversion feature may be determined under any reasonable method, including by comparing the note's purchase price to the market price of a similar note that does not have a conversion feature. Amortized Section 171 Premium is treated as an offset to interest income on a note and not as a separate deduction. The election to amortize premium on a constant yield method, once made, applies to all debt obligations held or subsequently acquired by you on or after the first day of the first taxable year to which the election applies and may not be revoked without the consent of the IRS. CONSTRUCTIVE DIVIDENDS Holders of convertible debt instruments such as the notes may, in certain circumstances, be deemed to have received distributions of stock if the conversion price of such instruments is adjusted. Adjustments to the conversion price made pursuant to a bona fide reasonable adjustment formula which has the effect of preventing the dilution of the interest of the holders of the notes will generally not be deemed to result in a constructive distribution of stock. However, certain of the possible adjustments provided in the notes (including, without limitation, adjustments in respect of taxable dividends to our stockholders and adjustments to the conversion price if the stock price is below a certain level during a designated period) may not qualify as being pursuant to a bona fide reasonable adjustment formula. If such adjustments are made, you will be deemed to have received constructive distributions includible in your income in the manner described under "Dividends" below even though you have not received any cash or property as a result of such adjustments. In certain circumstances, the failure to provide for such an adjustment may also result in a constructive distribution to you. 51 CONVERSION OF THE NOTES Upon the conversion of a note into common stock, you generally will not recognize gain or loss except with respect to (1) cash received in lieu of a fractional share (as discussed below) and (2) shares received that are attributable to accrued interest (as discussed below). The tax treatment of your conversion of a note into cash and common stock is not entirely clear. Although not free from doubt, the most likely consequence is that you should generally recognize gain to the extent that the cash (other than cash received in lieu of a fractional share or attributable to accrued interest) and the value of the common stock (other than common stock attributable to accrued interest) exceeds your adjusted tax basis in the note, but in no event should the amount of gain you recognize exceed the amount of cash received (other than cash received in lieu of a fractional share or attributable to accrued interest), and you should not recognize any loss. Any such gain should be capital gain and should be taxable as described below under "Sale, Exchange, Redemption, Repurchase or Other Taxable Disposition of the Notes." You are urged to consult your tax advisors with respect to the U.S. federal income tax consequences of a conversion of a note into cash and common stock. Your holding period in the common stock received upon conversion (other than common stock attributable to accrued interest) should generally include your holding period for the respective note and your aggregate tax basis in the common stock received should generally be the same as your basis in the respective note (exclusive of any basis allocable to a fractional share), decreased by the amount of any cash you receive (other than cash received in lieu of a fractional share), and increased by the amount of gain, if any, you recognize (other than gain with respect to a fractional share). The amount of cash and the fair market value of common stock you receive that are attributable to accrued interest will generally be taxed as ordinary income. Your tax basis in such common stock will equal the accrued interest to which such stock is attributable and your holding period in such common stock will begin on the day following the conversion. You will recognize gain or loss upon the receipt of cash in lieu of a fractional share of common stock in an amount equal to the difference between the amount of cash received and your tax basis in such fractional share. This gain or loss should be capital gain or loss and should be taxable as described below under "Sale, Exchange, Redemption or Other Taxable Disposition of Common Stock." If you receive cash upon the conversion of a note in complete satisfaction thereof, you will recognize gain or loss as described below under "Sale, Exchange, Redemption, Repurchase or Other Taxable Disposition of the Notes." SALE, EXCHANGE, REDEMPTION, REPURCHASE OR OTHER TAXABLE DISPOSITION OF THE NOTES Except as set forth above under "Conversion of the Notes," upon the sale, taxable exchange, redemption, repurchase or other taxable disposition of a note, you will recognize gain or loss to the extent of the difference between (1) the sum of the cash and the fair market value of any property received in exchange therefor (except to the extent attributable to the payment of accrued and unpaid interest on the note, which generally will be taxed as ordinary income to the extent that you have not previously recognized this income), and (2) your adjusted tax basis in the note. Your adjusted tax basis in a note will initially equal the cost of the note and will subsequently be increased by any market discount that you have previously included in income with respect to the note or reduced by any premium that you have taken into account with respect to the note. Except as set forth above under "Market Discount," any such gain or loss you recognize upon such taxable disposition of a note will be capital gain or loss. In the case of a non-corporate u.s. holder, such capital gain will be subject to tax at a reduced rate if the note has been held for more than one year. the deductibility of capital losses is subject to limitations. DIVIDENDS If you convert your note into our common stock, distributions, if any, made on our common stock generally will be included in your income as ordinary 52 dividend income to the extent of our current or accumulated earnings and profits. However, with respect to noncorporate U.S. holders for taxable years beginning before January 1, 2009 such dividends are generally taxed at the lower applicable long-term capital gains rates provided certain holding period requirements are satisfied. Distributions in excess of our current and accumulated earnings and profits will be treated as a return of capital to the extent of your adjusted tax basis in the common stock and thereafter as capital gain from the sale or exchange of such common stock. Dividends received by a corporate U.S. holder may be eligible for a dividends received deduction, subject to applicable limitations. SALE, EXCHANGE, REDEMPTION OR OTHER TAXABLE DISPOSITION OF COMMON STOCK If you convert your notes into our common stock, then upon the sale, taxable exchange, redemption or other taxable disposition of our common stock, you generally will recognize gain or loss equal to the difference between (1) the amount of cash and the fair market value of any property received upon such taxable disposition and (2) your adjusted tax basis in the common stock. Except as set forth above under "Market Discount," such gain or loss will be capital gain or loss and will be long-term capital gain or loss if your holding period in the common stock is more than one year at the time of the taxable disposition. Long-term capital gains recognized by certain noncorporate U.S. holders, including individuals, will generally be subject to a reduced rate of U.S. federal income tax. Your tax basis and holding period in common stock received upon conversion of a note are determined as discussed above under "Conversion of the Notes." The deductibility of capital losses is subject to limitations. BACKUP WITHHOLDING AND INFORMATION REPORTING We are required to furnish to the IRS and to the record holders of the notes and common stock, other than corporations and other exempt holders, information with respect to interest on the notes, dividends paid on the common stock and proceeds received from a disposition of the notes or shares of common stock pursuant to a conversion, redemption or repurchase. You may be subject to backup withholding with respect to interest paid on the notes, dividends paid on the common stock or with respect to proceeds received from a disposition of the notes or shares of common stock. Certain holders (including, among others, corporations and certain tax-exempt organizations) are generally not subject to backup withholding. you will be subject to backup withholding if you are not otherwise exempt and you o fail to furnish your taxpayer identification number ("TIN"), which, for an individual, is ordinarily his or her social security number; o furnish an incorrect TIN; o are notified by the IRS that you have failed to properly report payments of interest or dividends; or o fail to certify, under penalties of perjury, that you have furnished a correct TIN and that the IRS has not notified you that you are subject to backup withholding. Backup withholding is not an additional tax but, rather, is a method of tax collection. You generally will be entitled to credit any amounts withheld under the backup withholding rules against your U.S. federal income tax liability and may be entitled to a refund provided that the required information is furnished to the IRS in a timely manner. CONSEQUENCES TO NON-U.S. HOLDERS The following is a summary of certain material U.S. federal income tax consequences that will apply to you if you are a non-U.S. holder of the notes or our common stock. For purposes of this discussion, a "non-U.S. holder" means a beneficial owner of notes or common stock that is a nonresident alien individual or a corporation, trust or estate that is not a U.S. holder. PAYMENTS OF INTEREST In general, interest you receive on the notes will not be subject to the 30% U.S. federal withholding tax under the so-called "portfolio interest" exception provided that: 53 o such interest is not effectively connected with your conduct of a trade or business in the United States; o you do not own, actually or constructively, 10% or more of the total combined voting power of all classes of our stock entitled to vote within the meaning of Section 871(h)(3) of the Code; o you are not a "controlled foreign corporation" with respect to which we are, directly or indirectly, a "related person"; o you are not a bank whose receipt of interest on a note is described in Section 881(c)(3)(a) of the Code; and o either (i) you provide your name and address, and certify, under penalties of perjury, that you are not a U.S. person (which certification may be made on an IRS Form W-8BEN (or successor form)), or (ii) you hold your notes through certain intermediaries, and you and the intermediaries satisfy the certification requirements of applicable treasury regulations. Special certification rules apply to non-U.S. holders that are pass-through entities rather than corporations or individuals. prospective investors should consult their tax advisors regarding the certification requirements for such non-U.S. holders. If you cannot satisfy the requirements described above, you will be subject to the 30% U.S. federal withholding tax with respect to payments of interest on the notes, unless you provide us with a properly executed (1) IRS Form W-8BEN (or successor form) claiming an exemption from or reduction in withholding under the benefit of an applicable U.S. income tax treaty or (2) IRS Form W-8ECI (or successor form) stating that interest paid on the note is not subject to withholding tax because it is effectively connected with the conduct of a U.S. trade or business. If you are engaged in a trade or business in the United States and interest on a note is effectively connected with your conduct of that trade or business, you will be subject to U.S. federal income tax on that interest on a net income basis (although you will be exempt from the 30% withholding tax, provided the certification requirements described above are satisfied) in the same manner as if you were a U.S. person as defined under the Code. In addition, if you are a foreign corporation, you may be subject to a branch profits tax equal to 30% (or lower rate as may be prescribed under an applicable U.S. income tax treaty) of your earnings and profits for the taxable year, subject to adjustments, that are effectively connected with your conduct of a trade or business in the United States. For this purpose, effectively connected interest will be included in your earnings and profits. SALE, EXCHANGE, CONVERSION, REDEMPTION, REPURCHASE OR OTHER TAXABLE DISPOSITION OF THE NOTES OR COMMON STOCK You will not recognize any gain or loss on the conversion of notes into shares of common stock, except with respect to cash received in lieu of a fractional share (which will be treated as described below) and common stock attributable to accrued interest (which will be treated as described above under "Payments of Interest." You will recognize gain on the sale, exchange, redemption, repurchase or other taxable disposition of a note as well as upon the conversion of a note into cash or into a combination of cash and stock. Nevertheless, such gain generally will not be subject to U.S. federal income tax unless: o the gain is effectively connected with your conduct of a trade or business in the United States; o you are an individual who is present in the United States for 183 days or more in the taxable year of disposition, and certain conditions are met; or o we are or have been a "United States real property holding corporation" (a "USRPHC") for U.S. federal income tax purposes at any 54 time during the shorter of the five-year period ending on the date of disposition or the period that you held the notes or our common stock. If your gain is described in the first bullet point above, you generally will be subject to U.S. federal income tax on the net gain derived from the sale, and if you are a corporation, then any such effectively connected gain received by you may also, under certain circumstances, be subject to the branch profits tax at a 30% rate (or such lower rate as may be prescribed under an applicable U.S. income tax treaty). If you are an individual described in the second bullet point above, you will be subject to a flat 30% (or lower applicable treaty rate) U.S. federal income tax on the gain derived from the sale, which may be offset by U.S. source capital losses, even though you are not considered a resident of the United States. Such holders are urged to consult their tax advisors regarding the tax consequences of the acquisition, ownership and disposition of the notes or the common stock. We believe that we are not currently and will not become a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property interests relative to the fair market value of our other business assets, there can be no assurance that we will not become a usrphc in the future. DIVIDENDS AND CONSTRUCTIVE DIVIDENDS In general, dividends, if any, received by you with respect to our common stock (and any deemed distributions resulting from certain adjustments, or failures to make certain adjustments, to the conversion price of the notes, see "Consequences to U.S. Holders - - Constructive Dividends" above) will be subject to withholding of U.S. federal income tax at a 30% rate, unless such rate is reduced by an applicable U.S. income tax treaty. Because a constructive dividend deemed received by a non-U.S. holder would not give rise to any cash from which any applicable withholding tax could be satisfied, we may set-off any such withholding tax against cash payments of interest payable on the notes. Dividends that are effectively connected with your conduct of a trade or business in the United States are generally subject to U.S. federal income tax on a net income basis and are exempt from the 30% withholding tax (assuming compliance with certain certification requirements). Any such effectively connected dividends received by a non-U.S. holder that is a corporation may also, under certain circumstances, be subject to the branch profits tax at a 30% rate or such lower rate as may be prescribed under an applicable U.S. income tax treaty. In order to claim the benefit of a U.S. income tax treaty or to claim exemption from withholding because dividends paid to you on our common stock are effectively connected with your conduct of a trade or business in the United States, you must provide a properly executed IRS Form W-8BEN for treaty benefits or W-8ECI for effectively connected income (or such successor form as the IRS designates), prior to the payment of dividends. You may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund. BACKUP WITHHOLDING AND INFORMATION REPORTING If you are a non-U.S. holder, in general, you will not be subject to backup withholding and information reporting with respect to payments that we make to you (including interest, dividends and proceeds received from a disposition of the notes or common stock pursuant to a conversion, redemption or repurchase) or with respect to the proceeds of the sale of a note or a share of common stock within the United States or conducted through certain U.S.-related financial intermediaries, if the payor receives the certification described above under " Payments of Interest" and does not have actual knowledge or reason to know that you are a U.S. person, as defined under the Code, or you otherwise establish an exemption. However, we may be required to report annually to the IRS and to you the amount of, and the tax withheld with respect to, any interest or dividends paid to you, regardless of whether any tax was actually withheld. Copies of these information returns may also be made available under the provisions of a specific treaty or agreement to the tax authorities of the country in which you reside. YOu generally will be entitled to credit any amounts withheld under the backup withholding rules against your U.S. federal income tax liability provided that the required information is furnished to the irs in a timely manner. 55 SELLING SECURITYHOLDERS The notes were originally issued by us in a transaction exempt from the registration requirements of the Securities Act and were immediately resold by the initial purchaser in reliance on Rule 144A. Each institution that has provided us with a questionnaire setting forth the information specified below, and that selling securityholder's transferees, pledgees, donees and successors (collectively, the "selling securityholders"), may from time to time offer and sell pursuant to this prospectus or a supplement hereto any or all of the notes held by that selling securityholder and common stock into which the notes are convertible. The following table sets forth information as of July 13, 2004, with respect to the selling securityholders and the principal amounts of notes beneficially owned by each selling securityholder that may be offered under this prospectus. This information is based on information provided by or on behalf of the selling securityholders pursuant to the questionnaires referred to above. No holder of the notes may sell the notes or shares without furnishing to us a questionnaire setting forth the information specified below. However, as of the date of this prospectus, not every holder has provided to us a questionnaire. Therefore, the heading "All other holders of notes or future transferees, pledges or donees of such holders" in the "Name" column below represents the notes and shares held by holders who have not yet returned to us their questionnaire. The selling securityholders may offer all, some or none of the notes or common stock into which the notes are convertible. In addition, the selling securityholders may have sold, transferred or otherwise disposed of all or a portion of their notes since the date on which they provided the information regarding their notes in transactions exempt from the registration requirements of the Securities Act. No selling securityholder beneficially owns one percent or more of the notes or of our common stock, assuming conversion of the selling securityholders' notes, except as otherwise indicated in the table below. Information concerning the selling securityholders may change from time to time and any changed information will be set forth in supplements to this prospectus if and when necessary. In addition, the conversion rate and, therefore, the number of shares of common stock issuable upon conversion of the notes, is subject to adjustment under certain circumstances.
Principal Amount Shares of Common of Notes Common Stock Notes Owned Stock Owned Beneficially Beneficially Conversion After After Owned and Owned Prior to Shares Completion Competion of Material Offered Offering (1) Offered (2) of Offering(3) Offering (3) Relationship AG Offshore Convertibles, Ltd.(a)+ $ 4,200,000 - 273,438 - - None AG Domestic Convertibles, Ltd. (b)+ 1,800,000 - 117,188 - - None Basso Multi-Strategy Holding Fund Ltd.(c) 2,000,000 - 130,208 - - None Goldman Sachs & Co. Profit Sharing Master Trust (d)+ 68,000 - 4,427 - - None Highbridge InternationaL, LLC(e)+ 15,000,000 - 976,563 - - None LB I Group, Inc. (f)+ 10,000,000 470,000 651,042 - 470,000 None Lehman Brothers, Inc. (g)* 14,000,000 - 911,458 - - # OZ Mac 13 Ltd. (h) 49,000 - 3,190 - - None OZ Master Fund, Ltd. (i) 3,883,000 - 252,799 - - None Portside Growth and Opportunity Fund(j)+ 4,000,000 - 260,417 - - None SF Capital Partners, Ltd. (k)+ 3,000,000 97,000 195,313 - 97,000 None Satellite Strategic Finance Associates, LLC(l) 5,000,000 - 325,521 - - None Silverback Master, Ltd. (m)) 6,000,000 - 390,625 - - None Suttonbrook Capital Portfolio LP(n) 3,000,000 - 195,313 - - Nome ---------- --- --------- --- --- Totals 72,000,000 567,000 4,687,502 - 567,000
56 - --------------------------------------- + This selling stockholder is an affiliate of a broker-dealer and has represented to the company that it acquired the shares in the ordinary course of business and that, at the time of such acquisition, it did not have any agreements or understandings, directly or indirectly, with any person to dispose of the shares, other than a commitment by us to register the shares pursuant to a shelf registration statement. * This selling securityholder is a broker-dealer and, therefore, in the view of the SEC's staff, an underwriter. # From time to time, this selling securityholder and its affiliates have provided, and may continue to provide, investment banking and advisory services for us for which they have received, and may receive in the future, customary fees and expense reimbursements. (1) Does not include shares of common stock issuable upon conversion of the notes. (2) Represents shares of common stock issuable upon conversion of the notes that are beneficially owned and offered by the selling securityholder, assuming a conversion ratio of 65.1042 shares of common stock per $1,000 principal amount of notes and a cash payment in lieu of any fractional share interest. The number of shares issuable upon conversion is subject to adjustment as described under "Description of the Notes--Conversion Rights." (3) Assumes that all of the notes and/or all of the common stock into which the notes are convertible are sold. (4) Includes any position, office or other material relationship which the selling securityholder has had within the past three years with Infocrossing, Inc. or any of its predecessors or affiliates. (a) This selling securityholder has identified John M. Angelo and Michael L. Gordon as natural persons with control over AG Offshore Convertibles, LTD. (b) This selling securityholder has identified John M. Angelo and Michael L. Gordon as natural persons with control over AG Domestic Convertibles, Lts. (c) This selling securityholder has identified Basso Asset Management, L.P. as the investment manager to Basso Multi-Strategy Holding Fund LTD. and Howard Fischer as the natural person with control over Basso GP LLC, the general partner of Basso Asset Management, L.P. (d) This selling securityholder has identified Oz Management, LLC as the investment manager for Goldman Sachs & Co. Profit Sharing Master Trust and Daniel S. Och as the natural person who is the senior managing member of Qz Management, LLC. (e) This selling securityholder has identified Highbridge Capital Management LLC as the trading manager for Highbridge International, LLC and Glenn Dubin and Henry Swieca as natural persons with control over Highbridge Capital Management LLC. (f) LBI Group, Inc. is a subsidiary of Lehman Brothers, Inc. Lehman Brothers, Inc, is a wholly-owned subsidiary of Lehman Brothers Holdings, Inc., a public reporting corporation. (g) Lehman Brothers, Inc, is a wholly-owned subsidiary of Lehman Brothers Holdings, Inc., a public reporting corporation. (h) This selling securityholder has identified Oz Management, LLC as the investment manager for OZ Mac 13 Ltd.and Daniel S. Och as the natural person who is the senior managing member of Qz Management, LLC. (i) This selling securityholder has identified Oz Management, LLC as the investment manager for OZ Master Fund, Ltd. and Daniel S. Och as the natural person who is the senior managing member of Qz Management, LLC. (j) This selling securityholder has identified Ramius Capital Group, LLC as the investment adviser of Portside Growth and Opportunity Fund and Peter A. Cohen, Morgan B. Stark, Thomas W. Strauss and Jeffrey M. Solomon as the natural persons who are the sole managing members of C4S & Co.; LLC, the sole managing member of Ramius Capital Group, LLC. (k) This selling securityholder has identified Michael A. Roth and Brian J. Stark as natural persons with control over SF Capital Partners, Ltd. (l) This selling securityholder has identified Lief Rosenblatt, Mark Sonnino, Gabriel Nechamkin, Christopher Tozzo, Brian Kriftcher, Stephen Shapiro and David Ford as natural persons with control over Satellite Strategic Finance Associates, LLC. (m) This selling securityholder has identified Elliot Bossen as a natural person with control over Silverback Master, Ltd. 57 (n) This selling securityholder has identified Suttonbrook Capital Management, LP as the investment manager of Suttonbrook Capital Portfolio LP and John London and Steve Weinstein as the natural persons with control over Suttonbrook Capital Management, LP. 58 PLAN OF DISTRIBUTION The selling securityholders and their successors, which term includes their transferees, pledgees or donees or their successors may sell the notes and the underlying common stock directly to purchasers or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions from the selling securityholders or the purchasers. These discounts, concessions or commissions as to any particular underwriter, broker-dealer or agent may be in excess of those customary in the types of transactions involved. The securities may be sold in one or more transactions at: o fixed prices; o prevailing market prices at the time of sale; o prices related to the prevailing market prices; o varying prices determined at the time of sale; or o negotiated prices. These sales may be effected in transactions: o on any national securities exchange or quotation service on which our common stock may be listed or quoted at the time of sale, including the NASDAQ National Market; o in the over-the-counter market; o otherwise than on such exchanges or services or in the over-the-counter market; o through the writing of options, whether the options are listed on an options exchange or otherwise; or o through the settlement of short sales. These transactions may include block transactions or crosses. Crosses are transactions in which the same broker acts as agent on both sides of the trade. In connection with the sale of the notes and the underlying common stock or otherwise, the selling securityholders may enter into hedging transactions with broker-dealers or other financial institutions. These broker-dealers or financial institutions may in turn engage in short sales of the common stock in the course of hedging the positions they assume with selling securityholders. The selling securityholders may also sell the notes and the underlying common stock short and deliver these securities to close out such short positions, or loan or pledge the notes or the underlying common stock to broker-dealers that in turn may sell these securities. The aggregate proceeds to the selling securityholders from the sale of the notes or the underlying common stock offered by them hereby will be the purchase price of the notes or common stock less discounts and commissions, if any. each of the selling securityholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering. Our outstanding common stock is listed for trading on the NASDAQ National Market. We do not intend to list the notes for trading on any national securities exchange or on the NASDAQ National Market and can give no assurance about the development of any trading market for the notes. In order to comply with the securities laws of some states, if applicable, the notes and the underlying common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. 59 Broker-dealers or agents who participate in the sale of the notes and the underlying common stock are "underwriters" within the meaning of Section 2(11) of the securities act. Selling securityholders who participate in the sale of the notes and the underlying common stock may also be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act. Profits on the sale of the notes and the underlying common stock by selling securityholders and any discounts, commissions or concessions received by any broker-dealers or agents might be deemed to be underwriting discounts and commissions under the Securities Act. Selling securityholders who are deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act. To the extent the selling securityholders are deemed to be "underwriters," they may be subject to statutory liabilities, including, but not limited to, Sections 11, 12 and 17 of the Securities Act. The selling securityholders and any other person participating in a distribution are subject to applicable provisions of the Exchange Act and the rules and regulations thereunder. Regulation M of the Exchange Act may limit the timing of purchases and sales of any of the securities by the selling securityholders and any other person. In addition, Regulation M may restrict the ability of any person engaged in the distribution of the securities to engage in market-making activities with respect to the particular securities being distributed for a period of up to five business days before the distribution. The selling securityholders have acknowledged that they understand their obligations to comply with the provisions of the Exchange Act and the rules thereunder relating to stock manipulation, particularly Regulation M, and have agreed that they will not engage in any transaction in violation of such provisions. Each selling securityholder from whom we have received a questionnaire 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. A selling securityholder may decide not to sell any notes or the underlying common stock described in this prospectus. We cannot assure holders that any selling securityholder will use this prospectus to sell any or all of the notes or the underlying common stock. Any securities covered by this prospectus which qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to this prospectus. In addition, a selling securityholder may transfer, devise or gift the notes and the underlying common stock by other means not described in this prospectus. With respect to a particular offering of the notes and the underlying common stock, to the extent required, an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement of which this prospectus is a part will be prepared and will set forth the following information: o the specific notes or common stock to be offered and sold; o the names of the selling securityholders; o the respective purchase prices and public offering prices and other material terms of the offering; o the names of any participating agents, broker-dealers or underwriters; and o any applicable commissions, discounts, concessions and other items constituting, compensation from the selling securityholders. We entered into the resale registration rights agreement for the benefit of holders of the notes to register their notes and the underlying common stock under applicable federal and state securities laws under certain circumstances and at certain times. The resale registration rights agreement provides that the selling securityholders and Infocrossing will indemnify each other and their respective directors, officers and controlling persons against specific liabilities in connection with the offer and sale of the notes and the underlying common stock, including liabilities under the Securities Act, or will be entitled to contribution in connection with those liabilities. We will pay all of our expenses and specified expenses incurred by the selling 60 securityholders incidental to the registration, offering and sale of the notes and the underlying common stock to the public, but each selling securityholder will be responsible for payment of commissions, concessions, fees and discounts of underwriters, broker-dealers and agents. 61 VALIDITY OF THE SECURITIES The validity of the notes and shares of common stock issuable upon conversion of the notes will be passed upon for us by Latham & Watkins LLP, 885 Third Avenue, New York, New York 10022. EXPERTS The consolidated financial statements and financial statement schedule appearing in Infocrossing, Inc. and subsidiaries Form 10-K for the year ended December 31, 2003, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon, included therein and incorporated by reference, as amended by our Form 10-K/A filed on April 13, 2004. 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. 62 PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION Set forth below is a table of the registration fee for the Securities and Exchange Commission and estimates of all other expenses to be incurred in connection with the sale of the securities being registered: SEC registration fee....................................$ 9,122.40 Legal fees and expenses................................. 100,000.00 Accounting fees and expenses............................ 10,000.00 Miscellaneous expenses.................................. 3,377.60 ---------- Total..........................................$122,500.00 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. 2 ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE EXHIBIT NO. DESCRIPTION OF EXHIBIT 2.1 Stock Purchase Agreement, dated as of March 3, 2004, between the Company and ITO Holdings, LLC (incorporated by reference to Exhibit 2.1 the Company's report on Form 8-K filed with the Commission April 7, 2004). 3.1(a) Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company's Form 10-KSB filed with the Commission on February 2, 2000). 3.1(b) Certificate of Amendment to the Company's Restated Certificate of Incorporation, filed May 8, 2000 to increase the number of authorized shares and to remove Article 11 (incorporated herein by reference to Exhibit 3.1B to the Company's Form 10-Q filed with the Commission on June 14, 2000). 3.2 Amended and Restated Bylaws of the Company (incorporated herein by reference to Exhibit 3.2 to the Company's Form 10-Q/A filed with the Commission on May 17, 2004). 4.1 Form of certificate for common stock (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3 filed with the Commission on October 31, 2003). 4.2* Indenture, dated as of June 30, 2004, between the Company, as issuer and Wells Fargo Bank, National Association, as trustee. 4.3* Form of 4.00% Convertible Senior Notes due 2024 (included in Exhibit 4.2). 4.4* Resale Registration Rights Agreement, dated as of June 30, 2004, by and between the Company and Lehman Brothers, Inc. regarding the Company's 4.00% Convertible Senior Notes due 2024. 4.5* Amendment to Amended and Restated Credit Agreement, dated as of June 30, 2004, between the lenders named therein and the Company (Amended and Restated Credit Agreement incorporated herein by reference to Exhibit 10.1 the Company's report on Form 8-K filed with the Commission on April 7, 2004). 5.1# Opinion of Latham & Watkins LLP. 12.1* Statement of computation of ratio of earnings to fixed charges. 23.1* Consent of Ernst & Young LLP, independent auditors. 23.2# Consent of Latham & Watkins LLP (included in Exhibit 5.1). 24.1* Power of attorney (included on signature page). 25.1* Statement of Eligibility and Qualification on Form T-1 of Wells Fargo Bank, National Association, as trustee, of the Company's 4.00% Convertible Senior Notes due 2024. - --------------- * Filed herewith. # To be filed pursuant to an amendment to this registration statement. 3 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 of 1933, as amended (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 securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of 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 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (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 paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is 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 securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes, that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) 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. (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such 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 such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. 4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, 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 July 13, 2004. INFOCROSSING, INC. By: /s/ ZACH LONSTEIN ------------------------ Name: Zach Lonstein Title: Chairman of the Board of Directors and Chief Executive Officer 5 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Zach Lonstein and William J. McHale, or any of them, each acting alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for such person and in his name, place and stead, in any and all capacities, in connection with the Registrant's Registration Statement on Form S-3 under the Securities Act of 1933, including to sign the Registration Statement in the name and on behalf of the Registrant or on behalf of the undersigned as a director or officer of the Registrant, and any and all amendments or supplements to the Registration Statement, including any and all stickers and post-effective amendments to the Registration Statement and to sign any and all additional registration statements relating to the same offering of securities as those that are covered by the Registration Statement that are filed pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission and any applicable securities exchange or securities self-regulatory body, granting unto said attorneys-in-fact and agents, each acting alone, 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, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitutes or substitute, 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. SIGNATURE TITLE DATE /s/ ZACH LONSTEIN Chairman of the Board of Directors and - ----------------------- Chief Executive Officer (Principal Zach Lonstein Executive Officer) July 13, 2004 /s/ WILLIAM J. MCHALE Senior Vice President of Finance - ----------------------- (Principal Financial Officer and William J. McHale Principal Accounting Officer) July 13, 2004 /s/ PATRICK A. DOLAN President and Chief Operating Officer July 13, 2004 - ----------------------- Patrick A. Dolan /s/ PETER DAPUZZO Director July 13, 2004 - ----------------------- Peter DaPuzzo /s/ KATHLEEN A. PERONE Director July 13, 2004 - ----------------------- Kathleen A. Perone /s/ MICHAEL P. TARGOFF Director July 13, 2004 - ----------------------- Michael P. Targoff 6 /s/ ROBERT B. WALLACH Director July 13, 2004 - ----------------------- Robert B. Wallach /s/ HOWARD L. WALTMAN Director July 13, 2004 - ----------------------- Howard L. Waltman 7 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION OF EXHIBIT 2.1 Stock Purchase Agreement, dated as of March 3, 2004, between the Company and ITO Holdings, LLC (incorporated by reference to Exhibit 2.1 the Company's report on Form 8-K filed with the Commission April 7, 2004). 3.1(a) Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company's Form 10-KSB filed with the Commission on February 2, 2000). 3.1(b) Certificate of Amendment to the Company's Restated Certificate of Incorporation, filed May 8, 2000 to increase the number of authorized shares and to remove Article 11 (incorporated herein by reference to Exhibit 3.1B to the Company's Form 10-Q filed with the Commission on June 14, 2000). 3.2 Amended and Restated Bylaws of the Company (incorporated herein by reference to Exhibit 3.2 to the Company's Form 10-Q/A filed with the Commission on May 17, 2004). 4.1 Form of certificate for common stock (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3 filed with the Commission on October 31, 2003). 4.2* Indenture, dated as of June 30, 2004, between the Company, as issuer and Wells Fargo Bank, National Association, as trustee. 4.3* Form of 4.00% Convertible Senior Notes due 2024 (included in Exhibit 4.2). 4.4* Resale Registration Rights Agreement, dated as of June 30, 2004, by and between the Company and Lehman Brothers, Inc. regarding the Company's 4.00% Convertible Senior Notes due 2024. 4.5* Amendment to Amended and Restated Credit Agreement, dated as of June 30, 2004, between the lenders named therein and the Company (Amended and Restated Credit Agreement incorporated herein by reference to Exhibit 10.1 the Company's report on Form 8-K filed with the Commission on April 7, 2004). 5.1# Opinion of Latham & Watkins LLP. 12.1* Statement of computation of ratio of earnings to fixed charges. 23.1* Consent of Ernst & Young LLP, independent auditors. 23.2# Consent of Latham & Watkins LLP (included in Exhibit 5.1). 24.1* Power of attorney (included on signature page). 25.1* Statement of Eligibility and Qualification on Form T-1 of Wells Fargo Bank, National Association, as trustee, of the Company's 4.00% Convertible Senior Notes due 2024. - --------------- * Filed herewith. # To be filed pursuant to an amendment to this registration statement. 8 EX-4 2 x42debt.txt INDENTURE EXHIBIT 4.2 ================================================================================ INDENTURE BETWEEN INFOCROSSING, INC. AND WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE 4.00% CONVERTIBLE SENIOR NOTES DUE 2024 DATED AS OF JUNE 30, 2004 ================================================================================ CROSS-REFERENCE TABLE* Trust Indenture Act Section Indenture Section 310(a)(1)........................................ 5.11 (a)(2)...................................... 5.11 (a)(3)...................................... n/a (a)(4)...................................... n/a (a)(5)...................................... 5.11 (b)......................................... 5.3; 5.11 (c)......................................... n/a 311(a)........................................... 5.12 (b)......................................... 5.12 (c)......................................... n/a 312(a)........................................... 2.9 (b)......................................... 14.3 (c)......................................... 14.3 313(a)........................................... 5.7 (b)(1)...................................... n/a (b)(2)...................................... 5.7 (c)......................................... 5.7; 14.2 (d)......................................... 5.7 314(a)(1), (2), (3).............................. 9.4; 14.2 (a)(4)...................................... 9.5; 14.6 (b)......................................... n/a (c)(1)...................................... 14.5 (c)(2)...................................... 14.5 (c)(3)...................................... n/a (d)......................................... n/a (e)......................................... 14.6 (f)......................................... n/a 315(a)........................................... 5.1(a) (b)......................................... 5.6; 14.2 (c)......................................... 5.1(b) (d)......................................... 5.1(c) (e)......................................... 4.14 316(a)(last sentence)............................ 7.2 (a)(1)(A)................................... 4.5 (a)(1)(B)................................... 4.4 (a)(2)...................................... n/a (b)......................................... 4.7 (c)......................................... 7.4 317(a)(1)........................................ 4.8 (a)(2)...................................... 4.9 (b)......................................... 2.6 318(a)........................................... 14.1 (b)......................................... n/a (c)......................................... 14.1 "n/a" means not applicable. *This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture. i x TABLE OF CONTENTS PAGE ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.1. Definitions...............................................1 Section 1.2. Incorporation by Reference of Trust Indenture Act........18 Section 1.3. Rules of Construction....................................19 ARTICLE 2 THE NOTES Section 2.1. Title and Terms..........................................19 Section 2.2. Form of Notes............................................21 Section 2.3. Legends..................................................22 Section 2.4. Execution, Authentication, Delivery and Dating of the Notes...................................27 Section 2.5. Registrar and Paying Agent...............................27 Section 2.6. Paying Agent to Hold Assets in Trust.....................28 Section 2.7. General Provisions Relating to Registration, Transfer and Exchange..................................29 Section 2.8. Book-Entry Provisions for the Global Notes...............30 Section 2.9. Holder Lists.............................................31 Section 2.10. Persons Deemed Owners....................................31 Section 2.11. Mutilated, Destroyed, Lost or Stolen Notes...............31 Section 2.12. Treasury Notes...........................................32 Section 2.13. Temporary Notes..........................................32 Section 2.14. Cancellation.............................................33 Section 2.15. CUSIP Numbers............................................33 Section 2.16. Defaulted Interest.......................................33 Section 2.17. Transfer Provisions......................................34 ARTICLE 3 DISCHARGE OF INDENTURE Section 3.1. Discharge of Liability on Notes..........................35 Section 3.2. Repayment to the Company.................................36 ARTICLE 4 DEFAULTS AND REMEDIES Section 4.1. Events of Default........................................36 Section 4.2. Acceleration of Maturity; Rescission and Annulment.......38 Section 4.3. Other Remedies...........................................39 Section 4.4. Waiver of Past Defaults..................................39 Section 4.5. Control by Majority......................................39 Section 4.6. Limitation on Suit.......................................40 Section 4.7. Unconditional Rights of Holders to Receive Payment and to Convert................................40 Section 4.8. Collection of Indebtedness and Suits for Enforcement by the Trustee............................41 Section 4.9. Trustee May File Proofs of Claim.........................41 Section 4.10. Restoration of Rights and Remedies.......................42 Section 4.11. Rights and Remedies Cumulative...........................42 Section 4.12. Delay or Omission Not Waiver.............................42 Section 4.13. Priorities...............................................43 Section 4.14. Undertaking for Costs....................................43 Section 4.15. Waiver of Stay or Extension Laws.........................43 ARTICLE 5 THE TRUSTEE Section 5.1. Certain Duties and Responsibilities......................44 Section 5.2. Certain Rights of Trustee................................45 Section 5.3. Individual Rights of Trustee.............................46 Section 5.4. Money Held in Trust......................................46 Section 5.5. Trustee's Disclaimer.....................................46 Section 5.6. Notice of Defaults.......................................46 Section 5.7. Reports by Trustee to Holders............................47 Section 5.8. Compensation and Indemnification.........................47 Section 5.9. Replacement of Trustee...................................48 Section 5.10. Successor Trustee by Merger, Etc.........................49 Section 5.11. Corporate Trustee Required; Eligibility..................49 Section 5.12. Collection of Claims Against the Company.................49 ARTICLE 6 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER, SALE, LEASE OR OTHER DISPOSITION Section 6.1. Company May Consolidate, Etc., Only on Certain Terms.....49 Section 6.2. Successor Corporation Substituted........................50 ARTICLE 7 AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 7.1. Without Consent of Holders of Notes......................50 Section 7.2. With Consent of Holders of Notes.........................51 Section 7.3. Compliance with Trust Indenture Act......................52 Section 7.4. Revocation of Consents and Effect of Consents or Votes...52 Section 7.5. Notation on or Exchange of Notes.........................53 Section 7.6. Trustee to Sign Amendment, Etc...........................53 Section 7.7. Effect of Amendment......................................53 ARTICLE 8 [INTENTIONALLY OMITTED] ARTICLE 9 COVENANTS Section 9.1. Incurrence of Additional Indebtedness....................54 Section 9.2. Payment of Principal, Redemption Price, Repurchase Price and Interest....................................56 Section 9.3. Maintenance of Offices or Agencies.......................56 Section 9.4. Corporate Existence......................................57 Section 9.5. Reports..................................................57 Section 9.6. Compliance Certificate...................................57 Section 9.7. Resale of Certain Notes..................................58 Section 9.8. Designation of Restricted and Unrestricted Subsidiaries..........................................58 ARTICLE 10 REDEMPTION OF NOTES Section 10.1. Optional Redemption......................................59 Section 10.2. Notice to Trustee........................................60 Section 10.3. Selection of Notes to Be Redeemed........................60 Section 10.4. Notice of Redemption.....................................60 Section 10.5. Effect of Notice of Redemption...........................61 Section 10.6. Deposit and Payment of Redemption Price..................62 Section 10.7. Notes Redeemed in Part...................................62 ARTICLE 11 PURCHASE AT THE OPTION OF A HOLDER UPON SPECIFIC REPURCHASE DATES OR CHANGE OF CONTROL Section 11.1. Purchase Right...........................................63 Section 11.2. Repurchase Event Notice..................................64 Section 11.3. Delivery of Repurchase Event Purchase Notice; Form of Repurchase Event Purchase Notice; Withdrawal of Repurchase Event Purchase Notice...................64 Section 11.4. Exercise of Purchase Rights..............................66 Section 11.5. Deposit and Payment of the Purchase Price................66 Section 11.6. Effect of Delivery of Repurchase Event Purchase Notice and Purchase...................................67 Section 11.7. Physical Notes Purchased in Part.........................67 Section 11.8. Covenant to Comply With Securities Laws Upon Purchase of Notes.....................................68 Section 11.9. Repayment to the Company.................................68 ARTICLE 12 CONVERSION OF NOTES Section 12.1. Conversion Right; Expiration of Conversion Right; Conversion Price; Limitation on Ability to Exercise Conversion Right......................................68 Section 12.2. Exercise of Conversion Right.............................71 Section 12.3. Fractions of Shares......................................73 Section 12.4. Adjustment of Conversion Price...........................73 Section 12.5. Consolidation or Merger of the Company...................82 Section 12.6. Notice of Adjustments of Conversion Price................84 Section 12.7. Notice Prior to Certain Actions..........................84 Section 12.8. Company to Reserve Common Stock..........................85 Section 12.9. Common Stock to be Fully Paid and Nonassessable..........85 Section 12.10. Taxes on Conversions.....................................85 Section 12.11. Cancellation of Converted Notes..........................86 Section 12.12. Cash Conversion Option...................................86 Section 12.13. Responsibility of Trustee for Conversion Provisions......87 Section 12.14. Withholding Taxes on Adjustments of the Conversion Price......................................87 ARTICLE 13 MAKE WHOLE PREMIUM Section 13.1. Make Whole Premium.......................................88 Section 13.2. Adjustments Relating To Make Whole Premium...............91 ARTICLE 14 OTHER PROVISIONS OF GENERAL APPLICATION Section 14.1. Trust Indenture Act Controls.............................92 Section 14.2. Notices..................................................92 Section 14.3. Communication by Holders with Other Holders..............93 Section 14.4. Acts of Holders of Notes.................................93 Section 14.5. Certificate and Opinion as to Conditions Precedent.......94 Section 14.6. Statements Required in Certificate or Opinion............94 Section 14.7. Effect of Headings and Table of Contents.................95 Section 14.8. Successors and Assigns...................................95 Section 14.9. Separability Clause......................................95 Section 14.10. Benefits of Indenture....................................95 Section 14.11. Governing Law............................................95 Section 14.12. Counterparts.............................................95 Section 14.13. Legal Holidays...........................................95 Section 14.14. Recourse Against Others..................................96 Section 14.15. Tax Treatment............................................96 EXHIBITS EXHIBIT A Form of Note....................................A-1 EXHIBIT B Form of Repurchase Event Purchase Notice........B-1 EXHIBIT C Form of Conversion Notice.......................C-1 INDENTURE, dated as of June 30, 2004 (this "INDENTURE"), between Infocrossing, Inc., a corporation duly organized and existing under the laws of the State of Delaware, having its principal office at 2 Christie Heights Street, Leonia, New Jersey 07605 (the "COMPANY") and Wells Fargo Bank, National Association, a national association organized under the laws of the United States, as Trustee (the "TRUSTEE"), having its corporate trust office at Sixth St. and Marquette Ave., MAC N9303-120, Minneapolis, Minnesota 55479. RECITALS OF THE COMPANY WHEREAS, the Company has duly authorized the creation of an issue of its 4.00% Convertible Senior Notes due 2024 (the "NOTES") of substantially the terms, tenor, amount and other provisions hereinafter set forth, and, to provide therefor, the Company has duly authorized the execution and delivery of this Indenture; and WHEREAS, all things necessary to make the Notes, when the Notes are duly executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid and binding agreement of the Company, in accordance with their and its terms, have been done. NOW, THEREFORE, for and in consideration of the premises and the purchase of the Notes by the Holders (as defined below) thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders, as follows: ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.1. Definitions. For all purposes of this Indenture and the Notes, the following terms are defined as follows: "ACT", when used with respect to any Holder, has the meaning specified in Section 14.4(a). "ACQUIRED DEBT" means, with respect to any specified Person, Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person. "ADDITIONAL INTEREST" means the interest, if any, payable on the Notes pursuant to Section 3 of the Registration Rights Agreement. "ADDITIONAL PREMIUM" has the meaning specified in Section 13.1(b). "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person will be deemed to be control. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. "AGENT MEMBER" has the meaning specified in Section 2.8. "APPLICABLE CONVERSION PRICE" means, for each Trading Day on which the Market Price of the Common Stock is measured, the Conversion Price in effect on such Trading Day at the time the Market Price is determined. "APPLICABLE CONVERSION VALUE" means, for each Trading Day on which the Trading Price of the Notes is measured, the Conversion Value, in effect on such Trading Day at the time the Trading Price is determined. "ASSET SALE" means: (a) the sale, lease, conveyance or other disposition of any assets or rights; and (b) the issuance of Equity Interests in any of the Company's Restricted Subsidiaries or the sale of Equity Interests in any of its Subsidiaries. Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale: (a) any single transaction or series of related transactions that involves assets having a fair market value of less than $1 million; (b) a transfer of assets between or among the Company and its Restricted Subsidiaries; (c) an issuance of Equity Interests by a Restricted Subsidiary of the Company to the Company or to a Restricted Subsidiary of the Company; (d) the sale or lease of products, services or accounts receivable in the ordinary course of business and any sale or other disposition of damaged, worn-out or obsolete assets in the ordinary course of business; and (e) the sale or other disposition of cash or cash equivalents. "BANKRUPTCY LAW" means Title 11 of the U.S. Code or any similar federal or state law for the relief of debtors. "BOARD OF DIRECTORS" means either the board of directors of the Company or any committee of the board of directors of the Company empowered to act for it with respect to this Indenture. 2 "BOARD RESOLUTION" means a resolution duly adopted by the Board of Directors, a copy of which, certified by the Secretary or an Assistant Secretary of the Company to be in full force and effect on the date of such certification, shall have been delivered to the Trustee. "BUSINESS DAY" means, with respect to any Note, a day that in The City of New York is not a day on which banking institutions are authorized by law or regulation to close. "CALCULATION AGENT" has the meaning set forth in Section 13.1(e). "CAPITAL LEASE OBLIGATION" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with GAAP, and the stated maturity (for purposes of this definition, "stated maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the date of this Indenture, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof) thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty. "CAPITAL STOCK" means: (i) in the case of a corporation, corporate stock; (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (iii) in the case of a partnership or limited liability Company, partnership interests (whether general or limited) or membership interests; and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock. "CASH AMOUNT" has the meaning set forth in Section 12.12(a)(iii). "CASH SETTLEMENT AVERAGING PERIOD" has the meaning set forth in Section 12.12(a)(ii)(B). "CASH SETTLEMENT NOTICE PERIOD" has the meaning set forth in Section 12.12(a). "CHANGE OF CONTROL" means the occurrence of any of the following after the original issuance of the Notes when any of the following has occurred: 3 (i) the acquisition by any "person" or "group" (within the meaning of Sections 13(d)(3) and 14(d)(2), respectively, of the Exchange Act) deemed to be a "beneficial owner" (as defined in Rule 13d-3 and Rule 13d-5 of the Exchange Act), directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of shares of the Company's Capital Stock entitling such person to exercise 50% or more of the total voting power of all shares of the Company's Capital Stock entitled to vote generally in elections of directors, other than any acquisition by the Company, any of its Subsidiaries or any of its employee benefit plans (except that such person shall be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); (ii) the first day on which a majority of members of the Board of Directors are not Continuing Directors; or (iii) any consolidation or merger of the Company with or into any other person (which for purposes of this definition has the meaning set forth in Section 13(d)(3) of the Exchange Act), or any merger of another Person into the Company, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of the properties and assets of the Company to another Person, other than (a) any transaction (i) that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Capital Stock of the Company and (ii) pursuant to which holders of Capital Stock of the Company immediately prior to such transaction have the right to exercise, directly or indirectly, 50% or more of the total voting power of all shares of Capital Stock of the Company entitled to vote generally in the election of directors of the continuing or surviving Person immediately after such transaction or (b) any such merger solely for the purpose of changing the jurisdiction of incorporation of the Company and resulting in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of the common stock of the surviving entity. "CHANGE OF CONTROL PURCHASE DATE" has the meaning specified in Section 11.1 hereof. "CLOSING DATE" means June 30, 2004 or such later date on which the Notes may be delivered pursuant to the Purchase Agreement. "COMMISSION" means the Securities and Exchange Commission or any successor agency. "COMMON STOCK" means any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not subject to redemption by the Company. However, subject to the provisions of Sections 12.5 and 12.7 hereof, shares issuable on conversion of the Notes shall include only shares of the class designated as Common Stock, no par value, of the Company at the date of execution of this Indenture or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts 4 payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which are not subject to redemption by the Company, provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. "COMPANY" means the corporation named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "COMPANY ORDER" means a written order signed in the name of the Company by any Officer. "CONSOLIDATED CASH FLOW" means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication: (a) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus (b) the Fixed Charges of such Person and its Restricted Subsidiaries for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income; plus (c) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; minus (d) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business, in each case, on a consolidated basis and determined in accordance with GAAP. "CONSOLIDATED INDEBTEDNESS" means, with respect to any Person as of any date of determination, the sum, without duplication, of (i) the total amount of Indebtedness of such Person and its Subsidiaries plus (ii) the total amount of Indebtedness of any other Person, to the extent that such Indebtedness has been guaranteed by the referent Person or one or more of its Restricted Subsidiaries. 5 "CONSOLIDATED NET INCOME" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that: (a) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person; (b) the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders; (c) the cumulative effect of a change in accounting principles will be excluded; and (d) notwithstanding clause (1) above, the Net Income of any Unrestricted Subsidiary will be excluded, whether or not distributed to the specified Person or one of its Subsidiaries. "CONTINUING DIRECTOR" means, as of any date of determination, any member of the Board of Directors who (i) was a member of the Board of Directors on the date hereof, (ii) was nominated for election or elected to the Board of Directors with the approval of a majority of the Continuing Directors who were members of the Board of Directors at the time of such new director's nomination or election. "CONVERSION AGENT" means any Person authorized by the Company to convert Notes in accordance with Article 12. Initially, the Conversion Agent shall be Wells Fargo Bank, National Association. The Company may change the Conversion Agent, but the Conversion Agent will not be an affiliate of the Company "CONVERSION DATE" means, with respect to any Holder, the date on which such Holder has satisfied all the requirements to convert its Notes pursuant to Section 12.2. "CONVERSION OBLIGATION" has the meaning specified in Section 12.1(k). "CONVERSION PRICE" has the meaning specified in Section 12.1(c). "CONVERSION RATE", at any time, shall equal $1,000 divided by the Conversion Price at such time, rounded to three decimal places (rounded up if the fourth decimal place thereof is 5 or more and otherwise rounded down). "CONVERSION RECORD DATE" shall mean, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock 6 have the right to receive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of stockholders entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise). "CONVERSION RETRACTION PERIOD" has the meaning set forth in Section 12.12(a). "CONVERSION SETTLEMENT DISTRIBUTION" has the meaning set forth in Section 12.12(a). "CONVERSION VALUE", on any day, means the product of the Market Price for the Common Stock on that day multiplied by the then-current Conversion Rate. "CORPORATE TRUST OFFICE" means for purposes of presentation or surrender of Notes for payment, registration, transfer, exchange or conversion or for service of notices or demands upon the Company or for any other purpose of this Indenture, the office or agent of the Trustee located in the Borough of Manhattan, The City of New York. "CORPORATION" means any corporation, association, limited liability company, company and business trust. "CREDIT AGREEMENT" means, that certain Amended And Restated Term Loan Agreement, dated as of April 2, 2004, among the Company, the several banks and other financial institutions from time to time parties to the Credit Agreement and CapitalSource Finance LLC, a Delaware limited liability Company, as agent for the lenders thereunder including any related notes, Guarantees, collateral documents, instruments and agreements executed in connection therewith, and, in each case, as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time. "CREDIT FACILITIES" means, one or more debt facilities (including, without limitation, the Credit Agreement), commercial paper facilities or other credit extensions, in each case with banks or other institutional lenders or investors providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) notes, bonds or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced, increased or refinanced in whole or in part from time to time. "CURRENT MARKET PRICE" has the meaning specified in Section 12.4(g)(i). "CUSTODIAN" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law. "DEBT TO EBITDA RATIO" means, as of any date of determination, the ratio of (a) the Consolidated Indebtedness of the Company as of such date to (b) the Consolidated Cash Flow of the Company for the four most recent full fiscal quarters ending immediately prior to such date for which internal financial statements are available, determined on a pro forma basis (x) in accordance with Regulation S-X under the Securities Act or (y) as otherwise determined in good 7 faith by the chief financial officer of the Company after giving effect to all acquisitions or dispositions of assets made by the Company and its Restricted Subsidiaries from the beginning of such four-quarter period through and including such date of determination (including any related financing transactions) as if such acquisitions and dispositions had occurred at the beginning of such four-quarter period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the date of determination shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the date of determination, shall be excluded. "DEFAULT" means an event which is, or after notice or lapse of time or both would constitute, an Event of Default. "DEFAULTED PAYMENT" has the meaning specified in Section 4.1(b). "DEFAULTED INTEREST" has the meaning specified in Section 2.16 "DEPOSITARY" means The Depository Trust Company, its nominees and their respective successors. "DISTRIBUTED ASSETS" has the meaning specified in Section 12.4(d). "DOLLAR" or "$" means a U.S. dollar or other equivalent unit in such coin or currency of the United States as at the time shall be legal tender for the payment of public and private debts. "DTC" has the meaning specified in Section 12.2(b). "EFFECTIVE DATE" has the meaning specified in Section 13.1(b). "EQUITY INTERESTS" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "EVENT OF DEFAULT" has the meaning specified in Section 4.1. "EX-DIVIDEND TIME" means, with respect to any issuance or distribution on shares of Common Stock, the first date on which the shares of Common Stock trade regular way on the principal securities market on which the shares of Common Stock are then traded without the right to receive such issuance or distribution. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder. 8 "EXISTING INDEBTEDNESS" means up to $10.0 million in aggregate principal amount of Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the date of this Indenture. "EXPIRATION TIME" has the meaning specified in Section 12.4(f). "FAIR MARKET VALUE" means, if there is a current market for the asset, debt or transaction in question, the amount that a willing buyer would pay a willing seller in an arm's length transaction or, in the absence of a current market for such asset, debt or transaction, the amount determined in good faith by the Board of Directors that represents its determination of the fair market value of the asset. "FINAL NOTICE DATE" has the meaning set forth in Section 12.12(a). "FIXED CHARGES" means, with respect to any specified Person for any period, the sum, without duplication, of: (a) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations in respect of interest rates; plus (b) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; plus (c) any interest on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries whether or not such Guarantee is called upon. "GAAP" has the meaning specified in Section 1.3. "GLOBAL NOTE" has the meaning specified in Section 2.2(b). "GUARANTEE" means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise). "HEDGING OBLIGATIONS" means, with respect to any specified Person, the obligations of such Person incurred in the normal course of business and not for speculative purposes under: 9 (a) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements; (b) other agreements or arrangements designed to manage interest rates or interest rate risk; and (c) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices. "HOLDER", when used with respect to any Note, including any Global Note, means the Person in whose name the Note is registered in the Register. "INCUR" has the meaning set forth in Section 9.1. "INDEBTEDNESS" means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent: (i) in respect of borrowed money; (ii) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (iii) in respect of banker's acceptances; (iv) representing Capital Lease Obligations; (v) representing the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services are completed; or (vi) representing any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes the Guarantee by the specified Person of any Indebtedness of any other Person. "INDENTURE" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more supplemental indentures entered into pursuant to the applicable provisions hereof. "INITIAL PURCHASER" means Lehman Brothers Inc., as initial purchaser under the Purchase Agreement. "INTEREST" means, with respect to any Note, the interest payable on such Note based upon the applicable Interest Rate and, if applicable, any Defaulted Interest. 10 "INTEREST PAYMENT DATE" means each of January 15 and July 15, provided, however, that, if any such date is not a Business Day, the Interest Payment Date shall be the next succeeding Business Day. "INTEREST RATE" has the meaning specified in Section 2.1(c). "MAKE WHOLE PERCENTAGE" has the meaning specified in Section 13.1(c)(iii). "MAKE WHOLE PREMIUM" has the meaning specified in Section 13.1(b). "MAKE WHOLE TABLE" has the meaning specified in Section 13.1(c)(iii). "MARKET PRICE" of a security on any date of determination means: (i) the closing sale price (or, if no closing sale price is reported, the last reported sale price) of such security (regular way) on the Nasdaq National Market on such date; (ii) if such security is not listed for trading on the Nasdaq National Market on any such date, the closing sale price as reported in the composite transactions for the principal U.S. securities exchange on which such security is listed; (iii) if such security is not so reported, the last price quoted by Interactive Data Corporation for such security on such date or, if Interactive Data Corporation is not quoting such price, a similar quotation service selected by the Company; (iv) if such security is not so quoted, the average of the mid-point of the last bid and ask prices for such security on such date from at least two dealers recognized as market-makers for such security selected by the Company for this purpose; or (v) if such security is not so quoted, the average of the last bid and ask prices for such security on such date from a dealer engaged in the trading of convertible securities selected by the Company for this purpose. "MATURITY" means the date on which the Principal with respect to any Outstanding Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by acceleration, conversion, call for redemption, exercise of a purchase right or otherwise. "NASDAQ NATIONAL MARKET" means the National Association of Notes Dealers Automated Quotation National Market or any successor national securities exchange or automated over-the-counter trading market in the United States. "NET INCOME" means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however: 11 (a) any gain (or loss), together with any related provision for taxes on such gain (or loss), realized in connection with: (a) any Asset Sale; or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and (b) any extraordinary gain (or loss), together with any related provision for taxes on such extraordinary gain (or loss). "NON-ELECTING SHARE" has the meaning specified in Section 12.5. "NON-RECOURSE DEBT" means Indebtedness: (a) as to which neither the Company nor any of its Restricted Subsidiaries (1) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (2) is directly or indirectly liable as a guarantor or otherwise, or (3) constitutes the lender; (b) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its stated maturity (which term shall have the same meaning as in the definition of "Capital Lease Obligation"); and (c) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. "NOTES" has the meaning ascribed to it in the first paragraph under the caption "Recitals of the Company". "OFFICER" of the Company means the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, any Vice President, the Secretary or any Assistant Secretary of the Company. "OFFICERS' CERTIFICATE" means, with respect to the Company, a certificate signed by both (1) the Chairman of the Board, the Chief Executive Officer, the President or a Vice President and (2) so long as not the same as the officer signing pursuant to clause (1), the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and delivered to the Trustee. "OPINION OF COUNSEL" means a written opinion of counsel, who may be counsel to the Company (and may include directors or employees of the Company) and in form and substance acceptable to the Trustee, which acceptance shall not be unreasonably withheld. 12 "OUTSTANDING", when used with respect to Notes, means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except Notes: (i) previously canceled by the Trustee or delivered to the Trustee for cancellation; (ii) for the payment or redemption of which money in the necessary amount has been previously deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Notes; provided, however, that if such Notes are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture; and (iii) which have been paid in exchange for or in lieu of other Notes which have been authenticated and delivered pursuant to this Indenture, other than any such Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Notes are held by a bona fide purchaser in whose hands such Notes are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Notes have consented to or voted in favor of any request, demand, authorization, direction, notice, consent, waiver, amendment or modification hereunder, Notes held for the account of the Company or of any of its Affiliates shall be disregarded and deemed not to be Outstanding, except that in determining whether the Trustee shall be protected in making such a determination or relying upon any such consent or vote, only Notes which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. "PAYING AGENT" has the meaning specified in Section 2.5. "PERMITTED INDEBTEDNESS" has the meaning set forth in Section 9.1. "PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness renewed, refunded, refinanced, replaced, defeased or discharged (plus all accrued interest on the Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith); (b) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged; 13 (c) if the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged; and (d) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged. "PERSON" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, estate, unincorporated organization or government or any agency or political subdivision thereof. "PHYSICAL NOTES" means Notes issued in definitive, fully registered form without interest coupons, substantially in the form of Exhibit A hereto, with the applicable legends as provided in Section 2.3. "PLACE OF CONVERSION" means any city in which any Conversion Agent is located. "PLACE OF PAYMENT" means any city in which any Paying Agent is located. "PREDECESSOR NOTE" of any particular Note, means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 2.11 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note. "PRINCIPAL" means, with respect to any Outstanding Note, the principal amount of that Note, including the Redemption Price, if applicable, and the Repurchase Price, if applicable, payable with respect to that Note. "PURCHASE AGREEMENT" means the Purchase Agreement, dated June 24, 2004, between the Company and the Initial Purchaser relating to the offering and sale of the Notes. "PURCHASE RIGHT" has the meaning specified in Section 11.1. "PURCHASED SHARES" has the meaning specified in Section 12.4(f). "QIB" means a "qualified institutional buyer" as defined under Rule 144A. "REDEMPTION DATE", when used with respect to any Note to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "REDEMPTION PRICE", when used with respect to any Note to be redeemed, means the price per Note at which such Note may be redeemed pursuant to Section 10.1, including any additional payment pursuant to Section 10.1. 14 "REFERENCE DEALER" means a dealer engaged in the trading of convertible securities selected by the Company or its successor for the purpose for which such dealers are quoted or otherwise to which they are referred herein. "REFERENCE PERIOD" has the meaning specified in Section 12.4(d). "REGISTER" has the meaning specified in Section 2.5. "REGISTRAR" has the meaning specified in Section 2.5. "REGISTRATION RIGHTS AGREEMENT" means the Resale Registration Rights Agreement, dated as of the date hereof, between the Company and the Initial Purchaser. "REGULAR RECORD DATE" for the Interest payable on the Notes means the January 1 and the July 1 (whether or not a Business Day), as applicable, next preceding the corresponding Interest Payment Date. "REPURCHASE DATE" has the meaning specified in Section 11.1 hereof. "REPURCHASE EVENT NOTICE" has the meaning specified in Section 11.2. "REPURCHASE EVENT PURCHASE NOTICE" has the meaning specified in Section 11.2 hereof. "REPURCHASE EVENTS" has the meaning specified in Section 11.1. "REPURCHASE PRICE" has the meaning specified in Section 11.1 hereof. "RESPONSIBLE OFFICER", when used with respect to the Trustee, means any officer of the Trustee, including any vice president, assistant vice president, any treasurer, any assistant treasurer, any trust officer, or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. "RESTRICTED SECURITIES" means the securities defined as such in Section 2.3(a). "RESTRICTED SECURITIES LEGEND" has the meaning specified in Section 2.3(a). "RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "RULE 144" means Rule 144 as promulgated under the Securities Act (including any successor rule thereof), as the same may be amended from time to time. "RULE 144A" means Rule 144A as promulgated under the Securities Act (including any successor rule thereof), as the same may be amended from time to time. 15 "SECURITIES ACT" means the Securities Act of 1933, as amended and the rules and regulations of the Commission thereunder. "SHELF REGISTRATION STATEMENT" means the shelf registration statement filed with the Commission pursuant to the Securities Act pursuant to the Registration Rights Agreement. "SIGNIFICANT SUBSIDIARY" has the meaning assigned to it under Rule 405 of the Securities Act. "SPECIFIC REPURCHASE DATE" has the meaning specified in Section 11.1. "STATED MATURITY" has the meaning assigned to it in Section 2.1. "STOCK PRICE" has the meaning specified in Section 13.1(b). "STOCK PRICE CAP" has the meaning specified in Section 13.1(b). "STOCK PRICE THRESHOLD" has the meaning specified in Section 13.1(b). "SUBORDINATED INDEBTEDNESS" means Indebtedness that (x) is made expressly subordinate in right of payment to the Notes and (y) does not provide at any time for the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal or premium, if any, thereon until at least 91 days after July 15, 2009 excluding for this purpose pursuant to any provision similar to the provisions of the covenant applicable to the Notes described under Article 11; provided that the Company honors its obligations with respect to the Notes. "SUBSIDIARY" means, with respect to any specified Person: (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders' agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof). "SUBSIDIARY INDEBTEDNESS" has the meaning set forth in Section 9.1. "TIA" means the Trust Indenture Act of 1939, as amended (15 U.S. Code Section 77aaa-77bbbb), as in effect on the date of this Indenture; provided, however, that in the event the TIA is amended after such date, "TIA" means, to the extent required by such amendment, the Trust Indenture Act of 1939, as so amended, or any successor statute. 16 "TRADING DAY" means: (i) if the applicable security is listed or admitted for trading on the Nasdaq National Market, a day on which the Nasdaq National Market is open for business; (ii) if that security is not listed on the Nasdaq National Market, a day on which trades may be made on the Nasdaq National Market; (iii) if that security is not so listed on the Nasdaq National Market and not quoted on the Nasdaq National Market, a day on which the principal U.S. securities exchange on which the securities are listed is open for business; or (iv) if the applicable security is not so listed, admitted for trading or quoted, any day other than a Saturday or a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "TRADING PRICE" of the Notes on any date of determination means the average of the secondary market bid quotations per Note obtained by the Company or the Conversion Agent for $1,000,000 principal amount of the Notes at approximately 4:00 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers selected by the Company, provided that, if: (i) at least three such bids cannot reasonably be obtained by the Company or the Conversion Agent, but two such bids are obtained, then the average of the two bids shall be used, and (ii) if only one such bid can reasonably be obtained by the Company or the Conversion Agent, the one bid shall be used. If (i) either the Company or the Conversion Agent cannot reasonably obtain at least one bid for $1,000,000 principal amount of the Notes from a nationally recognized securities dealer or, (ii) in the reasonable judgment of the Company, the bid quotations are not indicative of the secondary market value of the Notes, then the Trading Price of the Notes will equal (a) the then-applicable Conversion Rate of the Notes multiplied by (b) the Market Price of the Common Stock on such determination date. "TRIGGER EVENT" has the meaning specified in Section 12.4(d). "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. 17 "UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company that is designated by the board of directors of the Company as an Unrestricted Subsidiary pursuant to a resolution of the board of directors, but only to the extent that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (c) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries. "VICE PRESIDENT", when used with respect to the Company, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". "VOTING STOCK" of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the board of directors of such Person. "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness. Section 1.2. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "INDENTURE SECURITIES" means the Notes; 18 "INDENTURE SECURITY HOLDER" means a Holder; "INDENTURE TO BE QUALIFIED" means this Indenture; "INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee; and "OBLIGOR" on the Notes means the Company and any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule have the meanings assigned to them by such definitions. Section 1.3. Rules of Construction. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States prevailing at the time of any relevant computation hereunder ("GAAP"); (c) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (d) all references to section and article numbers in this Indenture shall refer to sections and articles hereof, unless otherwise specified. ARTICLE 2 THE NOTES Section 2.1. Title and Terms. (a) The Notes shall be designated as the "4.00% CONVERTIBLE SENIOR NOTES DUE 2024" of the Company. The aggregate principal amount of Notes which may be authenticated and delivered under this Indenture is limited to $60,000,000 (or $72,000,000 if the Initial Purchaser's option to purchase additional Notes as set forth in Section 2 of the Purchase Agreement is exercised in full), except for Notes authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of other Notes pursuant to Sections 2.7, 2.8, 2.12, 7.5, 10.7, 11.1 or 12.2 hereof. The Notes shall be issuable in denominations of $1,000 or integral multiples thereof. (b) The Notes shall mature on July 15, 2024 (the "STATED MATURITY"). 19 (c) The Notes shall bear Interest from the date of their original issuance until the principal amount thereof is paid or made available for payment, or until such date on which the Notes are converted, redeemed or purchased as provided herein at a rate of 4.00% per annum (as adjusted, if at all, the "INTEREST RATE"). Interest shall be payable semi-annually, in arrears, on each Interest Payment Date. (d) Interest on the Notes shall be computed (i) for any full semi-annual period for which a particular Interest Rate is applicable, on the basis of a 360-day year comprised of twelve 30-day months and (ii) for any period for which a particular Interest Rate is applicable for less than a full semi-annual period for which Interest is calculated, on the basis of a 30-day month and, for such periods of less than a month, the actual number of days elapsed over a 30-day month. (e) Interest shall be due and payable on a Note as follows: (i) A registered Holder as of the close of business on a Regular Record Date shall be entitled to receive and shall receive (except as otherwise indicated in this Section 2.1(e)), accrued and unpaid Interest on such Note from the preceding Interest Payment Date (or such earlier date on which Interest was last paid) to the Interest Payment Date next succeeding such Regular Record Date, other than any Note whose Stated Maturity is prior to such Interest Payment Date. (ii) In the event that a Note becomes subject to redemption pursuant to Article 10 and the Redemption Date occurs after a Regular Record Date but on or prior to the next succeeding Interest Payment Date, the Person whose Note becomes subject to redemption (and only such Person rather than the Holder as of such Regular Record Date) shall be entitled to receive and shall receive accrued and unpaid Interest from the preceding Interest Payment Date (or such earlier date on which Interest was last paid) to, but excluding, the Redemption Date of such Note, even if such Person is not the Holder of such Note. (iii) In the event that a Note becomes subject to purchase pursuant to Article 11, a Holder who exercises a Purchase Right with respect to such Note shall be entitled to receive and shall receive accrued and unpaid Interest on such Note from the preceding Interest Payment Date (or such earlier date on which Interest was last paid) to, but excluding the applicable Repurchase Date for such Note, which amount shall be included in the applicable Repurchase Price thereof pursuant to Article 11. (iv) In the event that a Note is converted pursuant to Article 12, the Holder who converts such Note on any date other than an Interest Payment Date shall not be entitled to receive unpaid Interest on such Note from the preceding Interest Payment Date until the Conversion Date, such amounts being deemed to have been paid by receipt of shares of Common Stock in full rather than canceled, extinguished or forfeited. As a result, a Holder which converts a Note after a Regular Record Date but prior to the next succeeding Interest Payment Date 20 will receive accrued and unpaid Interest on such Note for such period on such Interest Payment Date but will be required to remit to the Company an amount equal to that Interest at the time such Holder surrenders the Note for conversion, pursuant to Article 12; provided, however, that such Holder will not be required to remit such Interest if, prior to conversion or the delivery of a notice of conversion pursuant to Article 12, the Company has either delivered a notice of redemption as contemplated by Article 10 on or prior to the third Business Day after such Interest Payment Date or redeemed such Note pursuant to Article 10 and the Holder converts such Note after a Regular Record Date but prior to the next succeeding Interest Payment Date pursuant to Article 12. (f) In addition to the amounts set forth in Section 2.1(e), Holders shall be entitled to receive Additional Interest, if any, on such Note pursuant and subject to the Registration Rights Agreement, but in no event shall a Holder be required to repay any Additional Interest such Holder receives following the remittance of Interest as specified in Section 2.1(e)(iv). Additional Interest shall be paid on dates corresponding to the payment date of Interest on such Note pursuant to the Registration Rights Agreement. (g) Payment of any Principal or Interest (to the extent paid in cash) or Additional Interest, if any, on Global Notes shall be payable by the Company to the Depositary in immediately available funds. (h) Payment of any Principal on Physical Notes shall be made at the office or agency of the Company maintained for such purpose, initially the Corporate Trust Office of the Trustee. Interest and Additional Interest, if any, on Physical Notes will be payable by (i) a U.S. Dollar check drawn on a U.S. bank mailed to the address of the Person entitled thereto as such address shall appear in the Register, or (ii) upon application to the Registrar not later than the relevant Regular Record Date by a Holder of an aggregate Principal amount of Notes in excess of $1,000,000, wire transfer in immediately available funds, which application shall remain in effect until the Holder notifies, in writing, the Registrar to the contrary. (i) The Notes may be redeemable at the option of the Company as provided in and subject to Article 10. (j) The Notes shall be purchased by the Company at the option of Holders as provided in and subject to Article 11 and Article 13. (k) The Notes shall be convertible at the option of the Holders as provided in and subject to Article 12 and Article 13. Section 2.2. Form of Notes. (a) Except as otherwise provided pursuant to this Section 2.2, the Notes are issuable in fully registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000 above that amount with applicable legends as are provided for in Section 2.3 and in the form of one or more permanent global securities, except as provided herein (each a "GLOBAL NOTE" and, collectively, the "GLOBAL NOTES"), the form of which is contained in Exhibit A hereto. The Notes shall not be issuable in bearer form. The terms and provisions contained in the form of Note shall constitute, and are hereby expressly made, a part of this Indenture and to the extent applicable, the Company, and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. 21 (b) The Notes are being offered and sold by the Company pursuant to the Purchase Agreement. Notes offered and sold to QIBs in accordance with Rule 144A, as provided in the Purchase Agreement, shall be issued initially in the form of one or more permanent global Notes in fully registered form without interest coupons, substantially in the form of Exhibit A hereto, with the applicable legends as provided in Section 2.3 (each a "GLOBAL NOTE" and collectively the "GLOBAL NOTES"). Each Global Note shall be duly executed by the Company and authenticated and delivered by the Trustee, and shall be registered in the name of the Depositary or its nominee and retained by the Trustee, as Custodian. The aggregate principal amount of the Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee, as Custodian, and of the Depositary or its nominee, as hereinafter provided. (c) Physical Notes acquired by QIBs in accordance with Rule 144A may be exchanged for interests in Global Notes pursuant to Sections 2.8(e) and 2.17(a) only. Physical Notes shall be duly executed by the Company and authenticated and delivered by the Trustee. Section 2.3. Legends. (a) Restricted Securities Legends. Each Note issued hereunder shall, upon issuance, bear the legend set forth in Section 2.3(a)(i), and each share of Common Stock issued upon conversion of any Note issued hereunder, shall, upon issuance, bear the legend set forth in Section 2.3(a)(ii) (each such legend, a "RESTRICTED SECURITIES LEGEND"), and such legend shall not be removed except as provided in Section 2.3(a)(iii). Each Note that bears or is required to bear the Restricted Securities Legend set forth in Section 2.3(a)(i) (together with each share of Common Stock issued upon conversion of such Note that bears or is required to bear the Restricted Securities Legend set forth in Section 2.3(a)(ii), collectively, the "RESTRICTED SECURITIES") shall be subject to the restrictions on transfer set forth in this Section 2.3(a) (including the Restricted Securities Legend set forth below), and the Holder of each such Restricted Security, by such Holder's acceptance thereof, shall be deemed to have agreed to be bound by the restrictions on transfer set forth herein. As used in Section 2.3(a), the term "transfer" encompasses any sale, pledge, transfer or other disposition whatsoever of any Restricted Security. (i) Restricted Securities Legend for Notes. Except as provided in Section 2.3(a)(iii), until two years after the original issuance date of any Note, any certificate evidencing such Note (and all Notes issued in exchange therefor or substitution thereof, other than share of Common Stock, if any, issued upon conversion thereof which shall bear the legend set forth in Section 2.3(a)(ii), if applicable) shall bear a Restricted Securities Legend in substantially the following form: THE NOTE EVIDENCED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, 22 ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER: (1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT; (2) REPRESENTS THAT IT IS PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF ONE OR MORE QUALIFIED INSTITUTIONAL BUYERS IN ACCORDANCE WITH RULE 144A; (3) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS NOTE RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER; AND (4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 3(D) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH NOTE (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 3(D) ABOVE), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE (OR ANY SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE 3(B) OR 3(C) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE (OR ANY SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY OR THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED 23 UPON THE EARLIER OF THE TRANSFER OF THE SECURITY EVIDENCED HEREBY PURSUANT TO CLAUSE 3(D) ABOVE OR THE EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY. (ii) Restricted Securities Legend for Common Stock Issued Upon Conversion of the Notes. Until two years after the original issuance date of any Note, any stock certificate representing Common Stock issued upon conversion of such Note shall bear a Restricted Securities Legend in substantially the following form: THE SHARES OF COMMON STOCK EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT UNTIL THE EXPIRATION OF TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE UPON THE CONVERSION OF WHICH THE SHARES OF COMMON STOCK EVIDENCED HEREBY WAS ISSUED: (1) IT WILL NOT OFFER, SELL, ASSIGN, TRANSFER, PLEDGE, ENCUMBER OR OTHERWISE DISPOSE OF THE SHARES EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER; (2) PRIOR TO ANY SUCH TRANSFER OTHER THAN A TRANSFER PURSUANT TO CLAUSE 1(D) ABOVE, IT WILL FURNISH TO SUCH TRANSFER AGENT, (OR ANY SUCCESSOR TRANSFER AGENT, AS APPLICABLE) SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE TRANSFER AGENT OR THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (3) IT WILL DELIVER TO EACH PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY ARE TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 1(D) 24 ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY PURSUANT TO CLAUSE 1(D) ABOVE OR THE EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF THE SECURITY UPON THE CONVERSION OF WHICH THE SHARES OF COMMON STOCK EVIDENCED HEREBY WERE ISSUED. AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. (iii) Removal of the Restricted Securities Legends. Each Note or share of Common Stock issued upon conversion of any Note (other than shares of Common Stock issued upon conversion of a Note that previously were sold pursuant to a registration statement that has been declared effective under the Securities Act and which continues to be effective at the time of such sale) shall bear the applicable Restricted Securities Legend set forth in Section 2.3(a)(i) or 2.3(a)(ii), as applicable, until the earlier of: (A) the date which is two years after the original issuance date of such Note; and (B) the date such Note has, or such shares of have been sold pursuant to a registration statement that has been declared effective under the Securities Act (and which continues to be effective at the time of such sale). The Holder must give notice thereof to the Trustee, as applicable. In the event Rule 144(k) as promulgated under the Securities Act is amended to shorten the two-year period under Rule 144(k), then, the references in the restrictive legends set forth above to "TWO YEARS", and in the corresponding transfer restrictions described above, the Notes and the shares of Common Stock will be deemed to refer to such shorter period, from and after receipt by the Trustee of an Officers' Certificate and an Opinion of Counsel to that effect. As soon as reasonably practicable after the Company knows of the effectiveness of any such amendment to shorten the two-year period under Rule 144(k), unless such changes would otherwise be prohibited by, or would cause a violation of, the federal securities laws applicable at the time, the Company will provide to the Trustee an Officers' Certificate and an Opinion of Counsel as to the effectiveness of such amendment and the effectiveness of such change to the restrictive legends and transfer restrictions. Notwithstanding the foregoing, the Restricted Securities Legend may be removed if there is delivered to the Company such satisfactory evidence, which may include an opinion of independent counsel, as may be reasonably required by the Company that neither such legend nor the restrictions on transfer set forth therein are required to ensure that transfers of such Notes or Common Stock will not violate the registration requirements of the Securities Act. Upon provision of such satisfactory evidence, the Trustee, at the written direction of the 25 Company, shall authenticate and deliver in exchange for such Notes another Note or Notes having an equal aggregate principal amount and Stated Maturity that does not bear such legend. If the Restricted Securities Legend has been removed from a Note as provided above, no other Note issued in exchange for all or any part of such Note shall bear such legend, unless the Company has reasonable cause to believe that such other Note is a "restricted security" within the meaning of Rule 144 and instructs the Trustee in writing to cause a Restricted Securities Legend to appear thereon. Any Note (or security issued in exchange or substitution thereof) as to which such restrictions on transfer shall have expired in accordance with their terms or as to which the conditions for removal of the Restricted Securities Legend set forth in Section 2.3(a)(i) as set forth therein have been satisfied may, upon surrender of such Note for exchange to the Registrar in accordance with the provisions of Section 2.7 hereof, be exchanged for a new Note or Notes, of like tenor and aggregate principal amount and Stated Maturity which shall not bear the Restricted Securities Legend required by Section 2.3(a)(i). Any such Common Stock as to which such restrictions on transfer shall have expired in accordance with their terms or as to which the conditions for removal of the Restricted Securities Legend set forth in Section 2.3(a)(ii) as set forth therein have been satisfied may, upon surrender of the certificates representing such shares of Common Stock for exchange in accordance with the procedures of the Transfer Agent, be exchanged for a new certificate or certificates for a like aggregate number of shares of Common Stock, which shall not bear the Restricted Securities Legend required by Section 2.3(a)(ii). (b) Global Note Legend. Each Global Note shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND 26 TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. Section 2.4. Execution, Authentication, Delivery and Dating of the Notes. (a) One Officer shall execute the Notes on behalf of the Company by manual or facsimile signature. Notes bearing the manual or facsimile signatures of individuals who were at the time of the execution of the Notes the proper Officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of authentication of such Notes. (b) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Notes, and the Trustee in accordance with such Company Order shall authenticate and deliver such Notes as provided in this Indenture and not otherwise. No Note shall be entitled to any benefit under this Indenture, or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by or on behalf of the Trustee by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. The Trustee may appoint an authenticating agent or agents reasonably acceptable to the Company with respect to the Notes. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. (c) Each Note shall be dated the date of its authentication. The Trustee shall authenticate and deliver Notes for original issue in an aggregate principal amount of up to $60,000,000 (or $72,000,000 if the Initial Purchaser's option to purchase additional Notes as forth in Section 2 of the Purchase Agreement is exercised in full) upon one or more Company Orders without any further action by the Company. The aggregate principal amount of Notes Outstanding at any time may not exceed the amount set forth in the foregoing sentence. Section 2.5. Registrar and Paying Agent. The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (the "REGISTRAR") and an office or agency where Notes may be presented for payment (the "PAYING AGENT"). The Registrar shall keep a register of the Notes (the "REGISTER") and of their transfer and exchange. The Company may appoint one or more co-Registrars and one or more additional Paying Agents for the Notes. The term "Paying Agent" includes any additional paying agent and the term "Registrar" includes any additional registrar. The Company may change any Paying Agent or Registrar without prior notice to any Holder. The Company will cause each Paying Agent (other than the Trustee) to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: 27 (a) hold all sums of money or Common Stock held by it for the payment of any amounts due and payable in respect of the Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as provided in this Indenture; (b) give the Trustee notice of any Default by the Company in the making of any such payment; and (c) at any time during the continuance of any such Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company shall give prompt written notice to the Trustee of the name and address of any Paying Agent who is not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any Affiliate of the Company may act as Paying Agent or Registrar; provided, however, that none of the Company, its Subsidiaries or the Affiliates of the foregoing shall act: (i) as Paying Agent in connection with redemptions, offers to purchase and discharges, except as otherwise specified in this Indenture, and (ii) as Paying Agent or Registrar if a Default or Event of Default has occurred and is continuing. The Company hereby initially appoints the Trustee, as Registrar and Paying Agent for the Notes. Section 2.6. Paying Agent to Hold Assets in Trust. Not later than 11:00 a.m. (New York City time) on or prior to each due date of payments in respect of any Note, the Company shall deposit with one or more Paying Agents a sum of money in immediately available funds or Common Stock sufficient to make such payments when so becoming due. The Company at any time may require a Paying Agent to pay all money or Common Stock held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company) shall have no further liability for the money or Common Stock so paid over to the Trustee. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money and Common Stock held by the Paying Agent for the making of payments in respect of the Notes and shall notify the Trustee of any Default by the Company in making any such payment. At any time during the continuance of any such Default, the Paying Agent shall, upon the written request of the Trustee, forthwith pay to the Trustee all money and Common Stock so held in trust. If the Company shall act as a Paying Agent, it shall, prior to or on each such due date, segregate and hold in trust for the benefit of the Holders a sum sufficient with monies held by all other Paying Agents, to pay such amounts so becoming due until such sums shall be paid to such Persons or otherwise disposed 28 of as provided in this Indenture, and shall promptly notify the Trustee of its action or failure to act. Section 2.7. General Provisions Relating to Registration, Transfer and Exchange. The Notes are issuable only in registered form. A Holder may transfer a Note only by written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of this Indenture. No such transfer shall be effected until, and such transferee shall succeed to the rights of a Holder only upon, final acceptance and registration of the transfer by the Registrar in the Register. Furthermore, any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of beneficial interests in such Global Note may be effected only through a book-entry system maintained by the Holder of such Global Note (or its agent) and that ownership of a beneficial interest in the Global Note shall be required to be reflected in a book-entry. Notwithstanding the foregoing, in the case of a Restricted Security, a beneficial interest in a Global Note that is transferred in reliance on an exemption from the registration requirements of the Securities Act other than in accordance with Rule 144 or Rule 144A may only be transferred for a Physical Note. When Notes are presented to the Registrar with a request to register the transfer or to exchange them for an equal principal amount of Notes of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if the requirements hereunder for such transactions are met (including that such Notes are duly endorsed or accompanied by a written instrument of transfer duly executed by the Holder thereof or by an attorney who is authorized in writing to act on behalf of the Holder). Subject to Section 2.4, to permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Notes at the Registrar's request. No service charge shall be made for any registration of transfer or exchange or redemption of the Notes, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or other similar governmental charge payable upon exchanges pursuant to Sections 2.14, 7.5 or 10.7). Neither the Company nor the Registrar shall be required to exchange or register a transfer of any Notes: (a) for a period of 15 days prior to the day of any selection of Notes for redemption under Article 10 hereof; (b) so selected for redemption or, if a portion of any Note is selected for redemption, such portion thereof selected for redemption; or (c) surrendered for conversion or, if a portion of any Note is surrendered for conversion, such portion thereof surrendered for conversion. The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Agent Members or beneficial owners of interests in any Global Note) other than to require 29 delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. Section 2.8. Book-Entry Provisions for the Global Notes. (a) The Global Notes initially shall: (i) be registered in the name of the Depositary; (ii) be delivered to the Trustee as custodian for such Depositary, for credit to the accounts of the members of, participants in, the Depositary (the "AGENT MEMBERS") holding the Notes evidenced thereby; and (iii) bear the Restricted Securities Legend set forth in Section 2.3(a)(i) until such time as such Restricted Securities Legend may be removed in accordance with Section 2.3. (b) Agent Members shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary, or the Trustee as its custodian, or under such Global Note, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing contained herein shall prevent the Company, the Trustee or any agent of the Company or Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and the Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note. (c) The registered Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes. (d) A Global Note may not be transferred, in whole or in part, to any Person other than the Depositary, and no such transfer to any such other Person may be registered. Beneficial interests in a Global Note may be transferred in accordance with the rules and procedures of the Depositary and the provisions of Section 2.17 hereof. (e) If at any time: (i) the Depositary notifies the Company in writing that it is no longer willing or able to continue to act as Depositary for the Global Notes, or the Depositary ceases to be a "clearing agency" registered under the Exchange Act and a successor depositary for the Global Notes is not appointed by the Company within 90 days of such notice or cessation; 30 (ii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of the Physical Notes under this Indenture in exchange for all or any part of the Notes represented by a Global Note or Global Notes; or (iii) an Event of Default has occurred and is continuing and the Registrar has received a request from the Depositary for the issuance of Physical Notes in exchange for such Global Note or Global Notes, then the Depositary shall surrender such Global Note or Global Notes to the Trustee for cancellation and the Company shall execute, and the Trustee, upon receipt of an Officers' Certificate and Company Order for the authentication and delivery of Notes, shall authenticate and deliver in exchange for such Global Note or Global Notes, Physical Notes in an aggregate principal amount equal to the aggregate principal amount of such Global Note or Global Notes. Such Physical Notes shall be registered in such names as the Depositary shall identify in writing as the beneficial owners of the Notes represented by such Global Note or Global Notes (or any nominee thereof). (f) Notwithstanding the foregoing, in connection with any transfer of beneficial interests in a Global Note to the beneficial owners thereof pursuant to Section 2.8(d) hereof, the Registrar shall reflect on its books and records the date and a decrease in the aggregate principal amount of such Global Note in an amount equal to the aggregate principal amount of the beneficial interest in such Global Note to be transferred. Section 2.9. Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders and shall otherwise comply with Section 312(a) of the TIA. If the Trustee is not the Registrar, the Company shall furnish to the Trustee prior to or on each Interest Payment Date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders relating to such Interest Payment Date or request, as applicable. Section 2.10. Persons Deemed Owners. Prior to due presentment of a Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Note is registered as the owner of such Note for the purpose of receiving payment of principal of the Note or the payment of any Redemption Price or Repurchase Price in respect thereof and any Interest and Additional Interest thereon, for any purpose under this Indenture, whether or not such Note be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. Section 2.11. Mutilated, Destroyed, Lost or Stolen Notes. 31 If any mutilated Note is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Note of like tenor and aggregate principal amount and bearing a number not contemporaneously outstanding. If there is delivered to the Company and the Trustee (a) evidence to their satisfaction of the destruction, loss or theft of any Note, and (b) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of actual notice to the Company or the Trustee that such Note has been acquired by a bona fide purchaser, the Company shall execute and, upon request, the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount, and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion, but subject to any conversion rights, may, instead of issuing a new Note, pay such Note, upon satisfaction of the condition set forth in the preceding paragraph. Upon the issuance of any new Note under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Note issued pursuant to this Section 2.11 in lieu of any destroyed, lost or stolen Note shall constitute an original contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and such new Note shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. The provisions of this Section 2.11 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. Section 2.12. Treasury Notes. In determining whether the Holders of the requisite principal amount of Outstanding Notes have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Company or any Affiliate of the Company shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only such Notes of which the Trustee has received written notice and are so owned shall be so disregarded. Section 2.13. Temporary Notes. 32 Pending the preparation of Notes in definitive form, the Company may execute and the Trustee shall, upon written request of the Company, authenticate and deliver temporary Notes (printed or lithographed). Temporary Notes shall be issuable in any authorized denomination, and substantially in the form of the Notes in definitive form but with such omissions, insertions and variations as may be appropriate for temporary Notes, all as may be determined by the Company. Every such temporary Note shall be executed by the Company and authenticated by the Trustee upon the same conditions and in substantially the same manner, and with the same effect, as the Notes in definitive form. Without unreasonable delay, the Company will execute and deliver to the Trustee Notes in definitive form (other than in the case of Notes in global form) and thereupon any or all temporary Notes (other than any such Notes in global form) may be surrendered in exchange therefor, at each office or agency maintained by the Company pursuant to Section 9.2 and the Trustee shall authenticate and deliver in exchange for such temporary Notes an equal principal amount of Notes in definitive form. Such exchange shall be made by the Company at its own expense and without any charge therefor. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits and subject to the same limitations under this Indenture as Notes in definitive form authenticated and delivered hereunder. Section 2.14. Cancellation. All Notes surrendered for payment, redemption, purchase, conversion, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee. All Notes so delivered shall be canceled promptly by the Trustee, and no Notes shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. Upon written instructions of the Company, the Trustee shall dispose of canceled Notes in accordance with its procedures for the disposition of cancelled securities in effect as of the date of such disposition. If the Company shall acquire any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Notes unless the same are delivered to the Trustee for cancellation. Section 2.15. CUSIP Numbers. The Company in issuing the Notes may use "CUSIP" numbers (if then generally in use), and the Trustee shall use CUSIP numbers in notices of redemption or exchange as a convenience to Holders; provided that any such notice shall state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any such notice and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company shall promptly notify the Trustee of any change in the CUSIP numbers. Section 2.16. Defaulted Interest. If the Company fails to make a payment of Principal of or Interest and Additional Interest, if any, on any Note when due and payable, it shall pay such Interest on such amounts (to the extent lawful), which shall be calculated using the applicable Interest Rate (such amounts, the "DEFAULTED INTEREST"). It may elect to pay such Defaulted Interest, plus any other Interest payable on it, to the Persons who are Holders on which the Interest is due on a subsequent special 33 record date. The Company shall notify the Trustee in writing of the amount of Defaulted Interest the Company proposes to pay on each such Note. The Company shall fix any such special record date and payment date for such payment. At least 15 days before any such special record date, the Company shall mail to Holders affected thereby a notice that states the special record date, the Interest Payment Date and amount to be paid. Section 2.17. Transfer Provisions. Unless a Note is (i) transferred after the time period referred to in Rule 144(k) under the Securities Act or (ii) sold pursuant to a registration statement that has been declared effective under the Securities Act (and which continues to be effective at the time of such sale), the following provisions shall apply to any sale, pledge or other transfer of Notes: (a) Transfer of Notes. The following provisions shall apply with respect to the registration of any proposed transfer of Notes to a QIB: (i) If the Notes to be transferred consist of a beneficial interest in the Global Notes, the transfer of such interest may be effected only through the book-entry systems maintained by the Depositary. (ii) If the Notes to be transferred consist of Physical Notes, the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Note stating (or has otherwise advised the Company and the Registrar in writing) that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Note stating or has otherwise advised the Company and the Registrar in writing that: (A) it is purchasing the Notes for its own account or an account with respect to which it exercises sole investment discretion, in each case for investment and not with a view to distribution; (B) it and any such account is a QIB within the meaning of Rule 144A; (C) it is aware that the sale to it is being made in reliance on Rule 144A; (D) it acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information; and (E) it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A. In addition, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Notes in an amount equal 34 to the aggregate principal amount of the Physical Notes to be transferred, and the Trustee shall cancel the Physical Notes so transferred. (b) Other Exchanges. In the event that Global Notes are exchanged for Notes in definitive registered form pursuant to Section 2.7 prior to the effectiveness of a Shelf Registration Statement with respect to such Notes, such Notes may be exchanged only in accordance with the provisions of clauses (a) and (b) above (including the certification requirements intended to ensure that such transfers comply with Rule 144A) and such other procedures as may from time to time be adopted by the Company. (c) General. By its acceptance of any Note or shares of Common Stock issuable upon conversion of the Notes bearing the Restricted Securities Legend, each Holder of such Note or shares of Common Stock acknowledges the restrictions on transfer of such Note or shares of Common Stock set forth in this Indenture and agrees that it will transfer such Note and such Common Stock only as provided in this Indenture. The Registrar shall not register a transfer of any Note unless such transfer complies with the restrictions on transfer of such Note set forth in this Indenture. The Registrar shall be entitled to receive and conclusively rely on written instructions from the Company verifying that such transfer complies with such restrictions on transfer. In connection with any transfer of Notes, each Holder agrees by its acceptance of the Notes to furnish the Registrar or the Company such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act; provided that the Registrar shall not be required to determine (but may conclusively rely on a determination made by the Company with respect to) the sufficiency of any such certifications, legal opinions or other information. The Registrar shall retain copies of all certifications, letters, notices and other written communications received pursuant to Section 2.8 hereof or this Section 2.17 in accordance with its customary procedures for the retention of records relating to the transfer of securities. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. ARTICLE 3 DISCHARGE OF INDENTURE Section 3.1. Discharge of Liability on Notes. When (a) the Company delivers to the Trustee all Outstanding Notes (other than Notes replaced pursuant to Section 2.11) for cancellation, (b) all Outstanding Notes have become due and payable at their scheduled maturity within one year or all Outstanding Notes are scheduled for redemption within one year and the Company deposits with the Trustee cash and, in the event of possible conversions pursuant to Article 12, Common Stock, sufficient to pay all amounts due and owing on, and to satisfy all other obligations of the Company with 35 respect to, all Outstanding Notes on or before the date of their scheduled maturity or the scheduled date of redemption (other than Notes replaced pursuant to Section 2.11) or (c) when no Notes are Outstanding, and if in any such case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 5.8, cease to be of further effect. The Trustee shall join in the execution of a document prepared by the Company acknowledging satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers' Certificate and Opinion of Counsel and at the cost and expense of the Company. Section 3.2. Repayment to the Company. The Trustee and the Paying Agent shall return to the Company upon written request any money or securities held by them for the payment of any amount with respect to the Notes that remains unclaimed for two years, subject to applicable unclaimed property law. After return to the Company, Holders entitled to the money or securities must look to the Company for payment as general creditors unless an applicable abandoned property law designates another Person and the Trustee and the Paying Agent shall have no further liability to the Holders with respect to such money or securities for that period commencing after the return thereof. ARTICLE 4 DEFAULTS AND REMEDIES Section 4.1. Events of Default. An "EVENT OF DEFAULT", wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) the Company fails to convert Notes into shares of its Common Stock in accordance with the provisions of Article 12; (b) the Company defaults in the payment of the Principal amount (a "DEFAULTED PAYMENT") on any Outstanding Note when the same becomes due and payable at its Stated Maturity, upon redemption, upon exercise of a Purchase Right, upon declaration when due for purchase by the Company or otherwise, including any Make Whole Premium, if any, in connection with any conversion or repurchase; (c) the Company defaults in the payment of Interest and Additional Interest, if any, on any Note when it becomes due and payable and such default continues for a period of 30 days; (d) the Company fails to provide notice of the occurrence of a Change of Control on a timely basis; (e) the Company or any Restricted Subsidiaries of the Company fails to perform or observe any other term, covenant or agreement contained in the Notes or this Indenture and the default continues for a period of 60 days after written notice of such failure, requiring the Company to remedy the same, shall have been given to the Company by the Trustee 36 or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Outstanding Notes; (f) a default occurs under any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of two or more Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, the aggregate outstanding principal amount of which is in an amount in excess of $10 million, for a period of 30 days after written notice to the Company by the Trustee or to the Company and the Trustee by Holders of at least 25% in aggregate principal amount of the Outstanding Notes, which default (i) is caused a failure to pay when due principal or premium of or interest on such Indebtedness by the end of the applicable grace period, if any, unless such Indebtedness is discharged or (ii) results in the acceleration of such Indebtedness because of a default with respect to such Indebtedness without such Indebtedness having been discharged or such non-payment or acceleration having been cured, waived, rescinded or annulled; (g) the entry by a court having jurisdiction in the premises of (i) a decree or order for relief in respect of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of two or more Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, in an involuntary case or proceeding under any applicable U.S. federal or state bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or order adjudging the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of two or more Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or 37 composition of or in respect of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of two or more Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, under any applicable U.S. federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs; or (h) the commencement by the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of two or more Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, of a voluntary case or proceeding under any applicable U.S. federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by the Company or any of its Subsidiaries that is a Significant Subsidiary or any group of two or more Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, to the entry of a decree or order for relief in respect of the Company or any of its Subsidiaries that is a Significant Subsidiary or any group of two or more Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, in an involuntary case or proceeding under any applicable U.S. federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against the Company, or the filing by the Company or any of its Subsidiaries that is a Significant Subsidiary or any group of two or more Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, of a petition or answer or consent seeking reorganization or relief under any applicable U.S. federal or state law in the context of a bankruptcy, insolvency or reorganization proceeding, or the consent by the Company to the filing of such petition or to the appointment of or the taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by the Company or any of its Subsidiaries that is a Significant Subsidiary or any group of two or more Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, of an assignment for the benefit of creditors, or the admission by the Company or any of its Subsidiaries that is a Significant Subsidiary or any group of two or more Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company or any of its Subsidiaries that is a Significant Subsidiary or any group of two or more Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, expressly in furtherance of any such action. A Default under clause (e) or (f) above is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% of the principal amount of the Notes at the time Outstanding notify the Company and the Trustee, of the Default and the Company does not cure such Default (and such Default is not waived) within the time specified in clause (e) or (f) above after actual receipt of such notice. Any such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default". The Trustee shall, within 90 days of a Responsible Officer becoming aware of the occurrence of a Default, give to the Holders notice of all uncured Defaults known to it and written notice of any event which with the giving of notice or the lapse of time, or both, would become an Event of Default, its status and what action the Company is taking or proposes to take with respect thereto; provided, however, the Trustee shall be protected in withholding such notice if it, in good faith, determines that the withholding of such notice is in the best interest of such Holders, except in the case of a Default in the payment of the Principal of or Interest on any of the Notes when due or in the payment of any redemption or Purchase Right. Section 4.2. Acceleration of Maturity; Rescission and Annulment. If an Event of Default with respect to Outstanding Notes (other than an Event of Default specified in Section 4.1(g) or 4.1(h) hereof) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Outstanding Notes, by written notice to the Company, may declare due and payable 100% of the principal amount of all Outstanding Notes, plus any accrued and unpaid Interest and Additional Interest to the date of payment. Upon a declaration of acceleration, such Principal amount and accrued and unpaid Interest and Additional Interest to the date of payment shall be immediately due and payable. If an Event of Default specified in Section 4.1(g) and 4.1(h) occurs, the Principal and accrued and unpaid Interest and Additional Interest, if any, on the Outstanding Notes shall become and be immediately due and payable, without any declaration or other act on the part of the Trustee or any Holder. The Holders of not less than a majority of the principal amount of the Outstanding Notes, may, through notice to the Trustee on behalf of the Holders of all of the Notes, rescind and annul an acceleration and its consequences (including waiver of any defaults) if: 38 (a) all existing Events of Default, other than the nonpayment of a Defaulted Payment on the Notes which have become due solely because of the acceleration, have been remedied, cured or waived, and (b) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction; provided, however, that in the event such declaration of acceleration has been made based on the existence of an Event of Default under Section 4.1(f) and the default with respect to Indebtedness for money borrowed which gave rise to such Event of Default has been remedied, cured or waived, then, without any further action by the Holders, such declaration of acceleration shall be rescinded automatically and the consequences of such declaration shall be annulled. No such rescission or annulment shall affect any subsequent Default or impair any right consequent thereon. Section 4.3. Other Remedies. If an Event of Default with respect to Outstanding Notes occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the Defaulted Payment or Interest and Additional Interest, if any, due and payable on the Notes or to enforce the performance of any provision of the Notes. The Trustee may maintain a proceeding in which it may prosecute and enforce all rights of action and claims under this Indenture or the Notes, even if it does not possess any of the Notes or does not produce any of them in the proceeding. Section 4.4. Waiver of Past Defaults. The Holders, through the written consent of not less than a majority of the principal amount of the Outstanding Notes, may, on behalf of the Holders of all of the Notes, waive an existing Default or Event of Default, except a Default or Event of Default: (a) set forth in Sections 4.1(b) and (c), provided, however, that subject to Section 4.7, the Holders of a majority of the principal amount of the Outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration; or (b) in respect of a covenant or provision hereof which, under Section 7.2 hereof, cannot be modified or amended without the consent of the Holders of each Outstanding Note affected. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; provided, however, that no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Section 4.5. Control by Majority. 39 The Holders of a majority of the principal amount of the Outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that: (a) conflicts with any law or with this Indenture; (b) the Trustee determines may be unduly prejudicial to the rights of the Holders not joining therein; or (c) may expose the Trustee to personal liability. The Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Section 4.6. Limitation on Suit. No Holder shall have any right to pursue any remedy with respect to this Indenture or the Notes (including, instituting any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a receiver or trustee) unless: (a) such Holder has previously given written notice to the Trustee of an Event of Default that is continuing; (b) the Holders of at least 25% of the principal amount of the Outstanding Notes shall have made written request to the Trustee to pursue the remedy; (c) such Holder or Holders have offered to the Trustee indemnity satisfactory to it against any costs, expenses and liabilities incurred in complying with such request; (d) the Trustee has failed to comply with the request for 60 days after its receipt of such notice, request and offer of indemnity; and (e) during such 60-day period, no direction inconsistent with such written request has been given to the Trustee by the Holders of a majority of the principal amount of the Outstanding Notes; provided, however, that no one or more of such Holders may use this Indenture to prejudice the rights of another Holder or to obtain preference or priority over another Holder. Section 4.7. Unconditional Rights of Holders to Receive Payment and to Convert. Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the Principal on and Interest and Additional Interest, if any, in respect of the Notes held by such Holder, on or after the respective due dates, to convert the Notes in accordance with Article 12 or to bring suit for the 40 enforcement of any such payment on or after such respective dates or the right to convert, and such rights shall not be impaired or affected adversely without the consent of such Holder. Section 4.8. Collection of Indebtedness and Suits for Enforcement by the Trustee. The Company covenants that if: (a) a Default or Event of Default is made in the payment of Interest and Additional Interest, if any, on any Note when such Interest and Additional Interest, if any, becomes due and payable and such Default or Event of Default continues for a period of 30 days; or (b) a Default or Event of Default is made in the payment of the Principal on any Note when the same becomes due and payable at its Stated Maturity, upon redemption, upon declaration when due for purchase by the Company or otherwise, then the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Notes, the entire Principal then due and payable (as expressed therein or as a result of any acceleration effected pursuant to Section 4.2 hereof) on such Notes for any such amounts and, to the extent legally enforceable, Interest or Additional Interest, if any, on such Notes, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company and collect the monies adjudged or decreed to be payable in the manner provided by law out of the property of the Company, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Section 4.9. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or the property of the Company or its creditors, the Trustee (irrespective of whether the Principal, Interest and Additional Interest, if any, shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of any such amount) shall be entitled and empowered, by intervention in such proceeding or otherwise: 41 (a) to file and prove a claim for the whole amount of the Principal or Interest and Additional Interest, if any, owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding and (b) to collect and receive any monies, Common Stock or other property payable or deliverable on any such claim and to distribute the same, and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceedings is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 5.8. Nothing contained herein shall be deemed to authorize the Trustee to authorize or consent to or accept, or adopt on behalf of any Holder, any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 4.10. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 4.11. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 2.11, no right or remedy conferred in this Indenture upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by applicable law, be cumulative and in addition to every other right and remedy given hereunder or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 4.12. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or any acquiescence 42 therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as applicable. Section 4.13. Priorities. Any money and property collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee: FIRST: to the payment of all amounts due to the Trustee under Section 5.8; SECOND: to Holders for amounts due and unpaid on the Notes for the Principal or Interest or Additional Interest, if any, as applicable, ratably, without preference or priority of any kind, according to such amounts due and payable on the Notes; and THIRD: any remaining amounts shall be repaid to the Company. The Trustee may fix a special record date and payment date for any payment to Holders pursuant to this Section 4.13. At least 15 days before such special record date, the Trustee shall mail to each Holder and the Company a notice that states the special record date, the payment date and the amount to be paid. Section 4.14. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Note by such Holder's acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% of the principal amount of the Outstanding Notes, or to any suit instituted by any Holder for the enforcement of (i) payments pursuant to Section 4.7, (ii) Purchase Rights in accordance with Article 11 or (iii) conversion rights in accordance with Article 12. This Section 4.14 shall be in lieu of Section 315(e) of the TIA and such Section 315(e) is hereby expressly excluded from this Indenture, as permitted by the TIA. Section 4.15. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim to take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. 43 ARTICLE 5 THE TRUSTEE Section 5.1. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, (i) The Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture or the TIA, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided, however, that in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates or opinions to determine whether or not, on their face, they conform to the requirements to this Indenture (but need not investigate or confirm the accuracy of any facts stated therein). (b) In case an Event of Default actually known to a Responsible Officer of the Trustee has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) This paragraph (c) shall not be construed to limit the effect of paragraph (a) of this Section 5.1; (ii) The Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with a direction received by it of the Holders of a majority of the principal amount of the Outstanding Notes relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. (d) Whether or not herein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 5.1. 44 (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers. The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity reasonably satisfactory to it against any loss, liability, cost or expense (including, without limitation, reasonable fees and expenses of counsel). (f) The Trustee shall not be obligated to pay interest on any money or other assets received by it unless otherwise agreed in writing with the Company. Assets held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (g) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon, other evidence of Indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation. (h) The Trustee shall not be deemed to have notice or actual knowledge of any Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact a Default is received by the Trustee pursuant to Section 14.2 hereof, and such notice references the Notes and this Indenture. (i) The rights, privileges, protections, immunities and benefits given to the Trustee hereunder, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each Paying Agent, authenticating agent, Conversion Agent or Registrar acting hereunder. (j) The Trustee may request that the Company deliver an Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers' Certificate may be signed by any person authorized to sign an Officers' Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded. Section 5.2. Certain Rights of Trustee. Subject to the provisions of Section 5.1 hereof and subject to Section 315(a) through (d) of the TIA: (a) The Trustee may conclusively rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. 45 (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel, or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate or Opinion of Counsel. (c) The Trustee may act through attorneys and agents and shall not be responsible for the misconduct or negligence of any attorney or agent appointed with due care. (d) The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith which it believed to be authorized or within the discretion or rights or powers conferred upon it by this Indenture, unless the Trustee's conduct constitutes negligence. (e) The Trustee may consult with counsel of its selection and the advice of such counsel as to matters of law or legal interpretation shall be full and complete authorization and protection in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (f) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (g) The permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as a duty unless so specified herein. Section 5.3. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest (as such term is defined in Section 310(b) of the TIA), it must eliminate such conflict within 90 days, apply to the Commission for permission to continue as trustee (to the extent permitted under Section 310(b) of the TIA) or resign. Any agent may do the same with like rights and duties. The Trustee is also subject to Sections 5.11 and 5.12 hereof. Section 5.4. Money Held in Trust. Money held by the Trustee in trust hereunder shall not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise expressly agreed with the Company. Section 5.5. Trustee's Disclaimer. The recitals contained herein and in the Notes (except for those in the certificate of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity, sufficiency or priority of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Company of Notes or the proceeds thereof. Section 5.6. Notice of Defaults. 46 Within 90 days after a Responsible Officer of the Trustee has received written notice of the occurrence of any Default or Event of Default hereunder, the Trustee shall give notice to Holders, unless such Default or Event of Default shall have been cured or waived; provided, however, that, except in the case of a Default or Event of Default described in Sections 4.1(b) or (c), the Trustee shall be protected in withholding such notice if and so long as Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders. The second sentence of this Section 5.6 shall be in lieu of the proviso to Section 315(b) of the TIA and such proviso is hereby expressly excluded from this Indenture, as permitted by the TIA. The Trustee shall not be deemed to have knowledge of a Default unless a Responsible Officer of the Trustee has received written notice of such Default. Section 5.7. Reports by Trustee to Holders. The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required by Section 313 of the TIA at the times and in the manner provided by the TIA. A copy of each report at the time of its mailing to Holders shall be filed with the SEC, if required, and each stock exchange, if any, on which the Notes and the Common Stock are listed. The Company shall promptly notify the Trustee when the Notes or the Common Stock become listed on any stock exchange. Section 5.8. Compensation and Indemnification. The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such compensation as agreed to in writing by the Trustee and the Company (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Company covenants and agrees to pay or reimburse the Trustee upon its request for all expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ), except to the extent that any such expense, disbursement or advance is due to its negligence or bad faith. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 4.1, the expenses (including the charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any bankruptcy law. The Company also covenants to indemnify the Trustee and its officers, directors, employees and agents for, and to hold such Persons harmless against, any loss, liability or expense incurred by them, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder or the performance of their duties hereunder, including the costs and expenses of defending themselves against or investigating any claim of liability in the premises, except to the extent that any such loss, liability or expense was due to the negligence or willful misconduct of such Persons. The obligations of the Company under this Section 5.8 to compensate and indemnify the Trustee and its officers, directors, employees and agents and to pay or reimburse such Persons for expenses, disbursements and advances shall constitute additional Indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture or the 47 earlier resignation or removal of the Trustee. Such additional Indebtedness shall be a lien prior to that of the Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Notes, and the Notes are hereby subordinated to such senior claim. "TRUSTEE" for purposes of this Section 5.8 shall include any predecessor Trustee, in its capacity as Trustee, but the negligence or willful misconduct of any Trustee shall not affect the indemnification of any other Trustee. Section 5.9. Replacement of Trustee. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 5.9. The Trustee may resign and be discharged from the trust hereby created by so notifying the Company in writing. The Holders of at least a majority of the principal amount of Outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company must remove the Trustee if: (a) the Trustee fails to comply with Section 5.10 hereof or Section 310 of the TIA; (b) the Trustee becomes incapable of acting; (c) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; or (d) a Custodian or public officer takes charge of the Trustee or its property. If the Trustee resigns or is removed or if a vacancy exists in the office of the Trustee for any reason, the Company shall promptly appoint a successor Trustee. The Trustee shall be entitled to payment of its fees and reimbursement of its expenses while acting as Trustee. Within one year after the successor Trustee takes office, the Holders of at least a majority of the principal amount of Outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. Any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee if the Trustee fails to comply with Section 5.10. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation or removal, the resigning or removed Trustee, as applicable, may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The Company shall issue a notice of the successor Trustee's succession to the Holders. Upon payment of its charges, the retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject 48 nevertheless to its lien, if any, provided for in Section 5.8 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 5.9 hereof, the Company's obligations under Section 5.8 hereof shall continue for the benefit of the retiring Trustee with respect to expenses, losses and liabilities incurred by it prior to such replacement. Section 5.10. Successor Trustee by Merger, Etc. Subject to Section 5.11 hereof, if the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation or national banking association, the successor entity without any further act shall be the successor Trustee as to the Notes. Section 5.11. Corporate Trustee Required; Eligibility. The Trustee shall at all times satisfy the requirements of Section 310(a)(1), (2) and (5) of the TIA. The Trustee shall at all times have (or, in the case of a corporation included in a bank holding company system, the related bank holding company shall at all times have), a combined capital and surplus of at least $50 million as set forth in its (or its related bank holding company's) most recent published annual report of condition. The Trustee is subject to Section 310(b) of the TIA. Section 5.12. Collection of Claims Against the Company. The Trustee is subject to Section 311(a) of the TIA, excluding any creditor relationship listed in Section 311(b) of the TIA. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the TIA to the extent indicated therein. ARTICLE 6 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER, SALE, LEASE OR OTHER DISPOSITION Section 6.1. Company May Consolidate, Etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other Person or convey, transfer, sell, lease or otherwise dispose of all or substantially all of the properties and assets of the Company and its Restricted Subsidiaries taken as a whole, to any Person, unless: (a) the resulting, surviving or transferee Person is organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia; (b) such surviving or transferee entity shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of all and any amounts when due on all the Notes and the performance of every covenant of this Indenture, the Notes and the 49 Registration Rights Agreement (to the extent any obligations of the Company thereunder remain outstanding) on the part of the Company to be performed or observed and shall have provided for conversion rights provided in Article 12; and (c) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing. This Section 6.1 will not apply to: (a) a merger of the Company with an Affiliate solely for the purpose of reincorporating the Company in another jurisdiction; or (b) any consolidation or merger, or any sale, assignment, transfer, conveyance, lease or other disposition of assets between or among the Company and its Restricted Subsidiaries. Section 6.2. Successor Corporation Substituted. Upon any consolidation or merger by the Company with or into any other Person or any conveyance, transfer, sale, lease or other disposition of all or substantially all of the properties and assets of the Company to any Person, in accordance with Section 6.1 hereof, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer, sale, lease or disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein. In the event of any such conveyance, transfer, sale or disposition to the Company (which term shall for this purpose mean the Person named as the "Company" in the first paragraph of this Indenture or any successor Person which shall theretofore become such in the manner described in Section 6.1 hereof), except in the case of a lease to another Person, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Notes and may be dissolved and liquidated. ARTICLE 7 AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 7.1. Without Consent of Holders of Notes. Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may amend this Indenture and the Notes to: (a) add to the covenants of the Company for the benefit of the Holders; (b) without limiting the generality of paragraph (a) above, to eliminate the Company's option to make the election to deliver shares of Common Stock, cash or a combination thereof upon conversion pursuant to Section 12.12, or to require the Company to deliver, in connection with any conversion, shares of Common Stock, cash or a specified combination thereof; 50 (c) surrender any right or power herein conferred upon the Company; (d) provide for conversion rights of Holders if any reclassification or change of the Company's Common Stock or any consolidation, merger or sale of all or substantially all of the Company's assets occurs; (e) provide for the assumption of the Company's obligations to the Holders in the case of a merger, consolidation or conveyance, sale, transfer or lease pursuant to Article 6 hereof; (f) reduce the Conversion Price; provided, however, that such reduction in the Conversion Price shall not adversely affect the interest of the Holders (after taking into account tax and other consequences of such reduction); (g) comply with the requirements of the Commission in order to effect or maintain the qualification of this Indenture under the TIA; (h) make any changes or modifications to this Indenture necessary in connection with the registration of any Notes under the Securities Act as contemplated in the Registration Rights Agreement; provided, however, that such change or modification pursuant to this clause (g) does not, in the good faith opinion of the Board of Directors (as evidenced by a Board Resolution) and the Trustee, adversely affect the interests of the Holders in any material respect; (i) cure any ambiguity or correct or supplement any provision herein which may be inconsistent with any other provision herein or which is otherwise defective, or make any other provisions with respect to matters or questions arising under this Indenture which the Company may deem necessary or desirable and which shall not be inconsistent with the provisions of this Indenture; provided, however, that such action pursuant to this clause (h) does not, in the good faith opinion of the Board of Directors (as evidenced by a Board Resolution) and the Trustee, adversely affect the interests of the Holders in any material respect; (j) add guarantees with respect to the Notes; or (k) add or modify any other provisions herein with respect to matters or questions arising hereunder which the Company and the Trustee may deem necessary or desirable and which will not adversely affect the interests of the Holders. Section 7.2. With Consent of Holders of Notes. Except as provided below in this Section 7.2, this Indenture or the Notes may be amended, modified or supplemented, and noncompliance in any particular instance with any provision of this Indenture or the Notes may be waived, (i) with the written consent of the Holders of at least a majority of the principal amount of the Outstanding Notes or (ii) by the adoption of a resolution at a meeting of Holders by at least a majority in aggregate principal amount of the Notes represented at such meeting. 51 Without the written consent or the affirmative vote of each Holder of Notes affected thereby, an amendment or waiver under this Section 7.2 may not: (a) change the Stated Maturity of the Principal of or the date any installment of Interest or Additional Interest, if any, is due on any Note; (b) reduce the Principal or any premium, Repurchase Price or Redemption Price of or Interest or Additional Interest, if any, on any Note; (c) change the currency of any amount owed or owing under the Note or any Interest or Additional Interest thereon from U.S. Dollars; (d) impair the right of any Holder to institute suit for the enforcement of any payment in or with respect to any Note; (e) modify the obligation of the Company to maintain an office or agency in The City of New York pursuant to Section 9.2; (f) except as otherwise permitted or contemplated by the Indenture, adversely affect the right of the Holders to convert any Note as provided in Article 12; (g) modify the provisions of Article 10 in a manner adverse to the Holders; (h) modify any of the provisions of this Section, or reduce the percentage of voting interests required to waive a past default, except to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Note affected thereby; (i) reduce the percentage of the principal amount of the Outstanding Notes the consent of whose Holders is required for any supplemental indenture or the consent of whose Holders is required for any waiver provided for in this Indenture; or (j) alter the manner of calculation or rate of accrual of Interest or Additional Interest, if any, on any Note or extend the payment of any such amount. It shall not be necessary for any Act of Holders under this Section 7.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. Section 7.3. Compliance with Trust Indenture Act. Every amendment to this Indenture or the Notes shall be set forth in a supplemental indenture that complies with the TIA as then in effect. Section 7.4. Revocation of Consents and Effect of Consents or Votes. Until an amendment, supplement or waiver becomes effective, a written consent to it by a Holder is a continuing consent by the Holder and every 52 subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note; provided, however, that unless a record date shall have been established, any such Holder or subsequent Holder may revoke the consent as to its Note or portion of a Note if the Trustee receives written notice of revocation before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver becomes effective on receipt by the Trustee of written consents from or affirmative votes by, as applicable, the Holders of the requisite percentage of the principal amount of the Outstanding Notes, and thereafter shall bind every Holder; provided, however, if the amendment, supplement or waiver makes a change described in any of the clauses (a) through (j) of Section 7.2, the amendment, supplement or waiver shall bind only each Holder which has consented to it or voted for it, as applicable, and every subsequent Holder of a Note or portion of a Note that evidences the same Indebtedness as the Note of the consenting or affirmatively voting Holder, as applicable. Section 7.5. Notation on or Exchange of Notes. If an amendment, supplement or waiver changes the terms of a Note: (a) the Trustee may require the Holder of a Note to deliver such Notes to the Trustee, the Trustee may place an appropriate notation on the Note about the changed terms and return it to the Holder and the Trustee may place an appropriate notation on any Note thereafter authenticated; or (b) if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. Section 7.6. Trustee to Sign Amendment, Etc. The Trustee shall sign any amendment authorized pursuant to this Article 7 if the Trustee reasonably determines the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If the Trustee reasonably determines the amendment does adversely affect the rights, duties, liabilities or immunities of the Trustee, the Trustee may but need not sign it. In signing or refusing to sign any amendment hereunder, the Trustee shall be entitled to receive and shall be fully protected in relying upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence that such amendment is authorized or permitted by this Indenture and that all conditions precedent relating thereto have been complied with. Section 7.7. Effect of Amendment. Upon the execution of any supplemental amendment under this Article, this Indenture shall be modified in accordance therewith, and such amendment shall form a part of this Indenture for all purposes; and every Holder theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. 53 ARTICLE 8 [INTENTIONALLY OMITTED] ARTICLE 9 COVENANTS Section 9.1. Incurrence of Additional Indebtedness. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "INCUR") any Indebtedness (including Acquired Debt); provided, however, that the Company and its Subsidiaries may incur Indebtedness (including Acquired Debt) if the Company's Debt to EBITDA Ratio at the time of incurrence of such Indebtedness, after giving pro forma effect to such incurrence or issuance as of such date and to the use of proceeds therefrom as if the same had occurred at the beginning of the most recently ended four full fiscal quarter period of the Company for which internal financial statements are available, would have been no greater than 3.5 to 1. The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, "PERMITTED DEBT"): (a) the incurrence by the Company of additional Indebtedness and letters of credit under one or more Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (a) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) not to exceed $45.0 million, $30.0 million of which shall be used in connection with the direct or indirect acquisition of Equity Interests of a Person engaged in, or assets related to, the information technology services business, business process outsourcing or businesses complementary or ancillary thereto or for the acquisition by the Company or any of its Subsidiaries of new customers or customer contracts; (b) the incurrence by the Company and its Restricted Subsidiaries of Existing Indebtedness; (c) the incurrence by the Company of Indebtedness represented by the Notes to be issued hereby (and any additional Notes purchased by the initial purchaser pursuant to its 30-day option to purchase additional Notes); (d) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (d), not to exceed $7.5 million at any time outstanding; 54 (e) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under the first paragraph of this covenant or clauses (b), (c), (d), (e) or (l) of this paragraph; (f) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that if the Company is the obligor on such Indebtedness, such Indebtedness must be expressly subordinated to payment of any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the Notes to the extent provided in this Indenture; (g) the incurrence by the Company or any of its Restricted Subsidiaries of Subordinated Indebtedness; (h) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations; (i) the guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this covenant; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed; (j) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers' compensation claims, self-insurance obligations, bankers' acceptances, performance and surety bonds in the ordinary course of business; (k) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five business days; and (l) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (l), not to exceed $5.0 million. For purposes of determining compliance with this Section 9.1, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (a) through (l) above, or is entitled to be incurred pursuant to clause (a) above, the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 9.1. The accrual of Interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in 55 accounting principles, will not be deemed to be an incurrence of Indebtedness for purposes of this Section 9.1. Notwithstanding any other provision of this Section 9.1, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be: (x) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; and (y) the principal amount of the Indebtedness, in the case of any other Indebtedness. Section 9.2. Payment of Principal, Redemption Price, Repurchase Price and Interest. The Company will duly and punctually pay the Principal of, and the Interest and Additional Interest, if any, on, and any other payments due with respect to, the Notes when and if at any time any such foregoing amounts are due and payable in accordance with the terms of the Notes and this Indenture. The Company will deposit or cause to be deposited with the Trustee as directed by the Trustee, no later than the day of the Stated maturity of any Note, the date of any installment of Interest or Additional Interest, if any, or any other date such payment is otherwise due. If Additional Interest is payable by the Company pursuant to the Registration Rights Agreement, the Company shall deliver to the Trustee a certificate to such effect stating (i) the amount of Additional Interest so payable and (ii) the date on which such Additional Interest is payable. Unless and until a Responsible Officer of the Trustee receives such a certificate, the Trustee may assume without inquiry that no Additional Interest is payable. Section 9.3. Maintenance of Offices or Agencies. The Company hereby appoints the Trustee's Corporate Trust Office as its office in the Borough of Manhattan, The City of New York, where Notes may be: (a) presented or surrendered for payment; (b) surrendered for registration of transfer or exchange; (c) surrendered for conversion; and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company will maintain in The City of New York, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange, where Notes may be surrendered for conversion and where notices and demands to or upon the Company 56 in respect of the Notes and this Indenture may be served. The Company will give prompt written notice to the Trustee, and notice to the Holders in accordance with Section 14.2 hereof, of the appointment or termination of any such agents and of the location and any change in the location of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency in The City of New York, or shall fail to furnish the Trustee with the address thereof, presentations and surrenders may be made at, and notices and demands may be served on, the Corporate Trust Office of the Trustee. Section 9.4. Corporate Existence. Subject to Article 6 hereof, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises of the Company and each Subsidiary; provided, however, that the Company shall not be required to preserve any such right or franchise if the Board of Directors shall determine in good faith that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries as a whole and that the loss thereof is not disadvantageous in any material respect to the Holders. Section 9.5. Reports. (a) The Company, shall deliver to the Trustee within 15 days after it files them with the Commission copies of Forms 10-K and 10-Q which the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act; provided, however, the Company shall not be required to deliver to the Trustee any materials for which the Company has sought and received confidential treatment by the SEC. The Company also shall comply with the other provisions of Section 314(a) of the TIA. (b) If at any time the Company is not subject to Section 13 or 15(d) of the Exchange Act, upon the request of a Holder, the Company, will promptly furnish or cause to be furnished to such Holder or to a prospective purchaser of such Note designated by such Holder, as applicable, the information, if any, required to be delivered by it pursuant to Rule 144A(d)(4) under the Securities Act to permit compliance with Rule 144A in connection with the resale of such Note; provided, however, that the Company shall not be required to furnish such information in connection with any request made on or after the date which is two years from the later of the date such security was last acquired from the Company or an "affiliate" (as defined under Rule 144 under the Securities Act) of the Company. Section 9.6. Compliance Certificate. The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Company, an Officer's Certificate signed by two Officers of the Company stating that, in the course of the performance by the signers of their duties as Officers of the Company, they would normally have knowledge of any failure by the Company to comply with all conditions, or Default by the Company with respect to any covenants, under this Indenture, and further stating whether or not they have knowledge of any such failure or Default and, if so, specifying each such failure or Default and the nature thereof. In the event an Officer of the Company comes to have actual knowledge of a Default, regardless 57 of the date, the Company shall deliver an Officers' Certificate to the Trustee within five Business Days of obtaining such actual knowledge specifying such Default and the nature and status thereof. When any Registration Default (as defined in the Registration Rights Agreement) occurs, the Company shall promptly deliver to the Trustee by registered or certified mail or by telegram, telex or facsimile transmission an Officer's Certificate specifying the nature of such Registration Default. In addition, the Company shall deliver to the Trustee on each Interest Payment Date during the continuance of a Registration Default and on the first Interest Payment Date following the cure of a Registration Default (to the extent that Additional Interest is then due and payable on such Interest Payment Date), an Officer's Certificate specifying the Additional Interest which has accrued and which is then owing under the Registration Rights Agreement. Section 9.7. Resale of Certain Notes. During the period of two years after the last date of original issuance of any Notes, the Company shall not, and shall not register for transfer any sales by any of its "affiliates" (as defined under Rule 144 under the Securities Act) of any Notes, or shares of Common Stock issuable upon conversion of the Notes, which constitute "restricted securities" under Rule 144, except pursuant to an effective registration statement under the Securities Act; provided, however, that the Company may register for transfer sales of Notes, or shares of Common Stock issuable upon conversion of the Notes, which constitute "restricted securities" under Rule 144, if the transferee thereof acknowledges that such Notes are Transfer Restricted Securities (as defined in the Registration Rights Agreement). The Trustee shall have no responsibility or liability in respect of the Company's performance of its agreement in the preceding sentence. Section 9.8. Designation of Restricted and Unrestricted Subsidiaries. The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. The Board of Directors of the Company may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if that redesignation would not cause a Default. Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary will be evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the Board of Directors giving effect to such designation and an Officers' Certificate certifying that such designation complied with the preceding conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 9.1 hereof, the Company will be in default of such covenant. The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such 58 designation will only be permitted if (1) such Indebtedness is permitted under Section 9.1 hereof, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation. ARTICLE 10 REDEMPTION OF NOTES Section 10.1. Optional Redemption. At any time on or after July 15, 2007, except for Notes that it is required to purchase pursuant to Section 11.1 or required to convert pursuant to Section 12.1, the Company may, at its option, redeem the Notes for cash in whole at any time or in part from time to time, on any date prior to the Stated Maturity of such Notes, upon notice as set forth in Section 10.4, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed; provided, however, that the Company may only redeem Notes prior to July 15, 2009 if: (a) the Market Price of the Company's Common Stock has been at least 150% of the Conversion Price then in effect for at least 20 Trading Days during any 30 consecutive Trading Day period; and (b) the Shelf Registration Statement covering resales of the Notes and the shares of Common Stock issuable upon conversion of the Notes is effective and available for use and is expected to remain effective and available for use for the 30 days following the Redemption Date. The Company may not redeem any Notes if the Company has failed to pay any Interest (including Additional Interest) and such failure to pay is continuing. If the Company exercises its option to redeem the Notes of a Holder pursuant to this Section 10.1, the Holder may nevertheless exercise its right to have its Notes purchased pursuant to Section 11.1, if applicable, or to convert such Notes pursuant to Article 12 even if such Notes are not otherwise convertible at such time, in each case, until the close of business on the day that is one Business Day immediately preceding the Redemption Date. The Company shall pay Interest and Additional Interest, if any, to the Holder of the Notes called for redemption pursuant to Section 10.1 (including those Notes which are converted into Common Stock after the date the notice of the redemption is mailed and prior to the Redemption Date) accrued but not paid to, but excluding, the Redemption Date pursuant to Section 2.1(d)(ii); provided, however, that if the Redemption Date is an Interest Payment Date, the Company shall pay the Interest to the Holder of the Note at the close of business on such Interest Payment Date. If the Company redeems any Notes prior to July 15, 2009, the Company will also make an additional payment on the Redemption Date with respect to the Notes called for redemption, such payment to be made to the Persons who were the Holders of such Notes on the date notice of redemption is given, in an amount equal to $173.83 per $1,000 principal amount of Notes, less the amount of any Interest (not including any Additional Interest) actually paid on such Notes 59 prior to the Redemption Date. The Company will make this additional payment on all Notes called for redemption prior to July 15, 2009, including any Notes converted after the Redemption Notice Date and on or before the Redemption Date. Section 10.2. Notice to Trustee. If the Company elects to redeem Notes pursuant to the provisions of Section 10.1 hereof (such election to be ordered by a Board Resolution), it shall notify the Trustee at least 20 days prior to the intended Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), but not more than 60 days' prior to the notice of Redemption, of (i) such intended Redemption Date, (ii) the principal amount of Notes to be redeemed and (iii) the CUSIP numbers of the Notes to be redeemed. Section 10.3. Selection of Notes to Be Redeemed. If fewer than all the Notes are to be redeemed, the Trustee shall select the particular Notes to be redeemed from the Outstanding Notes by a method that complies with the requirements of any exchange on which the Notes are listed, or, if the Notes are not listed on an exchange, on a pro rata basis or by lot or in accordance with any other method the Trustee considers fair and appropriate. The Trustee may select for redemption portions of the principal amount of Notes that have denominations larger than $1,000. Notes and portions thereof that the Trustee selects shall be in principal amounts in integral multiples of $1,000. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. The Trustee shall notify the Company promptly of the Notes or portions of Notes to be redeemed. The Trustee shall promptly notify the Company and the Registrar in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed. If any Note selected for partial redemption is converted or elected to be purchased in part before termination of the conversion right or Purchase Right with respect to the portion of the Note so selected, the converted or purchased portion of such Note shall be deemed to be the portion selected for redemption; provided, however, that the Holder of such Note so converted or purchased and deemed redeemed shall not be entitled to any additional interest payment as a result of such deemed redemption than such Holder would have otherwise been entitled to receive upon conversion or purchase of such Note subject to Section 2.1(e). Notes which have been converted or purchased during a selection of Notes to be redeemed may be treated by the Trustee as Outstanding for the purpose of such selection. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Notes shall relate, in the case of any Notes redeemed or to be redeemed only in part, to the portion of the principal amount of such Notes which has been or is to be redeemed. Section 10.4. Notice of Redemption. 60 Notice of redemption shall be given in the manner provided in Section 14.2 to the Holders of Notes to be redeemed. Such notice shall be given no less than 20 and no more than 60 days prior to the intended Redemption Date. All notices of redemption shall state: (a) such intended Redemption Date; (b) the Redemption Price and Interest and Additional Interest accrued and unpaid to, but excluding, the Redemption Date, if any; (c) if the Company elects to satisfy the Conversion Obligation in a Cash Amount or in Common Stock; (d) If the Company elects to satisfy the Conversion Obligation in a Cash Amount, the date on which the Cash Settlement Averaging Period will commence; (e) if fewer than all the Outstanding Notes are to be redeemed, the principal amount of Notes to be redeemed and the principal amount of Notes which will be Outstanding after such partial redemption; (f) that on the Redemption Date the Redemption Price and Interest or Additional Interest accrued and unpaid to, but excluding, the Redemption Date, if any, will become due and payable upon each such Note to be redeemed; (g) the Conversion Price, the date on which the right to convert the principal of the Notes to be redeemed will terminate and the places where such Notes may be surrendered for conversion; (h) the place or places where such Notes are to be surrendered for payment of the Redemption Price and accrued and unpaid Interest and Additional Interest, if any; and (i) the CUSIP number of the Notes. The notice given shall specify the last date on which exchanges or transfers of Notes may be made pursuant to Section 2.7, and shall specify the serial numbers of Notes and the portions thereof called for redemption. Notice of redemption of Notes to be redeemed at the election of the Company shall be given by the Company or, at the Company's written request delivered at least 20 days prior to the date of the mailing of such Notice (unless a shorter period shall be acceptable to the Trustee), by the Trustee in the name of and at the expense of the Company. Section 10.5. Effect of Notice of Redemption. Notice of redemption having been given as provided in Section 10.4 hereof, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date 61 (unless the Company shall default in the payment of the Redemption Price and any accrued and unpaid Interest or Additional Interest) such Notes shall cease to bear Interest and Additional Interest, if any. Upon surrender of any such Note for redemption in accordance with such notice, such Note shall be paid by the Company at the Redemption Price; provided, however, the installments of Interest and Additional Interest, if any, on Notes whose Stated Maturity is prior to or on the Redemption Date shall be payable to the Holders of such Notes, or one or more Predecessor Notes, registered as such on the relevant Regular Record Date. If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal and premium, if any, shall, until paid, bear Interest from the Redemption Date at the Interest Rate. Section 10.6. Deposit and Payment of Redemption Price. Prior to or on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.6) an amount of money in immediately available funds sufficient to pay the Redemption Price, and accrued and unpaid Interest and Additional Interest, if any, in respect of all the Notes to be redeemed on that Redemption Date from the last Interest Payment Date to but not including the Redemption Date, other than any Notes called for redemption on that date which have been converted prior to the date of such deposit, and accrued and unpaid Interest on such Notes. The Trustee and Paying Agent shall then cause such funds to be paid to the Holders of the Notes being redeemed in accordance with this Article. If any Note delivered for redemption shall not be so redeemed by payment to the Holders thereof on the Redemption Date, the principal amount of such Note shall, until it is redeemed, bear Interest on the Redemption Date to but not including the actual date of redemption at the applicable Interest Rate, and each such Note shall remain convertible into shares of Common Stock pursuant to Article 12 until such Note shall have been so redeemed. If any Note called for redemption is converted, any money deposited with the Trustee or with a Paying Agent or so segregated and held in trust for the redemption of such Note shall (subject to any right of the Holder of such Note or any Predecessor Note to receive Interest as provided in Section 2.1(e) be paid to the Company upon request by the Company or, if then held by the Company, shall be discharged from such trust. Section 10.7. Notes Redeemed in Part. Any Note which is to be redeemed only in part shall be surrendered at an office or agency of the Company designated for that purpose pursuant to Section 9.2 hereof (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or the Holder's attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Note without service charge, a new Note or Notes of any authorized denomination as requested by such Holder in principal amount equal to and in exchange for the unredeemed portion of the Note 62 so surrendered, provided that no single Note may be purchased in part unless the portion of the principal amount of such Note to be Outstanding after such purchase is equal to $1,000 or an integral multiple thereof. ARTICLE 11 PURCHASE AT THE OPTION OF A HOLDER UPON SPECIFIC REPURCHASE DATES OR CHANGE OF CONTROL Section 11.1. Purchase Right. (a) On July 15, 2009, 2014 and 2019, (each, a "SPECIFIC REPURCHASE DATE") each Holder shall have the right (the "PURCHASE Right"), at the Holder's option, to require the Company to repurchase for cash, and upon the exercise of such right the Company shall purchase, all of such Holder's Notes not previously called for redemption, or any portion of the principal amount thereof that is equal to $1,000 or an integral multiple thereof (provided that no single Note may be purchased in part unless the portion of the principal amount of such Note to be Outstanding after such purchase is equal to $1,000 or an integral multiple thereof), at a purchase price equal to 100% of the principal amount of the Notes to be purchased (the "REPURCHASE PRICE"), plus accrued and unpaid Interest (including Additional Interest, if any) on those Notes to, but excluding the Specific Repurchase Date. Holders may submit their Notes for repurchase to the Paying Agent at any time from the opening of business on the date that is 20 Business Days prior to the applicable Specific Repurchase Date until the close of business on the applicable Specific Repurchase Date. (b) In the event that a Change of Control (together with the Specific Repurchase Dates, "REPURCHASE EVENTS") shall occur, each Holder shall have the right, at the Holder's option, but subject to the provisions of Section 11.2 hereof, to require the Company to purchase for cash, and upon the exercise of such right the Company shall purchase, all of such Holder's Notes not theretofore called for redemption, or any portion of the principal amount thereof that is equal to $1,000 or an integral multiple thereof as directed by such Holder pursuant to Section 11.3 (provided that no single Note may be purchased in part unless the portion of the principal amount of such Note to be Outstanding after such purchase is equal to $1,000 or an integral multiple thereof), on the date (the "CHANGE OF CONTROL PURCHASE DATE"; together with the Specific Repurchase Date, the "REPURCHASE DATE") that is a Business Day 20 Business Days after the date of the Repurchase Event Notice for an amount equal to the sum of (i) the Repurchase Price plus accrued and unpaid Interest and Additional Interest, if any, to, but excluding, the Change of Control Purchase Date, and (ii) the Make Whole Premium, if any; provided, however, that installments of Interest on Notes whose Stated Maturity is prior to or on the Change of Control Purchase Date shall be payable to the Holders of such Notes, or one or more Predecessor Notes, registered as such on the relevant Regular Record Date according to their terms and the provisions of Section 2.1 hereof; and provided further, however, that a Change of Control of the type described in clause (i) or clause (iii) of the definition of the term "Change of Control" will not constitute a Repurchase Event if at least 90% of the consideration in the transaction or transactions constituting a Change of Control consists of shares of Capital Stock traded or to be traded immediately following such Change of Control on a national securities exchange or the Nasdaq National Market and, as a result of the transaction or transactions, the Notes become convertible solely into such Capital Stock (and any rights attached thereto). 63 (c) If the Holders have a repurchase right pursuant to this Section 11.1, the Company shall issue a press release through Dow Jones & Company, Inc, Business Wire or Bloomberg Business News (or, if such organizations are not in existence at the time of issuance of such press release, such other news or press organization as is reasonably calculated to broadly disseminate the relevant information to the public) containing the relevant information and make such information available on the Company's web site or through another public medium as the Company may use at such time. Section 11.2. Repurchase Event Notice. No later than 20 Business Days after the occurrence of a Repurchase Event, the Company shall mail a written notice of the Repurchase Event (the "REPURCHASE EVENT NOTICE") by first- class mail to the Trustee and to each Holder (and to beneficial owners to the extent practicable) pursuant to Section 14.2. The Repurchase Event Notice shall include a form of notice (the "REPURCHASE EVENT PURCHASE NOTICE") to be completed by the Holder and delivered to the Paying Agent pursuant to Section 11.3, and shall state the following: (a) that it is a Repurchase Event Notice pursuant to this Section; (b) the events causing a Repurchase Event and the date of such Repurchase Event; (c) the procedures with which such Holder must comply to exercise its right to have its Notes purchased pursuant to Section 11.1, including the date by which the completed Repurchase Event Purchase Notice pursuant to Section 11.3 and the Notes the Holder elects to have purchased pursuant to Section 11.1 must be delivered to the Paying Agent in order to have such Notes purchased by the Company pursuant to Section 11.1, the name and address of the Paying Agent and that the Notes as to which a Repurchase Event Purchase Notice has been given may be converted, if they are otherwise convertible pursuant to Article 12, only if the completed and delivered Repurchase Event Purchase Notice has been withdrawn in accordance with the terms of the Indenture, the Holder's conversion rights pursuant to Article 12 and the Conversion Price and the Conversion Rate then in effect and any adjustments thereto; (d) the Repurchase Date and the Repurchase Price, if applicable; (e) that, unless the Company defaults in making payment of such Repurchase Price, Interest or Additional Interest, if any, on the Notes surrendered for purchase by the Company will cease to accrue on and after the Repurchase Date, if applicable; (f) the CUSIP number of the Notes; and No failure by the Company to give the foregoing Repurchase Event Notice shall limit any Holder's right to exercise its rights pursuant to Section 11.1 or affect the validity of the proceedings for the purchase of its Notes hereunder. Section 11.3. Delivery of Repurchase Event Purchase Notice; Form of Repurchase Event Purchase Notice; Withdrawal of Repurchase Event Purchase Notice. 64 (a) The Company shall deliver, or cause the Trustee or Paying Agent, to deliver, to all Holders (and beneficial holders of the Notes to the extent practicable) a form of Repurchase Event Purchase Notice, which with respect to Holders' Purchase Rights set forth in Section 11.1, shall be delivered to such Holders at least 20 Business Days prior to the Repurchase Event Purchase Date and, as set forth in Section 11.2, shall be included in the Repurchase Event Notice; provided that the delivery of such form of Repurchase Event Purchase Notice to the Holders shall be made in the Company's name and at the Company's expense and the text of such form of Repurchase Event Purchase Notice shall be prepared by the Company pursuant to clause (b) of this Section. (b) The form of Repurchase Event Purchase Notice shall provide instructions regarding procedures with which Holders must comply to exercise their rights pursuant to Section 11.1 and the completion of the Repurchase Event Purchase Notice and also shall state: (i) that it is the Repurchase Event Purchase Notice pursuant to Sections 11.2 and 11.3 of the Indenture and must be completed by the Holder and delivered to the Paying Agent (and any beneficial holder of securities), together with the delivery of the Holder's Notes for which the Holder will exercise its Purchase Rights pursuant to Section 11.1, for such Holder to receive the Repurchase Price; (ii) the name and address of the Paying Agent to, and the date by, which the completed Repurchase Event Purchase Notice and Notes must be delivered in order for the Holder to receive the applicable purchase price; (iii) the portion of the principal amount of the Note which the Holder will deliver to be purchased, which portion must be in a principal amount of $1,000 or an integral multiple thereof; (iv) any other procedures then applicable that the Holder must follow to exercise rights under Article 11 and a brief description of those rights; (v) the Repurchase Date and the Repurchase Price; (vi) the procedures with which such Holder must comply to exercise its right to have its Notes purchased pursuant to Section 11.1, including the date by which the completed Repurchase Event Purchase Notice pursuant to Section 11.3 and the Notes the Holder elects to have purchased pursuant to Section 11.1 must be delivered to Paying Agent in order to have such Notes purchased by the Company pursuant to Section 11.1, the name and address of the Paying Agent and that the Notes as to which a Repurchase Event Purchase Notice has been given may be converted, if they are otherwise convertible pursuant to Article 12, only if the completed and delivered Repurchase Event Purchase Notice has been withdrawn in accordance with the terms of the Indenture, the Holder's conversion rights pursuant to Article 12, the Conversion Price and the Conversion Rate then in effect and any adjustments thereto; (vii) the Holder's right to withdraw a completed and delivered Repurchase Event Purchase Notice, the procedures for withdrawing a Repurchase Event Purchase Notice, pursuant to clause (c) below and that Notes as 65 to which a completed and delivered Repurchase Event Purchase Notice may be converted, if they are convertible only in accordance with Article 12, if the applicable completed and delivered Repurchase Event Purchase Notice has been withdrawn; (viii) that, unless the Company defaults in making payment on Notes for which a Repurchase Event Purchase Notice has been submitted, Interest or Additional Interest, if any, on such Notes will cease to accrue on the Repurchase Event Purchase Date; and (ix) the CUSIP number of the Notes. (c) Notwithstanding anything herein to the contrary, any Holder which has delivered a completed Repurchase Event Purchase Notice to the Paying Agent shall have the right to withdraw such Repurchase Event Purchase Notice by delivery of a written notice of withdrawal delivered to the office of the Paying Agent in accordance with the Repurchase Event Purchase Notice at any time prior to the close of business on the Repurchase Date specifying: (i) the certificate number, if any, of the Note in respect of which such notice of withdrawal is being submitted; (ii) the principal amount of the Note with respect to which such notice of withdrawal is being submitted; and (iii) the principal amount, if any, of such Note which remains subject to the original Repurchase Event Purchase Notice and which has been or will be delivered for purchase by the Company. The Paying Agent shall promptly notify the Company of the receipt by it of any Repurchase Event Purchase Notice or written notice of withdrawal thereof. Section 11.4. Exercise of Purchase Rights. To exercise a Purchase Right pursuant to Section 11.1, a Holder must deliver to the Trustee at its offices on or prior to the Repurchase Date the following: (a) a completed Repurchase Event Purchase Notice, the form of which is provided in Exhibit B hereto; and (b) the Notes or cause such Notes to be delivered through the facilities of the Depositary, as applicable, with respect to which the Purchase Right is being exercised, with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer, in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing. Section 11.5. Deposit and Payment of the Purchase Price. (a) If a Holder has exercised its rights pursuant to Section 11.1 and has satisfied the conditions for the exercise of such rights in accordance with Section 11.4, then the Company shall, prior to 10:00 a.m. (New 66 York City time) on the Business Day following the Repurchase Date, deposit with the Trustee or with the Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.4) an amount of money in immediately available funds, if deposited on such Business Day, sufficient to pay the aggregate Repurchase Price of all the Notes or portions thereof which are to be purchased on such purchase date. From such deposit, the Trustee or Paying Agent, as applicable, shall pay the Holder the applicable Repurchase Price multiplied by the principal amount of Notes for which such rights were exercised on the Change of Control Purchase Date. (b) There shall be no purchase of any Notes pursuant to Section 11.1 if there has occurred (prior to, on or after, as applicable, the giving, by the Holders of such Notes, of the required Repurchase Event Purchase Notice) and is continuing an Event of Default (other than a default in the payment of the Repurchase Event Price with respect to such Notes). The Paying Agent will promptly return to the respective Holders thereof any Notes (i) with respect to which a Repurchase Event Purchase Notice has been withdrawn in compliance with this Indenture, or (ii) held by it during the continuance of an Event of Default (other than a default in the payment of the Repurchase Price with respect to such Notes) in which case, upon such return, the Repurchase Event Purchase Notice with respect thereto shall be deemed to have been withdrawn. (c) If any Note delivered for purchase pursuant to Section 11.1 shall not be so paid on the Repurchase Date, the principal amount of such Note shall, until it is paid, bear Interest from the purchase date to but not including the date of actual payment hereunder at the applicable Interest Rate, and each such Note shall remain convertible into shares of Common Stock pursuant to Article 12 until such Note shall have been paid. Section 11.6. Effect of Delivery of Repurchase Event Purchase Notice and Purchase. (a) Upon receipt by the Paying Agent of a Repurchase Event Purchase Notice, the Holder of the Note in respect of which such Repurchase Event Purchase Notice was delivered shall (unless such Repurchase Event Purchase Notice is withdrawn pursuant to Section 11.3(c)) thereafter be entitled to receive solely the Repurchase Price with respect to such Note, and, if applicable, any accrued and unpaid Interest (including Additional Interest, if any) pursuant to Section 2.1(e). Notes in respect of which a Repurchase Event Purchase Notice has been delivered by the Holder thereof may not be converted pursuant to Article 12 on or after the date of the delivery of such Repurchase Event Purchase Notice unless such Repurchase Event Purchase Notice which has been completed and delivered to the Paying Agent has first been validly withdrawn pursuant to Section 11.3(c). (b) All Notes purchased by the Company pursuant to a Repurchase Event shall be canceled by the Trustee. Section 11.7. Physical Notes Purchased in Part. Any Physical Note which is to be purchased only in part shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder 67 thereof or such Holder's attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Note, without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder in principal amount equal to, and in exchange for, the portion of the principal amount of the Note so surrendered which is not purchased. Section 11.8. Covenant to Comply With Securities Laws Upon Purchase of Notes. When complying with the provisions of this Article 11 (provided that such offer or purchase constitutes an "issuer tender offer" for purposes of Rule 13e-4 (which term, as used herein, includes any successor provision thereto) under the Exchange Act at the time of such offer or purchase), the Company shall (a) comply with Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act which may then be applicable, (b) file the related Schedule TO (or any successor schedule, form or report) under the Exchange Act and (c) otherwise comply with all federal and state securities laws so as to permit the rights and obligations under this Article 11 to be exercised in the time and in the manner specified in this Article 11. Section 11.9. Repayment to the Company. The Trustee and the Paying Agent shall return to the Company any cash that remains unclaimed, together with interest or dividends, if any, thereon (subject to the provisions of Section 5.4), held by them for the payment of the Repurchase Price; provided, however, that to the extent that the aggregate amount of cash deposited by the Company pursuant to Section 11.5 exceeds the aggregate Repurchase Price of the Notes or portions thereof which the Company is obligated to purchase on the purchase date then, unless otherwise agreed in writing with the Company, promptly after the Business Day following such purchase date, the Trustee or Paying Agent, as applicable, shall return any such excess to the Company together with interest or dividends, if any, thereon, subject to the provisions of Section 5.4. ARTICLE 12 CONVERSION OF NOTES Section 12.1. Conversion Right; Expiration of Conversion Right; Conversion Price; Limitation on Ability to Exercise Conversion Right. (a) Subject to and upon compliance with the provisions of this Article, at the option of the Holder at any time and from time to time prior to the close of business on their Stated Maturity, any Note or any portion of the principal amount thereof which is an integral multiple of $1,000 may be converted at the principal amount thereof, or of such portion thereof, into duly authorized, fully paid and nonassessable shares of Common Stock, at the Conversion Price, determined as hereinafter provided, in effect at the time of conversion: (i) during any fiscal quarter of the Company, if the Market Price of the Common Stock for at least 20 Trading Days in the 30 consecutive Trading Day period ending on the last day of the preceding fiscal quarter was more than 130% of the Applicable Conversion Price; 68 (ii) on or before July 15, 2019, during the five Business Day period following any 10 consecutive Trading Day period in which the Trading Price of the Notes during such 10 Trading Day period was less than 98% of the Applicable Conversion Value of the Notes; (iii) at any time prior to the close of business on the day that is one Business Day immediately preceding the Redemption Date, if such Note has been called for redemption pursuant to Article 10 hereof; or (iv) as provided in Section 12.1(b) below. The Conversion Agent shall, on behalf of the Company, determine whether the Notes shall be convertible as a result of the occurrence of an event specified in clause (i) above and, if the Notes shall be so convertible, the Conversion Agent shall promptly deliver to the Company and the Trustee written notice thereof. In the case of an event specified in clause (ii) above, the Conversion Agent shall have no obligation to determine the Trading Price of the Notes unless the Company shall have requested that it make such determination; and the Company has no obligation to make such request unless so requested by a Holder. On or before July 15, 2019, upon written request made by a Holder, the Company shall instruct the Conversion Agent to determine the Trading Price per Note beginning on the next Trading Day and on each successive Trading Day until the Trading Price per Note is greater than 98% of the Applicable Conversion Value for 10 consecutive Trading Days. If a Holder exercises its conversion right pursuant to Section 12.1(b) and is entitled to be paid the Make Whole Premium pursuant to Section 13.1, such Holder shall be entitled to accrued and unpaid Interest (including Additional Interest) on the converted Notes to, but excluding, the Conversion Date if the Make Whole Premium is greater than zero. (b) In addition, in the event that: (i) (A) the Company distributes to all holders of shares of Common Stock rights or warrants entitling them (for a period expiring within 60 days of the date of such distribution) to subscribe for or purchase shares of Common Stock, at a price per share less than the Market Price of the Common Stock at the time of the announcement of such distribution; (B) the Company distributes to all holders of shares of Common Stock cash or other assets, debt securities or rights or warrants to purchase the Company's securities, where the Fair Market Value (as determined by the Board of Directors) of such distribution per share of Common Stock exceeds 5% of the Market Price of a share of Common Stock on the Business Day immediately preceding the date of declaration of such distribution; or (C) a Change of Control occurs but the Holders do not have the right to require the Company to purchase their Notes as a result of such Change of Control, because of the final provisio in Section 11.2, 69 then, in each case, the Notes may be surrendered for conversion at any time on and after the date that the Company gives notice to the Holders of such right, which shall be not less than 20 days prior to the Ex-Dividend Time for such distribution, in the case of clause (A) or (B), or within 20 Business Days after the occurrence of the Change of Control, in the case of clause (C), until (1) the earlier of the close of business on the Business Day immediately preceding the Ex-Dividend Time or the date the Company announces that such distribution will not take place, in the case of clause (A) or (B), or (2) the earlier of 20 Business Days after the Company's delivery of the Repurchase Event Notice or the date the Company announces that the Change of Control will not take place, in the case of clause (C). (ii) the Company consolidates with or merges into another Person, or is a party to a binding share exchange pursuant to which the shares of Common Stock would be converted into cash, securities or other property as set forth in Section 12.5 hereof, then the Notes may be surrendered for conversion at any time from and after the date which is 15 days prior to the date announced by the Company as the anticipated effective time of such transaction until 15 days after the actual date of such transaction, provided, however, that at the effective time of a transaction described in the immediately preceding clause, the right to convert a Note into Common Stock will be changed into a right to convert a Note into the kind and amount of cash, securities or other property which a Holder would have received if such Holder had converted such Note immediately prior to such transaction. (c) The price at which shares of Common Stock shall be delivered upon conversion (the "CONVERSION PRICE") shall be initially equal to $15.36 per share of Common Stock, subject to adjustment, in certain instances, as provided in Section 12.4. (d) No payment or adjustment will be made for dividends on, or other distributions with respect to, any Common Stock except as provided in this Article 12. (e) A Note in respect of which a Holder has delivered a Repurchase Event Purchase Notice exercising the option of such Holder to require the Company to purchase such Note may be converted only if such notice of exercise is withdrawn in accordance with Section 11.3(c). (f) Whenever the Notes shall become convertible pursuant to this Section 12.1, the Company or, at the Company's request, the Trustee in the name and at the expense of the Company, shall notify the Holders of the event triggering such convertibility in the manner provided in Section 14.2, and the Company shall also publicly announce such information and publish it on the Company's web site. Any notice so given shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. (g) If any of the Notes is convertible by the Holders into Common Stock, the Company shall deliver to the Trustee an Officers' Certificate to that effect stating (i) the fact that such Notes are so convertible, (ii) the date as of which the Notes are convertible, (iii) the reason why the Notes are convertible and (iv) the conversion rate at which the Notes are convertible. Unless and until a Responsible Officer of the Trustee receives such Officers' Certificate, the Trustee may assume without inquiry that the Notes are not convertible. Whenever any fact set forth in an Officers' Certificate delivered pursuant to this Section 12.1 changes, the Company shall deliver to the Trustee a 70 new Officers' Certificate setting forth the correct information. Unless and until a Responsible Officer receives such a correcting Officers' Certificate, the Trustee may assume without inquiry that the last Officers' Certificate delivered to it remains in full force and effect and is correct is every respect. (h) Provisions of this Indenture that apply to conversion of all of a Note also apply to conversion of a portion of a Note. (i) A Holder of Notes is not entitled to any rights of a holder of Common Stock until such Holder has converted its Notes to Common Stock, and only to the extent such Notes are deemed to have been converted into Common Stock pursuant to this Article 12. (j) A Holder of Notes may only convert Notes to the extent that such Holder will not own immediately following such conversion, outstanding shares constituting more than 19.9% of the outstanding shares of Common Stock and when a Holder delivers any Note for conversion, such Holder will be deemed to represent that, immediately following conversion, such Holder will not own outstanding shares constituting more than 19.9% of the outstanding shares of Common Stock. To the extent a Holder attempts to convert Notes which would result in such Holder beneficially owning outstanding shares constituting more than 19.9% of the outstanding shares of Common Stock, the purported conversion will be void and such Holder will not acquire any rights in the shares of Common Stock that would result in such Holder owning outstanding shares constituting more than 19.9% of the outstanding shares of Common Stock. (k) Notwithstanding any other provision of the Notes or this Indenture, all Holders' rights with respect to conversion of the Notes and the Company's obligation to deliver shares of Common Stock upon such conversion (the "CONVERSION OBLIGATION"), are subject, in their entirety, to the Company's right, in its sole and absolute discretion, to elect to satisfy such Conversion Obligation in any manner permitted pursuant to Section 12.12. Section 12.2. Exercise of Conversion Right (a) To exercise the conversion right with respect to a Physical Note, a Holder must (1) deliver a completed conversion notice, the form of which is provided in Exhibit C, to the Depositary stating that the Holder elects to convert such Physical Note or, if less than the entire principal amount thereof is to be converted, the portion thereof to be converted, (2) deliver duly signed completed conversion notice and the Physical Note duly endorsed or assigned to the Company or in blank, at the office of any Conversion Agent, (3) pay all Interest and Additional Interest, if any, to which the Holder is not entitled, if any, pursuant to Section 2.1(e) and (4) pay any transfer taxes or other applicable taxes or duties, if required. (b) To convert interests in a Global Note issued pursuant to Rule 144A, a Holder must deliver to the Depository Trust Company, a New York Corporation ("DTC") the appropriate instruction form for conversion pursuant to DTC's conversion program. (c) To the extent provided in Section 2.1(e), Notes surrendered for conversion during the period from the close of business on any Regular 71 Record Date to the opening of business on the next succeeding Interest Payment Date (except in the case of any Note whose Stated Maturity is prior to such Interest Payment Date) shall be accompanied by payment by such Holder in immediately available funds to the Company of an amount equal to the Interest and Additional Interest, if any, to be received on such Interest Payment Date on principal amount of Notes being surrendered for conversion. To the extent provided in Section 2.1, Notes which have been called for redemption by the Company in a notice of redemption pursuant to Section 10.4, and are converted prior to redemption on a Redemption Date that is on or prior to the third Business Day after such Interest Payment Date, shall not require such concurrent payment to the Company upon surrender for conversion, and, if such Notes are converted during the time period set forth in the preceding sentence, the Holders of such converted Notes shall be entitled to receive (and retain) any accrued Interest and Additional Interest on the principal amount of such surrendered Notes, if any. Notwithstanding the foregoing, in the case of Notes submitted for conversion in connection with Section 12.1(b), such Notes shall continue to represent the right to receive the Make Whole Premium, if any, payable pursuant to Article 13 until such Make Whole Premium is so paid. (d) Notes shall be deemed to have been converted immediately prior to the close of business on the day of surrender of such Notes for conversion in accordance with the foregoing provisions, and at such time the rights of the Holders of such Notes as Holders shall cease, and the Person or Persons entitled to receive the shares of Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock at such time. (e) In the case of any Note which is converted in part only, or a Holder converts less than the principal amount it owns at such time, upon such conversion the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Note or Notes of authorized denominations in principal amount equal to the unconverted portion of the principal amount of such Notes. (f) As promptly as practicable on or after the Conversion Date, the Company shall cause to be issued and delivered to such Conversion Agent a certificate or certificates for the number of full shares of Common Stock issuable upon conversion of such Notes, together with payment in lieu of any fraction of a share as provided in Section 12.3 hereof. The Company hereby initially appoints the Trustee as the Conversion Agent. (g) A Note in respect of which a Holder has delivered a Repurchase Event Purchase Notice exercising the option of such Holder to require the Company to purchase such Note may be converted only if such notice of exercise is withdrawn in accordance with Section 11.3(c). (h) If shares of Common Stock to be issued upon conversion of a Note which is a Restricted Security, or shares of Common Stock to be issued upon conversion of a Restricted Security in part only, are to be registered in a name other than that of the Holder of such Restricted Security, such Holder must deliver to the Conversion Agent a certificate in substantially the form set forth in Exhibit C annexed hereto, dated the date of surrender of such Note and signed by such Holder, as to compliance with the restrictions on transfer applicable to such Note. None of the Trustee, any Conversion Agent, Registrar or Transfer Agent 72 shall be required to register in a name other than that of the Holder of shares of Common Stock or Notes issued upon conversion of any such Note not so accompanied by a properly completed certificate. Section 12.3. Fractions of Shares. No fractional shares of Common Stock shall be issued upon conversion of any Note or Notes. If more than one Note shall be surrendered for conversion at one time by the same Holder, the number of full shares of Common Stock which shall be issued upon conversion thereof shall be computed on the basis of the principal amount of the Notes (or specified portions thereof) so surrendered. Instead of any fractional shares of Common Stock which would otherwise be issued upon conversion of any Note or Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fraction (calculated to the nearest 1/100th of a share) in an amount equal to the same fraction of the Trading Price of the shares of Common Stock as of the Trading Day preceding the Conversion Date. Section 12.4. Adjustment of Conversion Price. The Conversion Price shall be subject to adjustment, calculated in good faith by the Company, from time to time as follows: (a) In case the Company shall hereafter pay a dividend or make a distribution to all holders of the outstanding Common Stock in shares of Common Stock, the Conversion Price in effect at the opening of business on the date following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be reduced by multiplying such Conversion Price by a fraction: (i) the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the Conversion Record Date fixed for such determination; and (ii) the denominator of which shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution. Such reduction shall become effective immediately after the opening of business on the day following the Conversion Record Date. If any dividend or distribution of the type described in this Section 12.4(a) is declared but not so paid or made, the Conversion Price shall again be adjusted to the Conversion Price which would then be in effect if such dividend or distribution had not been declared. (b) In case the outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and conversely, in case outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as applicable, to become effective immediately after the opening of 73 business on the day following the day upon which such subdivision or combination becomes effective. (c) In case the Company shall issue rights or warrants (other than any rights or warrants issued pursuant to a rights plan (commonly referred to as a "poison pill" plan) referred to in Section 12.4(d)) to all holders of its outstanding shares of Common Stock entitling them to subscribe for or purchase shares of Common Stock (or securities convertible into shares of Common Stock) at a price per share (or having a conversion price per share) less than the Current Market Price on the Conversion Record Date fixed for the determination of stockholders entitled to receive such rights or warrants, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect at the opening of business on the date after such Conversion Record Date by a fraction: (i) the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the Conversion Record Date, plus the number of shares which the aggregate offering price of the total number of shares so offered for subscription or purchase (or the aggregate conversion price of the convertible securities so offered) would purchase at such Current Market Price; and (ii) the denominator of which shall be the number of shares of Common Stock outstanding on the close of business on the Conversion Record Date, plus the total number of additional shares of Common Stock so offered for subscription or purchase (or into which the convertible securities so offered are convertible). Such adjustment shall become effective immediately after the opening of business on the day following the Conversion Record Date fixed for determination of stockholders entitled to receive such rights or warrants. To the extent that shares of Common Stock (or securities convertible into Common Stock) are not delivered pursuant to such rights or warrants, upon the expiration or termination of such rights or warrants, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of the delivery of only the number of shares of Common Stock (or securities convertible into Common Stock) actually delivered. In the event that such rights or warrants are not so issued, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such date fixed for the determination of stockholders entitled to receive such rights or warrants had not been fixed. In determining whether any rights or warrants entitle the Holders to subscribe for or purchase Common Stock at less than such Current Market Price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received for such rights or warrants, the value of such consideration if other than cash, to be determined by the Board of Directors. (d) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock shares of any class of Capital Stock of the Company (other than any dividends or distributions to which Section 12.4(a) applies) or evidences of its Indebtedness, cash or other assets, including securities, but excluding (i) any rights or warrants referred to in Section 12.4(c); 74 (ii) dividends or distributions of stock, securities or other property or assets (including cash) in connection with a reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance to which Section 12.5 applies; (iii) dividends and distributions paid exclusively in cash; and (iv) distributions of Common Stock referred to in Section 12.4(a) (such Capital Stock, evidence of its Indebtedness, cash, other assets or securities being distributed hereinafter in this Section 12.4(d) called the "DISTRIBUTED ASSETS"), then, in each such case, subject to clause (ii) of this Section 12.4(d), the Conversion Price shall be reduced so that the same shall be equal to the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on the Conversion Record Date with respect to such distribution by a fraction: (i) the numerator of which shall be the Current Market Price on such date, less the Fair Market Value (as determined by the Board of Directors, whose determination shall be conclusive and set forth in a Board Resolution) on such date of the portion of the distributed assets so distributed applicable to one share of Common Stock (determined on the basis of the number of shares of Common Stock outstanding on the Conversion Record Date); and (ii) the denominator of which shall be such Current Market Price on such Conversion Record Date. Such reduction shall become effective immediately prior to the opening of business on the day following the Conversion Record Date. However, in the event that the then Fair Market Value (as so determined) of the portion of the distributed assets so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price on the Conversion Record Date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall have the right to receive upon conversion of a Note (or any portion thereof) the amount of distributed assets such Holder would have received had such Holder converted such Note (or portion thereof) immediately prior to such Conversion Record Date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such dividend or distribution had not been declared. If the Board of Directors determines the Fair Market Value of any distribution for purposes of this Section 12.4(d) by reference to the actual or when issued trading market for any distributed assets comprising all or part of such distribution, it must in doing so consider the prices in such market over the same period (the "REFERENCE PERIOD") used in computing the Current Market Price to the extent possible, unless the Board of Directors in a Board Resolution determines in good faith that determining the Fair Market Value during the Reference Period would not be in the best interest of the Holders. Rights or warrants distributed by the Company to all holders of Common Stock entitling the holders thereof to subscribe for or purchase shares of the Company's Capital Stock (either initially or under certain circumstances), which 75 rights or warrants, until the occurrence of a specified event or events specified in such rights or warrants or related instruments or agreements governing the same (a "TRIGGER EVENT"): (A) are deemed to be transferred with such shares of Common Stock; (B) are not exercisable; and (C) are also issued in respect of future issuances of Common Stock; shall be deemed not to have been distributed for purposes of this Section 12.4(d) (and no adjustment to the Conversion Price under this Section 12.4(d) will be required) until the occurrence of the earliest Trigger Event. If such right or warrant is subject to subsequent events, upon the occurrence of which such right or warrant shall become exercisable to purchase different distributed assets, evidences of Indebtedness or other assets or entitle the Holder to purchase a different number or amount of the foregoing or to purchase any of the foregoing at a different purchase price, then the occurrence of each such event shall be deemed to be the date of issuance and the Conversion Record Date with respect to a new right or warrant (and a termination or expiration of the existing right or warrant without exercise by the Holder thereof); In addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event or other event (of the type described in the preceding sentence) with respect thereto, that resulted in an adjustment to the Conversion Price under this Section 12.4(d): (i) in the case of any such rights or warrants which shall all have been redeemed or purchased without exercise by any Holders thereof, the Conversion Price shall be readjusted upon such final redemption or purchase to give effect to such distribution or Trigger Event, as applicable, as though it were a cash distribution, equal to the per share redemption or purchase price received by a holder of Common Stock with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of the date of such redemption or purchase; and (ii) in the case of such rights or warrants which shall have expired or been terminated without exercise, the Conversion Price shall be readjusted as if such rights and warrants had never been issued. For purposes of this Section 12.4(d) and Sections 12.4(a), 12.4(b) and 12.4(c), any dividend or distribution to which this Section 12.4(d) is applicable that also includes shares of Common Stock, a subdivision or combination of Common Stock to which Section 12.4(b) applies, or rights or warrants to subscribe for or purchase shares of Common Stock to which Section 12.4(c) applies (or any combination thereof), shall be deemed instead to be: (1) a dividend or distribution of the evidences of Indebtedness, assets, shares of Capital Stock, rights or warrants, other than such shares of Common Stock, such subdivision or combination or such rights or warrants to which Sections 12.4(a), 12.4(b) and 12.4(c) apply, respectively (and any Conversion Price reduction required by this Section 12.4(d) with respect to such dividend or distribution shall then be made), immediately followed by 76 (2) a dividend or distribution of such shares of Common Stock, such subdivision or combination or such rights or warrants (and any further Conversion Price reduction required by Sections 12.4(a), 12.4(b) and 12.4(c) with respect to such dividend or distribution shall then be made), except: (A) the Conversion Record Date of such dividend or distribution shall be substituted as (x) "the date fixed for the determination of stockholders entitled to receive such dividend or other distribution", "Conversion Record Date fixed for such determinations" and "Conversion Record Date" within the meaning of Section 12.4(a), (y) "the day upon which such subdivision becomes effective" and "the day upon which such combination becomes effective" within the meaning of Section 12.4(b), and (z) as "the date fixed for the determination of stockholders entitled to receive such rights or warrants", "the Conversion Record Date fixed for the determination of the stockholders entitled to receive such rights or warrants" and such "Conversion Record Date" within the meaning of Section 12.4(c); and (B) any shares of Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of Section 12.4(a) and any reduction or increase in the number of shares of Common Stock resulting from such subdivision or combination shall be disregarded in connection with such dividend or distribution. In the event of any distribution referred to in Section 12.4(c) or 12.4(d), where, in the case of a distribution described in Section 12.4(d), the Fair Market Value of such distribution per share of Common Stock (as determined by the Board of Directors) exceeds 5% of the Current Market Price on the Business Day immediately preceding the declaration date for such distribution, then, if such distribution would also trigger a conversion right under Section 12.1(b) or the Notes are otherwise convertible pursuant to this Article 12, the Company will be required to give notice to the Holders at least 20 days prior to the Ex-Dividend Time for the distribution and, upon giving of notice, the Notes may be surrendered for conversion at any time on and after the date that the Company gives notice to the Holders of such conversion right, until the close of business on the Business Day prior to the Ex-Dividend Time or until the Company announces that such distribution will not take place. No adjustment to the Conversion Price or the ability of a Holder to convert will be made if the Holder will otherwise participate in such distribution without conversion. (e) In case the Company shall, by dividend or otherwise, distribute to all or substantially all holders of its Common Stock cash, other than any dividend or distribution made in connection with the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, then, in such case, unless the Company elects to reserve such cash for distribution to the Holders of the Notes upon the conversion of the Notes so that any such Holder converting Notes will receive upon such conversion, in addition to the shares of Common Stock to which such Holder is entitled, the amount of cash which such Holder would have received if such Holder had, immediately prior to the record date for such distribution of cash, converted its Notes into Common Stock, the Conversion Rate shall be adjusted so that the same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the close of business on such Conversion Record Date by a fraction of which the denominator shall be such Current Market Price of the Common Stock on the record date less the amount of cash so distributed (and not excluded as provided above) 77 applicable to one share of Common Stock and the numerator of which shall be the Current Market Price of the Common Stock on such Conversion Record Date; such adjustment to be effective immediately prior to the opening of business on the Business Day following the record date; provided, however, that in the event the portion of the cash so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on the Conversion Record Date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder of a Note shall have the right to receive upon conversion the amount of cash such Holder would have received had such Holder converted each Note on the Conversion Record Date. If such dividend or distribution is not so paid or made, the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such dividend or distribution had not been declared. (f) In case a tender offer made by the Company or any of its Subsidiaries for all or any portion of the Common Stock shall expire and such tender offer (as amended upon the expiration thereof) shall require the payment to stockholders (based on the acceptance (up to any maximum specified in the terms of the tender offer) of Purchased Shares) of an aggregate consideration having a Fair Market Value (as determined by the Board of Directors, whose determination shall be conclusive and set forth in a Board Resolution) that combined together with the aggregate of the cash plus the Fair Market Value (as determined by the Board of Directors, whose determination shall be conclusive and set forth in a Board Resolution), as of the expiration of such tender offer, of any other consideration payable in respect of any other tender or exchange offers by the Company or any of its Subsidiaries for all or any portion of the Common Stock expiring within the 12 months preceding the expiration of such tender offer and in respect of which no adjustment pursuant to this Section 12.4(f) has been made and exceeds an amount equal to 5% of the product of the Current Market Price as of the last time (the "EXPIRATION TIME") tenders could have been made pursuant to such tender offer (as it may be amended) multiplied by the number of shares of Common Stock outstanding (including any tendered shares) on the Expiration Time, then, and in each such case, immediately prior to the opening of business on the day after the date of the Expiration Time, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to close of business on the date of the Expiration Time by a fraction: (A) the numerator of which shall be the number of shares of Common Stock outstanding (including any tendered shares) at the Expiration Time multiplied by the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time; and (B) the denominator shall be the sum of (x) the Fair Market Value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender offer) of all shares validly tendered and not withdrawn as of the Expiration Time (the shares deemed so accepted, up 78 to any such maximum, being referred to as the "PURCHASED SHARES") and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) on the Expiration Time and the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time. Such reduction (if any) shall become effective immediately prior to the opening of business on the day following the Expiration Time. In the event that the Company is obligated to purchase shares pursuant to any such tender offer, but the Company is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such tender offer had not been made. If the application of this Section 12.4(f) to any tender offer would result in an increase in the Conversion Price, no adjustment shall be made for such tender offer under this Section 12.4(f). (g) In addition, if, after the effectiveness date of the Shelf Registration Statement and prior to the end of the 18th month thereafter, the Market Price of the Common Stock is less than 68.23% of the Conversion Price then in effect for at least 20 Trading Days during any 30 consecutive Trading Day period, the Conversion Price shall immediately be reduced by 17.38%; provided that (1) this adjustment shall only be applicable to Notes that have been sold or otherwise distributed pursuant to the Shelf Registration Statement or pursuant to Rule 144(k) under the Securities Act (and such adjustment shall apply to all such Notes, regardless of whether they are so sold or distributed before or after such adjustment) and (2) there shall be no more than one such reduction of the Conversion Price during the term of the Notes. (h) For purposes of this Section 12.4, the following terms shall have the meanings indicated: (i) "CURRENT MARKET PRICE" shall mean the average of the daily Trading Prices per share of Common Stock (or such other security as specified herein) for the 10 consecutive Trading Days immediately prior to the date in question; provided, however, that if: (A) the "ex" date (as hereinafter defined) for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 12.4(a), (b), (c), (d), (e) or (f) occurs during such 10 consecutive Trading Days, the Trading Price for each Trading Day prior to the "ex" date for such other event shall be adjusted by multiplying such Trading Price by the same fraction by which the Conversion Price is so required to be adjusted as a result of such other event; (B) the "ex" date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 12.4(a), (b), (c), (d), (e) or (f) occurs on or after the "ex" date for the issuance or distribution requiring such computation and prior to the day in question, the 79 Trading Price for each Trading Day on and after the "ex" date for such other event shall be adjusted by multiplying such Trading Price by the reciprocal of the fraction by which the Conversion Price is so required to be adjusted as a result of such other event; and (C) the "ex" date for the issuance or distribution requiring such computation is prior to the day in question, after taking into account any adjustment required pursuant to clause (i) or (ii) of this proviso, the Trading Price for each Trading Day on or after such "ex" date shall be adjusted by adding thereto the amount of any cash and the Fair Market Value (as determined by the Board of Directors in a manner consistent with any determination of such value for purposes of Section 12.4(d) or (f), whose determination shall be conclusive and set forth in a Board Resolution) of the evidences of Indebtedness, shares of Capital Stock or assets being distributed applicable to one share of Common Stock as of the close of business on the day before such "ex" date. For purposes of any computation under Section 12.4(f), the Current Market Price of the Common Stock on any date shall be deemed to be the average of the daily Trading Prices per share of Common Stock for such day and the next two succeeding Trading Days; provided, however, that if the "ex" date for any event (other than the tender offer requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 12.4(a), (b), (c), (d), (e) or (f) occurs on or after the Expiration Time for the tender or exchange offer requiring such computation and prior to the day in question, the Trading Price for each Trading Day on and after the "ex" date for such other event shall be adjusted by multiplying such Trading Price by the reciprocal of the fraction by which the Conversion Price is so required to be adjusted as a result of such other event. For purposes of this paragraph, the term "ex" date, when used: (1) with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way on the relevant exchange or in the relevant market from which the Trading Price was obtained without the right to receive such issuance or distribution; (2) with respect to any subdivision or combination of shares of Common Stock, means the first date on which the shares of Common Stock trade regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective; and (3) with respect to any tender or exchange offer, means the first date on which the Common Stock trades regular way on such exchange or in such market after the Expiration Time of such offer. Notwithstanding the foregoing, whenever successive adjustments to the Conversion Price are called for pursuant to this Section 12.4, such adjustments shall be made to the Current Market Price as may be necessary or appropriate to effectuate the intent of this Section 12.4 and to avoid unjust or inequitable results as determined in good faith by the Board of Directors. 80 The Company may make such reductions in the Conversion Price, in addition to those required by Sections 12.4(a), (b), (c), (d), (e) or (f), as the Board of Directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes or otherwise. (i) No adjustment need be made for (i) a transaction referred to in Sections 12.4 or 12.5 if Holders participate in the transaction without conversion on a basis and with notice that the Board of Directors determines to be fair and appropriate in light of the basis and notice on which holders of shares of Common Stock participate in the transaction; (ii) the issuance and distribution of rights to purchase shares of Common Stock pursuant to (A) a Company plan for reinvestment of dividends or interest, (B) a change in the par value or no par value of the shares of Common Stock or (C) to the extent the Notes become convertible pursuant to this Article 12 in whole or in part into cash, with respect to such cash after such cash is distributed to the Holders in satisfaction of such conversion right. (j) To the extent permitted by applicable law, the Company from time to time may reduce the Conversion Price by any amount for any period of time if the period is at least 20 days and the reduction is irrevocable during the period and the Board of Directors determines in good faith that such reduction would be in the best interests of the Holders, which determination shall be conclusive and set forth in a Board Resolution. Whenever the Conversion Price is reduced pursuant to the preceding sentence, the Company shall mail to the Trustee and the Conversion Agent a notice of the reduction at least 15 days prior to the date the reduced Conversion Price takes effect, and such notice shall state the reduced Conversion Price and the period during which it will be in effect. (k) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, however, that any adjustments which by reason of this Section 12.4(k) are not required to be made shall be carried forward and taken into account in any subsequent adjustment, regardless of whether the aggregate adjustment is less than 1%, within one year of the first such adjustment carried forward or if the Company has called the Notes for redemption. All calculations under this Article 12 shall be made by the Company in good faith and shall be made to the nearest cent or to the nearest one hundredth of a share, as applicable. No adjustment need be made for a change in the par value or no par value of the Common Stock. (l) No adjustment in Conversion Price shall be required if the Fair Market Value of any assets, debt securities or rights, warrants or options to purchase the securities of the Company, including but not limited to Common Stock, in each case applicable to each share of Common Stock are distributed to the Company's stockholders and such Fair Market Value either equals or exceeds the Current Market Price or such Current Market Price exceeds the such Fair Market Price Value by an amount not exceeding $1.00; provided, however, that any adjustments which by reason of this Section 12.4(l) are not required to be made shall be distributed upon conversion of any Note in an amount of assets, securities or rights, warrants or options comprising the distribution that a Holder would have received if such Holder had converted such Note immediately prior to the Conversion Record Date. 81 (m) In any case in which this Section 12.4 provides that an adjustment shall become effective immediately after a Conversion Record Date for an event, the Company may defer until the occurrence of such event (i) issuing to the Holder of any security converted after such Conversion Record Date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (ii) paying to such Holder any amount in cash in lieu of any fraction pursuant to Section 12.3. (n) For purposes of this Section 12.4, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Company will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company. (o) If the distribution date for the rights provided in the Company's rights agreement, if any, occurs prior to the date a Note is converted, the Holder of the Note who converts such Note after the distribution date is not entitled to receive the rights that would otherwise be attached (but for the date of conversion) to the shares of Common Stock received upon such conversion; provided, however, that an adjustment shall be made to the Conversion Price pursuant to clause 12.4(b) as if the rights were being distributed to the common stockholders of the Company immediately prior to such conversion. If such an adjustment is made and the rights are later redeemed, invalidated or terminated, then a corresponding reversing adjustment shall be made to the Conversion Price, on an equitable basis, to take account of such event. (p) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock shares of any class of Capital Stock of a Subsidiary, then the Conversion Price shall be reduced so that the same shall be equal to the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on the Conversion Record Date with respect to such distribution by a fraction: (i) the numerator of which shall be the Current Market Price of the shares of Capital Stock of such Subsidiary (as determined by the Board of Directors, whose determination shall be conclusive and set forth in a Board Resolution), measured from the date of such distribution; and (ii) the denominator of which shall be the Current Market Price of the Company's common stock, measured from the date of such distribution. Section 12.5. Consolidation or Merger of the Company. If any of the following events occurs, namely: (a) any reclassification or change of the outstanding Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or 82 combination) as a result of which holders of Common Stock shall be entitled to receive Capital Stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock; (b) any merger, consolidation, statutory share exchange or combination of the Company with another Person as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash or any combination thereof) with respect to or in exchange for such Common Stock; or (c) any sale or conveyance of all or substantially all of the properties and assets of the Company to any other Person as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash or any combination thereof) with respect to or in exchange for such Common Stock; the Company or the successor or purchasing Person, as the case may be, shall execute with the Trustee a supplemental indenture (which shall comply with the Trust Indenture Act as in force at the date of execution of such supplemental indenture, if such supplemental indenture is then required to so comply) providing that such Notes shall be convertible into the kind and amount of shares of stock and other securities or property or assets (including cash) which such Holder would have been entitled to receive upon such reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance had such Notes been converted into Common Stock immediately prior to such reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance assuming such holder of Common Stock did not exercise its rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon such merger, consolidation, statutory share exchange, sale or conveyance (provided that if the kind or amount of securities, cash or other property receivable upon such merger, consolidation, statutory share exchange, sale or conveyance is not the same for each share of Common Stock in respect of which such rights of election shall not have been exercised ("NON-ELECTING SHARE"), then for the purposes of this Section 12.5, the kind and amount of securities, cash or other property receivable upon such merger, consolidation, statutory share exchange, sale or conveyance for each Non-Electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of the Non-Electing Shares). Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 12. If, in the case of any such reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance, the stock or other securities and assets receivable thereupon by a holder of Common Stock includes shares of stock or other securities and assets of a Person other than the successor or purchasing Person, as the case may be, in such reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance, then such supplemental indenture shall also be executed by such other Person and shall contain such additional provisions to protect the interests of the Holders as the Board of Directors shall reasonably consider necessary by reason of the foregoing, including to the extent practicable the provisions providing for the Purchase Rights set forth in Article 11 hereof. The Company shall cause notice of the execution of such supplemental indenture to be mailed to each Holder, at the address of such Holder as it appears on the register of the Notes maintained by the Registrar, within 20 days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture. 83 The above provisions of this Section 12.5 shall similarly apply to successive reclassifications, mergers, consolidations, statutory share exchanges, combinations, sales and conveyances. If this Section 12.5 applies to any event or occurrence, Section 12.4 shall not apply. Section 12.6. Notice of Adjustments of Conversion Price. Whenever the Conversion Price is adjusted as herein provided (other than in the case of an adjustment pursuant to the fifth paragraph of Section 12.4(d) for which the notice required by such paragraph has been provided), the Company shall promptly file with the Trustee and any Conversion Agent other than the Trustee an Officers' Certificate setting forth the adjusted Conversion Price and showing in reasonable detail the facts upon which such adjustment is based. Promptly after delivery of such Officers' Certificate, the Company shall prepare a notice or press release stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price and the date on which each adjustment becomes effective, shall issue such notice or press release through Dow Jones & Company, Inc, Business Wire or Bloomberg Business News (or, if such organizations are not in existence at the time of issuance of such press release, such other news or press organization as is reasonably calculated to broadly disseminate the relevant information to the public) and shall make the information available on the Company's website or through another public medium as the Company may use at such time. Failure to deliver such notice shall not affect the legality or validity of any such adjustment. Section 12.7. Notice Prior to Certain Actions. In case at any time after the date hereof: (a) the Company shall become party to a consolidation or merger for which approval of any stockholders of the Company is required, or enters into the sale or conveyance to another Person or entity or group of Persons or entities acting in concert as a partnership, limited partnership, syndicate or other group (within the meaning of Rule 13d-3 under the Exchange Act) of all or substantially all of the property and assets of the Company; (b) the Company shall declare a dividend (or any other distribution) on its Common Stock payable otherwise than in cash out of its capital surplus or its consolidated retained earnings; (c) the Company shall authorize the granting to the holders of its Common Stock of rights or warrants to subscribe for or purchase any shares of Capital Stock of any class (or of securities convertible into shares of Capital Stock of any class) or of any other rights; (d) there shall occur any reclassification of the Common Stock of the Company (other than a subdivision or combination of its outstanding Common Stock, a change in par value, a change from par value to no par value or a change from no par value to par value), or any merger, 84 consolidation, statutory share exchange or combination to which the Company is a party and for which approval of any stockholders of the Company is required, or the sale, transfer or conveyance of all or substantially all of the assets of the Company; or (e) there shall occur the voluntary or involuntary dissolution, liquidation or winding up of the Company; the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of securities pursuant to Section 9.2, and shall cause to be provided to the Trustee and all Holders in accordance with Section 14.2, at least 20 days (or 10 days in any case specified in clause (a) or (b) above) prior to the applicable record or effective date hereinafter specified, a notice stating: (i) the date on which a record is to be taken for the purpose of such dividend, distribution, rights or warrants, or, if a record is not to be taken, the date as of which the holders of shares of Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined; or (ii) the date on which such reclassification, merger, consolidation, statutory share exchange, combination, sale, transfer, conveyance, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of shares of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, merger, consolidation, statutory share exchange, sale, transfer, dissolution, liquidation or winding up. Neither the failure to give such notice nor any defect therein shall affect the legality or validity of the proceedings or actions described in clauses (a) through (e) of this Section 12.6. Section 12.8. Company to Reserve Common Stock. The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, for the purpose of effecting the conversion of the Notes, the full number of shares of fully paid and nonassessable Common Stock then issuable upon the conversion of all Outstanding Notes. Section 12.9. Common Stock to be Fully Paid and Nonassessable. The Company covenants that all Common Stock which may be issued upon conversion of Notes will upon issue be fully paid and nonassessable and, except as provided in Section 12.10, the Company will pay all taxes, liens and charges with respect to the issue thereof. Section 12.10. Taxes on Conversions. Except as provided in the next sentence, the Company will pay any and all taxes (other than taxes on income) and duties that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of Notes pursuant 85 to Article 12. A Holder delivering a Note for conversion shall be liable for and will be required to pay any tax or duty which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that of the Holder of the Note or Notes to be converted, and no such issue or delivery shall be made unless the Person requesting such issue has paid to the Company the amount of any such tax or duty, or has established to the satisfaction of the Company that such tax or duty has been paid. Section 12.11. Cancellation of Converted Notes. All Notes delivered for conversion shall be delivered to the Trustee to be canceled by or at the direction of the Trustee. Section 12.12. Cash Conversion Option. (a) If a Holder elects to convert all or any portion of a Note into shares of Common Stock as set forth in Section 12.1 and the Company receives such Holder's Notice of Conversion on or prior to the day that is 20 days prior to the Stated Maturity Date (the "FINAL NOTICE DATE"), the Company may choose to satisfy all or any portion of its Conversion Obligation in cash. Upon such election, the Company will notify such Holder through the Trustee of the dollar amount to be satisfied in cash (which must be expressed either as 100% of the Conversion Obligation or as a fixed dollar amount) at any time on or before the date that is two Business Days following the Company's receipt of such Holder's Notice of Conversion as specified in Section 12.2 (such period, the "CASH SETTLEMENT NOTICE PERIOD"). If the Company elects to pay cash for any portion of the shares otherwise issuable to the Holder, the Holder may retract such Holder's Notice of Conversion at any time during the two Business Day period beginning on the day after the final day of the Cash Settlement Notice Period (the "CONVERSION RETRACTION PERIOD"); no such retraction can be made (and a Notice of Conversion shall be irrevocable) if the Company does not elect to deliver cash in lieu of shares of Common Stock (other than cash in lieu of fractional shares). With respect to any Notice of Conversion received by the Company prior to the Final Notice Date, the "CONVERSION SETTLEMENT DISTRIBUTION" for any Note subject to such Notice of Conversion shall consist of cash, Common Stock or a combination thereof, as selected by the Company as set forth below: (i) if the Company elects to satisfy the entire Conversion Obligation in shares of Common Stock, the Conversion Settlement Distribution shall be a number of shares equal to the aggregate original principal amount of the Notes to be converted divided by the Conversion Price; (ii) if the Company elects to satisfy the entire Conversion Obligation in cash, the Conversion Settlement Distribution shall be cash in an amount equal to the product of: (A) a number equal to the aggregate principal amount of Notes to be converted divided by the Conversion Price, and 86 (B) the average Market Price of the Common Stock during the 10 Trading Day period beginning on the Trading Day immediately following the final day of the Conversion Retraction Period (the "CASH SETTLEMENT AVERAGING PERIOD"); and (iii) if the Company elects to satisfy a fixed portion (other than 100%) of the Conversion Obligation in cash, the Conversion Settlement Distribution shall consist of (1) such cash amount ("CASH AMOUNT") and (2) a number of shares of Common Stock equal to the excess, if any, of the number of shares calculated as set forth in clause (i) above over the number of shares equal to the sum, for each day of the Cash Settlement Averaging Period, of (x) 10% of the Cash Amount, divided by (y) the Market Price of the Common Stock on such day. (b) At any time on or before any Final Notice Date, the Company will notify the Trustee whether it intends to satisfy all or any portion of the Conversion Obligation with respect to conversions of Notes for which the Company receives a Notice of Conversion after such Final Notice Date and the dollar amount to be satisfied in cash (which must be expressed either as 100% or as a fixed dollar amount). In such case, the applicable Conversion Settlement Distribution will be computed in the same manner as set forth in clause (a) above except that the Cash Settlement Averaging Period shall be the 10 Trading Days beginning on the first Trading Day following the Company's receipt of the Notice of Conversion. Holders shall not be permitted to retract any Notice of Conversion that is delivered after the Final Notice Date. Section 12.13. Responsibility of Trustee for Conversion Provisions. (a) The Trustee and any Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the nature or intent of any such adjustments when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. Neither the Trustee nor any Conversion Agent shall be accountable with respect to the validity or value (of the kind or amount) of any Common Stock or of any other securities or property, which may at any time be issued or delivered upon the conversion of any Note; and it or they do not make any representation with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of stock or share certificates or other securities or property upon the surrender of any Note for the purpose of conversion; and the Trustee and any Conversion Agent shall not be responsible or liable for any failure of the Company to comply with any of the covenants of the Company contained in this Article. Section 12.14. Withholding Taxes on Adjustments of the Conversion Price 87 If a taxable distribution to holders of the Company's Common Stock or other transaction occurs which results in any adjustment of the Conversion Price, Holders of Notes may, in certain circumstances, be deemed to have received a distribution subject to U.S. income tax as a dividend. Because a constructive dividend deemed received by a holder that is not a U.S. person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended) would not give rise to any cash from which any applicable withholding tax could be satisfied, the Company may set-off any such withholding tax against cash payments payable on the Notes. ARTICLE 13 MAKE WHOLE PREMIUM Section 13.1. Make Whole Premium. (a) If a Change of Control occurs prior to July 15, 2009 and more than 10% of the consideration in the transaction or transactions constituting a Change of Control consists of cash or property other than shares of the Capital Stock traded or to be traded immediately following such Change of Control on a national securities exchange or the Nasdaq National Market, the Company will pay the Make Whole Premium, if any, to Holders of the Notes who surrender their Notes for repurchase in connection with such Change of Control pursuant to Section 11.1(b) or convert their Notes pursuant to Section 12.1(b). The Make Whole Premium, if any, will be paid on the Change of Control Repurchase Date to Holders who exercise such repurchase right or conversion right. In the event the Make Whole Premium is greater than zero, accrued and unpaid Interest (including Additional Interest) to, but excluding, the Conversion Date will also be paid to such Holders. (b) The "MAKE WHOLE PREMIUM" will be determined as follows: (i) If the Effective Date is on or after July 15, 2009, no Make Whole Premium shall be paid; (ii) If the Stock Price is less than or equal to 82.62% of the Conversion Price (subject to adjustment pursuant to Section 13.2) (the "STOCK PRICE THRESHOLD"), no Additional Premium shall be paid; (iii) If the Stock Price is equal to or in excess of (subject to adjustment pursuant to Section 13.2) 227.86% of the Conversion Price (the "STOCK PRICE CAP"), no Additional Premium shall be paid; and (iv) In all other cases, the Make Whole Premium shall be equal to a percentage (the "ADDITIONAL PREMIUM") of the principal amount of the notes as described in Section 13.1(c)(iii) below. (c) For purposes of Section 13.1(c), the following terms shall have the meaning indicated: 88 (i) "EFFECTIVE DATE" means the date that a Change of Control becomes effective. (ii) "STOCK PRICE" means the price paid per share of Common Stock in the transaction constituting the Change of Control, determined as follows: (A) If holders of the Common Stock receive only cash in the transaction constituting the Change of Control, the Stock Price shall equal the cash amount paid per share of Common Stock; and. (B) In all other cases, the Stock Price shall be the average Market Price of the Common Stock over the 10 Trading Day period ending on the Trading Day preceding the Effective Date. (iii) "Make Whole Percentage" means the percentage set forth on the table below (the "MAKE WHOLE TABLE") for the Stock Price and the Effective Date: 89 The following table illustrates what the Additional Premiums would be for various Stock Prices (expressed as a percentage of the Conversion Price).
MAKE WHOLE PREMIUM UPON CHANGE IN CONTROL (EXPRESSED AS A PERCENTAGE OF PRINCIPAL AMOUNT) - ------------------------------------------------------------------------------------------------------------ EFFECTIVE DATE STOCK PRICE (EXPRESSED AS A PERCENTAGE OF THE CONVERSION PRICE) 82.62% 89.13% 100.00% 123.70% 149.74% 182.29% 227.86% ------ ------ ------- ------- ------- ------- ------- JUNE 30, 2004 0.00% 4.52% 12.56% 7.95% 4.55% 1.87% 0.00% JULY 15, 2004 0.00 4.47 12.50 7.90 4.51 1.84 0.00 JANUARY 15, 2005 0.00 4.00 11.99 7.39 4.10 1.58 0.00 JULY 15, 2005 0.00 3.64 11.56 6.93 3.72 1.34 0.00 JANUARY 15, 2006 0.00 3.36 11.16 6.47 3.33 1.11 0.00 JULY 15, 2006 0.00 3.11 10.76 5.98 2.93 0.88 0.00 JANUARY 15,2007 0.00 2.82 10.26 5.37 2.46 0.63 0.00 JULY 15, 2007 0.00 2.48 9.66 4.64 1.92 0.37 0.00 JANUARY 15, 2008 0.00 1.97 8.78 3.65 1.26 0.11 0.00 JULY 15, 2008 0.00 1.29 7.51 2.30 0.53 0.00 0.00 JANUARY 15, 2009 0.00 0.25 5.33 0.17 0.00 0.00 0.00 JULY 15, 2009 0.00 0.00 0.00 0.00 0.00 0.00 0.00 - ------------------------------------------------------------------------------------------------------------
The exact Stock Price and Effective Date may not be set forth on the table. In such event if the Stock Price is between two Stock Prices on the table or the Effective Date is between two dates on the table, the Additional Premium will be determined by straight-line interpolation between Additional Premium amounts set forth for the higher and lower Stock Prices and the two dates, as applicable, based on a 365-day year. Because the Stock Prices set forth in the table above are expressed as percentages of the Conversion Price, the Stock Price amounts will change when the Conversion Price of the Notes is adjusted. (d) The Company will pay the Make Whole Premium in the same form of consideration into which all or substantially all of the Common Stock has been converted or exchanged in connection with the Change of Control. If holders of the Common Stock have the right to elect the form of consideration received in the transaction constituting a Change of Control, then for purposes of determining the form of consideration to be delivered in respect of the Make Whole Premium, the consideration into which a share of Common Stock has been converted or exchanged shall be deemed to equal the aggregate consideration distributed in respect of all shares of Common Stock divided by the total number of shares of Common Stock participating in the distribution. (e) For purposes of determining the value of the consideration to be issued in respect of the Make Whole Premium, the value will be calculated as follows: (i) securities that are traded on a United States national securities exchange or approved for quotation on the Nasdaq National Market or any similar system of automated dissemination of quotations of securities prices will be valued based on the average Closing Sale 90 Price or last sale price, as applicable, over the ten (10) Trading Day period ending on the Trading Day preceding the Change of Control Repurchase Date; (ii) other securities, assets or property (other than cash) which holders will have the right to receive will be valued based on 98% of the average of the Fair Market Value of such securities, assets or property (other than cash) as determined by two independent nationally recognized investment banks selected by the Trustee, and (iii) 100% of any cash. A calculation agent (the "CALCULATION AGENT") appointed from time to time by the Company shall, on behalf of and on request by the Company or the Trustee, calculate (A) the Stock Price and (B) the Make Whole Premium with respect to such Stock Price, based on the Effective Date specified by the Company or the Trustee, and shall deliver its calculation of the Stock Price and Make Whole Premium to the Company and the Trustee within three Business Days of the request by the Company or the Trustee. In addition, the Calculation Agent shall, on behalf of and upon request by the Company or the Trustee no less than three Business Days prior to a Change of Control Repurchase Date, make the determinations described in Section 13.1(e)(i) above and deliver its calculations to the Company or the Trustee by 9 p.m., New York City time, on the Trading Day preceding the Change of Control Repurchase Date. The Company, or at the Company's request, the Trustee in the name and at the expense of the Company, (X) shall notify the Holders of the Stock Price and Make Whole Premium per $1,000 original principal amount of Notes with respect to a Change of Control as part of the Change of Control Notice and (Y) shall notify the holders promptly upon 9 a.m., New York City time, on the Change of Control Repurchase Date of the number or amount of such securities, assets or property into which all or substantially all of the shares of Common Stock have been converted or exchanged as of the Effective Date to be paid in respect of the Make Whole Premium in connection with such Change of Control, in the manner provided in Section 14.2, and the Company shall also publicly announce such information and publish it on the Company's web site. Any notice so given shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. (f) On or prior to the Change of Control Repurchase Date, the Company will deposit with the Paying Agent a number or an amount of securities, assets or property sufficient to pay the Make Whole Premium with respect to all the Notes to be repurchased on such date and all the Notes converted or exchanged in connection with such Change of Control; provided that if such payment is made on the Change of Control Repurchase Date, it must be received by the Paying Agent by 10:00 a.m., New York City time, on such date. Section 13.2. Adjustments Relating To Make Whole Premium Whenever the Conversion Rate shall be adjusted from time to time by the Company pursuant to Section 12.4, the Stock Price Threshold and the Stock Price Cap shall be adjusted and each of the Stock Prices set forth in the Make Whole Table will be adjusted by multiplying each such amount by a fraction, the 91 numerator of which is the Conversion Rate immediately prior to such adjustment and the denominator of which is the Conversation Rate as so adjusted. ARTICLE 14 OTHER PROVISIONS OF GENERAL APPLICATION Section 14.1. Trust Indenture Act Controls. This Indenture is subject to the provisions of the TIA which are required to be part of this Indenture, and shall, to the extent applicable, be governed by such provisions. Section 14.2. Notices. Any notice or communication to the Company or the Trustee is duly given if in writing (which may be by facsimile with the original to follow) and delivered in person or mailed by first-class mail to the address set forth below: (a) if to the Company: (1) Infocrossing, Inc. 2 Christie Heights Street Leonia, NJ 07605 Attention: Chief Executive Officer Fax: (201) 840-7126 Telephone: (201) 840-4700 (2) Infocrossing, Inc. 2 Christie Heights Street Leonia, NJ 07605 Attention: General Counsel Fax: (201) 840-7126 Telephone: (201) 840-4700 With a copy to: Latham & Watkins LLP 885 Third Avenue Suite 100 New York, NY 10022 Attention: Robert A. Zuccaro Fax: (212) 751-4864 Telephone: (212) 906-1200 (b) if to the Trustee: Wells Fargo Bank, National Association Corporate Trust Services Sixth & Marquette, N9303-120 92 Minneapolis, MN 55479 Attention: Timothy P. Mowdy Fax: (612) 667-9825 Telephone: (612) 316-1445 The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication to a Holder shall be mailed by first class mail to his address shown on the Register kept by the Registrar. Failure to mail a notice or communication to a Holder or any defect in such notice or communication shall not affect its sufficiency with respect to other Holders. If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee at the same time If a notice or communication is mailed or sent in the manner provided above within the time prescribed it is duly given as of the date it is mailed, whether or not the addressee receives it, except that notice to the Trustee shall only be effective upon receipt thereof by the Trustee. Section 14.3. Communication by Holders with Other Holders. Holders may communicate pursuant to Section 312(b) of the TIA with other Holders with respect to their rights under the Notes or this Indenture. The Company, the Trustee, the Registrar and anyone else shall have the protection of Section 312(c) of the TIA. Section 14.4. Acts of Holders of Notes. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent or proxy duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments and record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "ACT" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent or proxy, or of the holding by any Person of a Note, shall be sufficient for any purpose of this Indenture and (subject to Section 5.1) conclusive in favor of the Trustee and the Company if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be provided in any manner which the Trustee reasonably deems sufficient. (c) The principal amount and serial numbers of Notes held by any Person, and the date of such Person holding the same, shall be proved by the Register. 93 (d) Any request, demand, authorization, direction, notice, consent, election, waiver or other Act of the Holders of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Company in reliance thereon, whether or not notation of such action is made upon such Note. Section 14.5. Certificate and Opinion as to Conditions Precedent. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an Officer of the Company may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless such Officer knows, or in the exercise of reasonable care should know, that the Opinion of Counsel with respect to the matters upon which such certificate or opinion is based is erroneous. Any such Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or representations by, an Officer or Officers of the Company stating that the information with respect to such factual matters is in the possession of the Company unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such Counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished; provided, however, that, at any time that an Opinion of Counsel is required to be delivered hereunder, the opining counsel may, with the consent of the Trustee, deliver to the Trustee the Opinion of Counsel in question addressed to a party other than the Trustee with text to the effect that the Trustee may rely on such opinion rather than by delivering a separate Opinion of Counsel to the Trustee directly. Section 14.6. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: 94 (a) a statement that each individual signing such certificate or opinion on behalf of the Company, has read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 14.7. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 14.8. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. Section 14.9. Separability Clause. In case any provision in this Indenture or the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 14.10. Benefits of Indenture. Nothing contained in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or legal or equitable right, remedy or claim under this Indenture. Section 14.11. Governing Law. This Indenture and the Notes shall be governed by, and construed in accordance with, the Laws of the State of New York. Section 14.12. Counterparts. This instrument may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original but all such counterparts shall together constitute but one and the same instrument. Section 14.13. Legal Holidays. 95 In any case where any Interest Payment Date, Redemption Date, Repurchase Date or Stated Maturity of any Note or the last day on which a Holder has a right to convert such Note shall not be a Business Day at any Place of Payment or Place of Conversion, then (notwithstanding any other provision of this Indenture or of the Notes) payment of Principal on, or Interest or Additional Interest, if any, on, conversion of the Notes, need not be made at such Place of Payment or Place of Conversion on such day, but may be made on the next succeeding Business Day at such Place of Payment or Place of Conversion with the same force and effect as if made on the Interest Payment Date, Redemption Date, Repurchase Date or at the Stated Maturity or on such last day for conversion; provided, however, that in the case that payment is made on such succeeding Business Day, no Interest shall accrue on the amount so payable for the period from and after such Interest Payment Date, Redemption Date, Repurchase Date or Stated Maturity, as applicable. Section 14.14. Recourse Against Others. No recourse for the payment of the Principal of or Interest on any Notes, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or director or manager, as such, past, present or future, of the Company of any successor entity to either the Company, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance thereof and as part of the consideration for the issue thereof, expressly waived and released. Section 14.15. Tax Treatment The Company agrees, and by acceptance of beneficial ownership interest in the Notes each beneficial holder of the Notes will be deemed to have agreed, for United States federal income tax purposes to treat the Notes as indebtedness that is not subject to the contingent payment debt instrument regulations under Treas. Reg. Sec. 1.1275-4. 96 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed all as of the day and year first above written. INFOCROSSING, INC. By: /s/ NICHOLAS J. LETIZIA ----------------------------- Name: Nicholas J. Letizia Title: Senior Vice President, General Counsel and Secretary WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE AND NOT IN ITS INDIVIDUAL CAPACITY By: /s/ TIMOTHY P. MOWDY ------------------------- Name: Timothy P. Mowdy Title: Assistant Vice President EXHIBIT A FORM OF NOTE UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR. A-1 INFOCROSSING, INC. 4.00% CONVERTIBLE SENIOR NOTE DUE 2024 CUSIP NO. _________ NO. __ PRINCIPAL AMOUNT $____________ Infocrossing, Inc., a Delaware corporation (including any successor corporation under the Indenture hereinafter referred to, the "COMPANY"), for value received, hereby promises to pay to Cede & Co., or its registered assigns, the principal sum of ____________ U.S. Dollars ($_____________) on _____ __, 20__. Interest Payment Dates: January 15 and July 15, commencing ________, 20__. Regular Record Dates: January 1 and July 1. Reference is hereby made to the further provisions of this Note set forth below, which further provisions shall for all purposes have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused this Note to be duly executed manually or by facsimile by its duly authorized officers. INFOCROSSING, INC. By: _____________________________________ Name: Title: Dated: _____ __, 20__ A-2 Trustee's Certificate of Authentication This is one of the 4.00% Convertible Senior Notes due 2024 described in the within-named Indenture. WELLS FARGO BANK, NATIONAL ASSOCIATION, as TRUSTEE By: _____________________________ Authorized Signatory Dated: _____ __, 20__ A-3 INFOCROSSING, INC. 4.00% CONVERTIBLE SENIOR NOTE DUE 2024 SECTION 1 Indenture; Notes. This Note is one of a duly authorized series of the 4.00% Convertible Senior Notes due 2024 (the "NOTES") of Infocrossing, Inc., a Delaware corporation (including any successor Person under the Indenture hereinafter referred to, the "Company"), issued under an Indenture, dated as of June 30, 2004 (the "INDENTURE"), between the Company and Wells Fargo Bank, National Association, as trustee (the "TRUSTEE"). The terms of the Note include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended ("TIA"). This Note is subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of all such terms. To the extent permitted by applicable law, in the event of any inconsistency or difference between the terms of this Note and the terms of the Indenture, the terms of the Indenture shall control. Capitalized terms used but not defined herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. SECTION 2 Principal and Interest. The Company promises to pay Interest on the principal amount of the Notes at the Interest Rate from the date of issuance until repayment in full at Stated Maturity, redemption or purchase. The Company will pay Interest on this Note semi-annually, in arrears, on January 15 and July 15 of each year (each, an "INTEREST PAYMENT DATE"), commencing January 15, 2005. The Notes shall bear Interest from June 30, 2004 until the Principal thereof is paid or made available for payment, or until such date on which the Notes are converted, redeemed or purchased as provided herein, at a rate of 4.00% per annum. Interest on the Notes shall be computed (i) for any full semi-annual period for which a particular Interest Rate is applicable, on the basis of a 360-day year comprised of twelve 30-day months and (ii) for any period for which a particular Interest Rate is applicable for less than a full semiannual period for which Interest is calculated, on the basis of a 30-day month and, for such periods of less than a month, the actual number of days elapsed over a 30-day month. In addition to the amounts set forth in Section 2.1(d) and (f), Holders shall be entitled to receive Additional Interest, if any, on such Note pursuant and subject to the Registration Rights Agreement, but in no event shall a Holder be required to repay any Additional Interest such Holder receives following the remittance of Interest as specified in Section 2.1(e)(iv). Additional Interest shall be paid on dates corresponding to the payment date of Interest on such Note pursuant to the Registration Rights Agreement. Further reference is made to Sections 2.1(c) through Section 2.1(e) of the Indenture for other provisions of the Notes relating to the payment of Interest. A-4 If the Company fails to make a payment of Principal of or Interest on any Note when due and payable, it shall pay such Interest on such amounts (to the extent lawful), which shall be calculated using the applicable Interest Rate (such amounts, the "DEFAULTED INTEREST"). It may elect to pay such Defaulted Interest, plus any other Interest payable on it, to the Persons who are Holders on which the Interest is due on a subsequent special record date. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each such Note. The Company shall fix any such special record date and payment date for such payment. At least 15 days before any such special record date, the Company shall mail to Holders affected thereby a notice that states the special record date, the Interest Payment Date and amount to be paid. SECTION 3 Method of Payment. Interest on this Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such Interest. Principal of and Interest on Global Notes will be payable, for the benefit of the Holders of this Note, to the Depositary in immediately available funds. Principal on Physical Notes will be payable at the office or agency of the Company maintained for such purpose, initially the Corporate Trust Office of the Trustee. Interest on Physical Notes will be payable by (i) a U.S. Dollar check drawn on a bank in the City of New York mailed to the address of the Person entitled thereto as such address shall appear in the Register, or (ii) upon application to the Registrar not later than the relevant Regular Record Date by a Holder of an aggregate Principal amount of Notes in excess of $1,000,000, wire transfer in immediately available funds. SECTION 4 Paying Agent and Registrar. Initially, the Trustee will act as Paying Agent and Registrar. The Company may change the Paying Agent or Registrar without notice to any Holder. SECTION 5 Optional Redemption Reference is made to Article 10 of the Indenture regarding the Company's right to optionally redeem the Notes, which is incorporated into this Note by reference as if stated herein in its entirety. SECTION 6 Purchase Right Upon a Specific Date or Repurchase Event. Reference is made to Article 11 and Article 13 of the Indenture regarding the Company's obligations to the Holders upon a Repurchase Event and the Holders' rights to require the Company to repurchase their Notes upon a Repurchase Event, which is incorporated into this Note by reference as if stated herein in its entirety. SECTION 7 Conversion Right. A-5 Reference is made to Article 12 and Article 13 of the Indenture regarding the Holders' right to convert their Notes and related matters, which is incorporated into this Note by reference as if stated herein in its entirety. SECTION 8 No Sinking Fund. The Notes are not subject to a sinking fund. SECTION 9 Absolute Obligation. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company under the Indenture and this Note which is absolute and unconditional, to pay the Principal of or Interest on this Note at the place and time and in the coin or currency herein prescribed. SECTION 10 Denominations; Transfer; Exchange. The Notes are issuable in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000 in excess thereof. A Holder may transfer and register the transfer or exchange of Notes in accordance with the Indenture. Pursuant to the Indenture, when this Note (or any portion thereof in integral multiples of $1,000 in principle amount) is presented to the Registrar with a request to register the transfer or to exchange it for an equal principal amount other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if the requirements hereunder for such transactions are met (including that such portions thereof are duly endorsed or accompanied by a written instrument of transfer duly executed by the Holder thereof or by an attorney who is authorized in writing to act on behalf of the Holder). Subject to Section 2.4 of the Indenture, to permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Notes at the Registrar's request. No service charge shall be made for any registration of transfer or exchange or redemption of the Notes, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or other similar governmental charge payable upon exchanges pursuant to Sections 2.14, 7.5 or 10.7 of the Indenture). Pursuant to the Indenture, neither the Company nor the Registrar shall be required to exchange or register a transfer of this Note (or any portion thereof): (a) for a period of 15 days prior to the day of any selection of any portion of this Note for redemption under Article 10 hereof; (b) so selected for redemption or, if a portion of this Note is selected for redemption, such portion thereof selected for redemption; or (c) surrendered for conversion or, if a portion of this Note is surrendered for conversion, such portion thereof surrendered for conversion. A-6 In the event of redemption, conversion or purchase of the Notes in part only, a new Note or Notes for the unredeemed, unconverted or unpurchased portion thereof will be issued in the name of the Holder hereof. SECTION 11 Persons Deemed Owners. The registered Holder of this Note shall be treated as its owner for all purposes. SECTION 12 Discharge Prior to Redemption or Stated Maturity. Subject to certain conditions contained in the Indenture, the Company may discharge its obligations under the Notes and the Indenture if (1)(A) all of the Outstanding Notes shall become due and payable at their scheduled Stated Maturity within one year or (B) all of the Outstanding Notes are scheduled for redemption within one year or have all been converted, and (2) the Company shall have deposited with the Trustee cash or, in the event of a conversion pursuant to the terms of the Indenture, Common Stock, sufficient to pay all amounts due and owing on all Outstanding Notes on the date of their scheduled maturity or the scheduled date of redemption, as the case may be. SECTION 13 Amendment; Supplement; Waiver. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority of the aggregate principal amount of the Outstanding Notes. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Notes at the time Outstanding, on behalf of the Holders of all the Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences and to make any changes or modifications necessary in connection with the registration of the Notes under the Securities Act as contemplated in the Registration Rights Agreement. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note or such other Note. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the Principal of and Interest on this Note at the times, places and rate, and in the coin or currency, herein prescribed or to convert this Note (or pay cash in lieu of conversion) as provided in the Indenture. SECTION 14 Defaults and Remedies. A-7 Reference is made to the Indenture for the Events of Default, remedies and related provisions with respect to the Notes, which is incorporated into this security by reference as if stated herein in its entirety. SECTION 15 Authentication. This Note shall not be valid until the Trustee executes the certificate of authentication in the space provided therefor on the Note. SECTION 16 Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act). SECTION 17 CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures, the Company has caused one or more CUSIP numbers, as appropriate, to be printed on this Note and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on this Note or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. SECTION 18 Governing Law. The Indenture and this Note shall be governed by, and construed in accordance with, the laws of the State of New York. SECTION 19 Successor Corporation. In the event a successor Person assumes all the obligations of the Company under this Note, pursuant to the terms hereof and of the Indenture, the Company will be released from all such obligations. SECTION 20 Registration Rights. The Holders of the Notes are entitled to the benefits of a Resale Registration Rights Agreement, dated as of June 30, 2004, between the Company and Lehman Brothers Inc., including the receipt of Additional Interest upon a registration default (as defined in such agreement). SECTION 21 Tax Treatment The Company agrees, and by acceptance of beneficial ownership interest in the Notes each beneficial holder of the Notes will be deemed to have A-8 agreed, for United States federal income tax purposes to treat the Notes as indebtedness that is not subject to the contingent payment debt instrument regulations under Treas. Reg. Sec. 1.1275-4. A-9 ASSIGNMENT FORM To assign this Note, fill in the form below and have your signature guaranteed: (I) or (we) assign and transfer this Note to: - ------------------------------------------------------------------------------ (Insert assignee's social security or tax I.D. number) - ------------------------------------------------------------------------------ (Print or type assignee's name, address and zip code) and irrevocably appoint ____________ to transfer this Note on the books of the Company. The agent may substitute another to act for him. Your Name: _________________________________________________ (Print your name exactly as it appears on the face of this Note) In connection with any transfer of this Note occurring prior to the date which is the end of the period referred to in Rule 144(k) under the Securities Act (other than a transfer pursuant to an effective registration statement under the Securities Act), the undersigned confirms that without utilizing any general solicitation or general advertising that: [Check One] | | (a) this Note is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. or | | (b) this Note is being transferred other than in accordance with (a) above and documents are being furnished which comply with the conditions of transfer set forth in this Note and the Indenture. If none of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register this Note in the name of any Person other than the Holder hereof unless the conditions to any such transfer of registration set forth herein and in Sections 2.7, 2.8 and 2.17 of the Indenture shall have been satisfied. Dated: ---------------------------------------------- Your Signature: ---------------------------------------------- (Sign exactly as your name appears on the face of this Note) Signature Guarantee*: ------------------------------------------------- * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A-10 TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion, in each case for investment and not with a view to distribution, and that it and any such account is a "Qualified Institutional Buyer" within the meaning of Rule 144A under the Securities Act of 1933 and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ________________________ NOTICE: To be executed by an executive officer. A-11 SCHEDULE OF EXCHANGES FOR PHYSICAL SECURITIES The following exchanges of a part of this Global Note for Physical Notes have been made:
Principal Amount of Amount of decrease in Amount of increase in this Global Note Signature of Principal Amount of Principal Amount of following such authorized officer Date of Exchange this Global Note this Global Note decrease (or increase) of Trustee ---------------- ---------------- ---------------- ------------- -------
A-12 EXHIBIT B FORM OF REPURCHASE EVENT PURCHASE NOTICE TO: Infocrossing, Inc. 2 Christie Heights Street Leonia, New Jersey 07605 The undersigned registered owner of this Note hereby irrevocably acknowledges receipt of a notice from Infocrossing, Inc. (the "COMPANY") as to the occurrence of a Repurchase Event with respect to the Company and requests and instructs the Company to repay the entire principal amount of this Note, or the portion thereof (which is $1,000 principal amount or an integral multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Note, together with Interest , if any, accrued and unpaid to, but excluding, such date, to the registered Holder hereof. Your Name: ----------------------------------------------------------- (Print your name exactly as it appears on the face of this Note) Dated: --------------------------------------------------------------- Your Signature: ------------------------------------------------------ (Sign exactly as your name appears on the face of this Note) Signature Guarantee*: ------------------------------------------------- Social Note or other Taxpayer Identification Number: ----------------- Principal amount to be converted (if less than all): $ Certificate number (if applicable: * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). B-1 EXHIBIT C FORM OF CONVERSION NOTICE TO: Infocrossing, Inc. 2 Christie Heights Street Leonia, New Jersey 07605 The undersigned registered owner of this Note hereby irrevocably exercises the option to convert this Note, or the portion hereof (which is $1,000 principal amount or an integral multiple thereof) below designated, into shares of Common Stock in accordance with the terms of the Indenture referred to in this Note, and directs that the shares issuable and deliverable upon such conversion, together with any check in payment for fractional shares and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below. If shares or any portion of this Note not converted are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. To the extent provided in the Indenture, any amount required to be paid to the undersigned on account of Interest, if any, accompanies this Note. The undersigned represents that, immediately following conversion described above, the undersigned will not own outstanding shares constituting more than 19.9% of the outstanding shares of Common Stock. Your Name: ___________________________________________________________ (Print your name exactly as it appears on the face of this Note) Dated: _______________________________________________________________ Your Signature: ______________________________________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee*: _________________________________________________ Social Note or other Taxpayer Identification Number: __________________ Principal amount to be converted (if less than all): $_________________ Fill in for registration of shares (if to be issued) and Notes (if to be delivered) other than to and in the name of the registered Holder - ------------------------------------------------------------------------ (Name) - ------------------------------------------------------------------------------ (Street Address) - ----------------------------------------------------------------------------- (City, State and Zip Code) * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). C-1 EX-4 3 x44debt.txt RESALE REGISTRATION RIGHTS AGREEMENT EXHIBIT 4.4 RESALE REGISTRATION RIGHTS AGREEMENT BETWEEN INFOCROSSING, INC. AND LEHMAN BROTHERS INC. DATED AS OF JUNE 30, 2004 TABLE OF CONTENTS PAGE 1. Definitions.........................................................1 2. Shelf Registration..................................................3 3. Additional Amounts..................................................5 4. Registration Procedures.............................................6 5. Registration Expenses..............................................13 6. Indemnification and Contribution...................................14 7. Rule 144A..........................................................17 8. Participation in Underwritten Registrations........................17 9. Miscellaneous......................................................18 RESALE REGISTRATION RIGHTS AGREEMENT, dated as of June 30, 2004, between Infocrossing, Inc., a Delaware corporation (the "COMPANY"), and Lehman Brothers Inc.(the "INITIAL PURCHASER"). Pursuant to the Purchase Agreement, dated June 24, 2004, between the Company and the Initial Purchaser (the "PURCHASE AGREEMENT"), the Initial Purchaser has agreed to purchase from the Company $60,000,000 ($72,000,000 if the Initial Purchaser exercises its option thereunder in full) in aggregate principal amount at maturity of the Company's 4.00% Convertible Senior Notes due 2024 (the "Notes"). The Notes will be convertible into fully paid, nonassessable shares of common stock, no par value (the "CONVERSION SHARES"), of the Company on the terms, and subject to the conditions, set forth in the Indenture (as defined herein). To induce the Initial Purchaser to purchase the Notes, the Company has agreed to provide the registration rights set forth in this Agreement pursuant to Section 3(k) of the Purchase Agreement. The parties hereby agree as follows: 1. Definitions. As used in this Agreement, the following capitalized terms shall have the following meanings: ADDITIONAL INTEREST: As defined in Section 3(a) hereof. ADDITIONAL INTEREST PAYMENT DATE: Each Interest Payment Date. AFFILIATE: As such term is defined in Rule 405 under the Securities Act. AGREEMENT: This Resale Registration Rights Agreement, as amended, modified or otherwise supplemented from time to time in accordance with the terms hereof. BLUE SKY APPLICATION: As defined in Section 6(a) hereof. BROKER-DEALER: Any broker or dealer registered under the Exchange Act. BUSINESS DAY: A day other than a Saturday or Sunday or any day on which banking institutions in New York City are authorized or obligated by law or executive order to close. CLOSING DATE: The date of this Agreement. COMMISSION: Securities and Exchange Commission. COMPANY: As defined in the preamble hereto. CONVERSION SHARES: As defined in the preamble hereto. EFFECTIVENESS PERIOD: As defined in Section 2(a)(iii) hereof. EFFECTIVENESS TARGET DATE: As defined in Section 2(a)(ii) hereof. EXCHANGE ACT: Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder. HOLDER: A Person who owns, beneficially or otherwise, Transfer Restricted Securities. INDEMNIFIED HOLDER: As defined in Section 6(a) hereof. INDENTURE: The Indenture, dated as of June 30, 2004, between the Company, and Wells Fargo Bank, National Association, as trustee, pursuant to which the Notes are to be issued, as such Indenture is amended, modified or supplemented from time to time in accordance with the terms thereof. INITIAL PURCHASER: As defined in the preamble hereto. INTEREST PAYMENT DATE: As defined in the Indenture. MAJORITY OF HOLDERS: Holders holding over 50% in aggregate principal amount of the Notes outstanding at the time of determination in question; provided, however, that, for the purpose of this definition, a holder of Conversion Shares which constitute Transfer Restricted Securities when issued upon conversion of Notes shall be deemed to hold an aggregate principal amount of Notes (in addition to the principal amount of Notes held by such holder) equal to the product of (x) the number of such Conversion Shares held by such holder and (y) the prevailing conversion price, such prevailing conversion price as determined in accordance with Section 12 of the Indenture. NASD: National Association of Securities Dealers, Inc. NOTES: As defined in the preamble hereto. PERSON: An individual, partnership, corporation, unincorporated organization, limited liability company, trust, joint venture or a government or agency or political subdivision thereof. PROSPECTUS: The prospectus included in a Shelf Registration Statement, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. PURCHASE AGREEMENT: As defined in the preamble hereto. QUESTIONNAIRE: As defined in Section 2(b) hereof. QUESTIONNAIRE DEADLINE: As defined in Section 2(b) hereof. RECORD HOLDER: With respect to any Additional Interest Payment Date, each Person who is a Holder of Transfer Restricted Securities that are Notes on the record date with respect to the Interest Payment Date on which such Additional Interest Payment Date shall occur. REGISTRATION DEFAULT: As defined in Section 3(a) hereof. SALE NOTICE: As defined in Section 4(e) hereof. SECURITIES ACT: Securities Act of 1933, as amended, and the rules and resolutions of the Commission thereunder. SHELF FILING DEADLINE: As defined in Section 2(a)(i) hereof. SHELF REGISTRATION STATEMENT: As defined in Section 2(a)(i) hereof. SUSPENSION NOTICE. As defined in Section 4(c) hereof. SUSPENSION PERIOD. As defined in Section 4(b)(i) hereof. TIA: Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission thereunder, in each case, as in effect on the date the Indenture is qualified under the TIA. TRANSFER RESTRICTED SECURITIES: Each Note and each Conversion Share issued upon conversion of the Notes until the earliest to occur of: (A) the date on which such Note or such Conversion Share issued upon conversion has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement; and (B) the date on which such Note or such Conversion Share issued upon conversion ceases to be outstanding (whether as a result of redemption, repurchase and cancellation, conversion or otherwise). TRUSTEE: As defined in Section 1.1 of the Indenture. UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in which Notes or Conversion Shares are sold to an underwriter for reoffering to the public. 2. Shelf Registration. (a) The Company shall: (i) not later than 15 days after the date hereof (the "SHELF FILING DEADLINE"), cause to be filed a registration statement pursuant to Rule 415 under the Securities Act (together with any amendments thereto, and including any documents incorporated by reference therein, the "SHELF REGISTRATION STATEMENT"), which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities held by Holders that have provided the information required pursuant to the terms of Section 2(b) hereof; (ii) use its commercially reasonable efforts to cause the Shelf Registration Statement to be declared effective by the Commission not later than 120 days after the date hereof (the "EFFECTIVENESS TARGET DATE"); and (iii) keep the Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 4(b) hereof to the extent necessary to ensure that (A) it is available for resales by the Holders of Transfer Restricted Securities entitled to the benefit of this Agreement and (B) conforms with the requirements of this Agreement and the Securities Act, for a period (the "EFFECTIVENESS PERIOD") that will terminate upon the earliest of (x) the second anniversary of the effective date of the Shelf Registration Statement, (y) when all Transfer Restricted Securities registered under the Shelf Registration Statement have been sold in accordance with it and (z) when all Transfer Restricted Securities have ceased to be outstanding (whether as a result of redemption, repurchase and cancellation, conversion or otherwise). (b) To have its Transfer Restricted Securities included in the Shelf Registration Statement pursuant to this Agreement, each Holder shall complete the Selling Securityholder Notice and Questionnaire, the form of which is contained in Exhibit A to this Agreement (the "QUESTIONNAIRE"). The Company shall mail the Questionnaire to each Holder not less than 20 Business Days (but not more than 40 Business Days) prior to the time the Company intends in good faith to have the Shelf Registration Statement declared effective by the Commission. Holders are required to complete and deliver the Questionnaire to the Company prior to or on the 20th Business Day after the date of a written request therefor by the Company (which request shall include a copy of the Questionnaire) (such deadline, the "QUESTIONNAIRE DEADLINE"). Holders that do not complete and deliver the Questionnaire will not be named as selling securityholders in the Prospectus. Prior to such time, each Holder may complete the Questionnaire and deliver it to the Company prior to such request and, as a result, shall be entitled to have its Transfer Restricted Securities included in the initial Shelf Registration Statement filed with the Commission. In addition, upon receipt of written request for additional information from the Company, each Holder who intends to be named as a selling securityholder in the Shelf Registration Statement shall furnish to the Company in writing, within 20 Business Days after such Holder's receipt of such request, such additional information regarding such Holder and the proposed distribution by such Holder of its Transfer Restricted Securities, in connection with the Shelf Registration Statement or Prospectus or Preliminary Prospectus included therein and in any application to be filed with or under state securities law, as the Company may reasonably request. In connection with all such requests for information from Holders of Transfer Restricted Securities, the Company shall notify such Holders of the requirements set forth in this paragraph regarding their obligation to provide the information requested pursuant to this Section. Each Holder as to which the Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make information previously furnished to the Company by such Holder not materially misleading. Upon receipt of a completed Questionnaire after the Questionnaire Deadline, the Company will as promptly as practicable, but in any event within 10 Business Days of receipt, file any amendments or supplements to the Shelf Registration Statement to allow such Holder to be named as a selling Holder in the Prospectus included therein; provided, however, that the Company shall not be obligated to file (i) more than one such pre-effective amendment or supplement for all Holders during any fiscal quarter and (ii) more than one post-effective amendment for all Holders during any semi-annual period, and provided further, in all such cases involving supplements or amendments (whether pre-effective or post-effective), the Company shall only be obligated to make a filing when the principal amount of Notes to be included in such amendment or supplement is more than $1 million. 3. Additional Interest. (a) The Company and the Initial Purchaser agree that the Holders of Transfer Restricted Securities will suffer damages if the Company fails to fulfill its obligations under Section 2 hereof and that it would not be feasible to ascertain the extent of such damages with precision. Accordingly, if: (i) the Shelf Registration Statement is not filed with the Commission prior to or on the Shelf Filing Deadline; (ii) the Shelf Registration Statement has not been declared effective by the Commission prior to or on the Effectiveness Target Date; (iii) except as provided in Section 4(b)(i) hereof, the Shelf Registration Statement is filed and declared effective but, during the Effectiveness Period, shall thereafter cease to be effective or fail to be usable for its intended purpose without such disability being cured within five Business Days by an effective post-effective amendment to the Shelf Registration Statement, a supplement to the Prospectus or a report filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act that cures such failure; or (iv) (A) prior to or on the 45th or 60th day, as the case may be, of any Suspension Period (as such term is defined herein), such suspension has not been terminated or (B) Suspension Periods exceed an aggregate of 90 days in any 360 day period, (each such event referred to in foregoing clauses (i) through (iv), a "REGISTRATION DEFAULT"), the Company hereby agrees to pay additional interest ("ADDITIONAL INTEREST") with respect to the Transfer Restricted Securities that are Notes from and including the day following the Registration Default to but excluding the day on which the Registration Default has been cured, accruing at the following rate: (i) with respect to the first 90-day period during which a Registration Default shall have occurred, 0.25% per annum of the principal amount of the Notes; (ii) with respect to the period commencing on the 91st day following the day the Registration Default shall have occurred to the second anniversary of the Closing Date, 1.00% per annum of the principal amount of the Notes; (iii) with respect to the period commencing on the second anniversary of the Closing Date to the third anniversary of the Closing Date, 3.00% per annum of the principal amount of the Notes; and (iv) thereafter the rate of Additional Interest shall increase annually by 2.00 percentage points on each anniversary of the Closing Date, commencing with the third anniversary (for purposes of illustration, the rate of Additional Interest would increase to 9.00% per annum of the principal amount of the Notes on the fifth anniversary of the Closing Date). No Additional Interest shall be payable on any Notes that have been converted into shares of our common stock. A Holder will not be entitled to Additional Interest unless it has provided all information requested by the Questionnaire prior to the deadline specified therein. Following the cure of all Registration Defaults relating to any particular Notes, the accrual of Additional Interest with respect to such Notes shall cease. (b) So long as any Notes remain outstanding, the Company shall notify the Trustee within two Business Days after each and every date on which an event occurs in respect of which Additional Interest is required to be paid. Any amounts of Additional Interest due pursuant to clause (a) of this Section 3 will be payable in cash semi-annually in arrears on each Additional Interest Payment Date, commencing with the first such date occurring after any such Additional Interest commences to accrue, to Holders to whom regular interest is payable on such Additional Interest Payment Date with respect to Notes that are Transfer Restricted Securities. All accrued Additional Interest shall be paid by the Company to Record Holders of Transfer Restricted Securities that are Notes on each Additional Interest Payment Date by wire transfer of immediately available funds or by federal bank check. The Company agrees to deliver all notices, certificates and other documents contemplated by the Indenture in connection with the payment of Additional Interest. All obligations of the Company set forth in this Section 3 that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such Transfer Restricted Security shall have been satisfied in full. The Additional Interest set forth above shall be the exclusive monetary remedy available to the Holders of Transfer Restricted Securities for such Registration Default. 4. Registration Procedures. (a) In connection with the Shelf Registration Statement, the Company shall comply with all the provisions of Section 4(b) hereof and shall use its commercially reasonable efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and pursuant thereto, shall as expeditiously as possible prepare and file with the Commission a Shelf Registration Statement relating to the registration on any appropriate form under the Securities Act. (b) In connection with the Shelf Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities, the Company shall: (i) Subject to any notice by the Company in accordance with this Section 4(b) of the existence of any fact or event of the kind described in Section 4(b)(iii)(D), keep the Shelf Registration Statement continuously effective during the Effectiveness Period; upon the occurrence of any event that would cause the Shelf Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not be effective and usable for the resale of Transfer Restricted Securities during the Effectiveness Period, the Company shall file promptly an appropriate amendment to the Shelf Registration Statement, a supplement to the Prospectus or a report filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use its commercially reasonable efforts to cause such amendment to be declared effective and the Shelf Registration Statement and the related Prospectus to become usable for their intended purposes as soon as practicable thereafter. Notwithstanding the foregoing, the Company may suspend the effectiveness of the Shelf Registration Statement by written notice to the Holders for a period not to exceed an aggregate of 45 days in any 90-day period (each such period, a "SUSPENSION PERIOD"), and not to exceed an aggregate of 90 days in any 360-day period, if: (x) an event occurs and is continuing as a result of which the Shelf Registration Statement would, in the Company's judgment, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and (y) the Company reasonably determines that the disclosure of such event at such time would have a material adverse effect on the business of the Company and its subsidiaries taken as a whole; provided that in the event the disclosure relates to a previously undisclosed proposed or pending material business transaction, the disclosure of which would impede the Company's ability to consummate such transaction, the Company may extend a Suspension Period from 45 days to 60 days during any 90-day period. (ii) Prepare and file with the Commission such amendments and post-effective amendments to the Shelf Registration Statement as may be necessary to keep the Shelf Registration Statement effective during the Effectiveness Period; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Securities Act in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by the Shelf Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in the Shelf Registration Statement or supplement to the Prospectus. (iii) Advise the selling Holders promptly (but in any event within five Business Days) and, if requested by such Persons, to confirm such advice in writing: (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to the Shelf Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Shelf Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Shelf Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, or (D) of the existence of any fact or the happening of any event, during the Effectiveness Period, that makes any statement of a material fact made in the Shelf Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Shelf Registration Statement or the Prospectus in order to make the statements therein not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Shelf Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company shall use its commercially reasonable efforts to obtain the withdrawal or lifting of such order at the earliest possible time and will provide to the Initial Purchaser and each Holder who is named in the Shelf Registration Statement prompt notice of the withdrawal of any such order. (iv) Furnish to each of the selling Holders before filing with the Commission, a copy of the Shelf Registration Statement and copies of any Prospectus included therein or any amendments or supplements to the Shelf Registration Statement or Prospectus (other than documents incorporated by reference after the initial filing of the Shelf Registration Statement), which documents will be subject to the review of such holders for a period of at least ten Business Days (in the case of the Shelf Registration Statement and Prospectus) and two Business Days (in the case of any amendment or supplement thereto), and the Company will not file the Shelf Registration Statement or Prospectus or any amendment or supplement to the Shelf Registration Statement or Prospectus (other than documents incorporated by reference) to which a selling Holder of Transfer Restricted Securities covered by the Shelf Registration Statement shall reasonably object prior to the filing thereof. (v) Make available at reasonable times for inspection by one or more representatives of the selling Holders, designated in writing by a Majority of Holders whose Transfer Restricted Securities are included in the Shelf Registration Statement, and any attorney or accountant retained by such selling Holders all financial and other records, pertinent corporate documents and properties of the Company as shall be reasonably necessary to enable them to exercise any applicable due diligence responsibilities, and cause the Company's officers, directors, managers and employees to supply all information reasonably requested by any such representative or representatives of the selling Holders, attorney or accountant in connection with the Shelf Registration Statement after the filing thereof and before its effectiveness, provided, however, that any information designated by the Company as confidential at the time of delivery of such information shall be kept confidential by the recipient thereof. (vi) If requested by any selling Holders as promptly as practicable incorporate in the Shelf Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders may reasonably request to have included therein, including, without limitation: (1) information relating to the "Plan of Distribution" of the Transfer Restricted Securities, (2) information with respect to the principal amount of Notes or number of Conversion Shares being sold, (3) the purchase price being paid therefor and (4) any other terms of the offering of the Transfer Restricted Securities to be sold in such offering; provided, however, that with respect to any information requested for inclusion by a selling Holder, this clause (vi) shall apply only to information that relates to the Transfer Restricted Securities to be sold by such selling Holder; and make all required filings of such Prospectus supplement or post-effective amendment as soon as reasonably practicable after the Company is notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment. (vii) Furnish to each selling Holder without charge, at least one copy of the Shelf Registration Statement, as first filed with the Commission, and of each amendment thereto (and any documents incorporated by reference therein or exhibits thereto (or exhibits incorporated in such exhibits by reference) as such Person may request). (viii) Deliver to each selling Holder without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; subject to any notice by the Company in accordance with this Section 4(b) of the existence of any fact or event of the kind described in Section 4(b)(iii) (D), the Company hereby consents to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto. (ix) The Company shall: (A) upon request, furnish to each selling Holder and each underwriter, if any, in such substance and scope as they may reasonably request and as are customarily made by issuers to underwriters in primary underwritten offerings for selling security holders, upon the date of closing of any sale of Transfer Restricted Securities in an Underwritten Registration: 1. a certificate, dated the date of such closing, signed by the Chief Financial Officer of the Company confirming, as of the date thereof, matters of the type set forth in Section 5(h) of the Purchase Agreement and such other matters as such parties may reasonably request; 2. opinions, each dated the date of such closing, of counsel to the Company covering such of the matters as are customarily covered in legal opinions to underwriters in connection with underwritten offerings of securities; and 3. customary comfort letters, dated the date of such closing, from the Company's independent accountants in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with underwritten offerings of securities; (B) set forth in full in the underwriting agreement, if any, indemnification provisions and procedures which provide rights no less protective than those set forth in Section 6 hereof with respect to all parties to be indemnified; and (C) deliver such other documents and certificates as may be reasonably requested by such parties to evidence compliance with clause (A) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the selling Holders pursuant to this clause (ix). (x) Before any public offering of Transfer Restricted Securities, cooperate with the selling Holders, and their respective counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions in the United States as the selling Holders may reasonably request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the Shelf Registration Statement; provided, however, that the Company shall not be required (A) to register or qualify as a foreign corporation or a dealer of securities where it is not now so qualified or to take any action that would subject it to the service of process in any jurisdiction where it is not now so subject or (B) to subject itself to taxation in any such jurisdiction if it is not now so subject. (xi) Cooperate with the selling Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends (unless required by applicable securities laws); and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders may request at least two Business Days before any sale of Transfer Restricted Securities. (xii) Use its commercially reasonable efforts to cause the Transfer Restricted Securities covered by the Shelf Registration Statement to be registered with or approved by such other U.S. governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Securities. (xiii) Subject to Section 4(b)(i) hereof, if any fact or event contemplated by Section 4(b)(iii)(D) hereof shall exist or have occurred, to prepare a supplement or post-effective amendment to the Shelf Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. (xiv) Provide CUSIP numbers for all Transfer Restricted Securities not later than the effective date of the Shelf Registration Statement and provide the Trustee under the Indenture with certificates for the Notes that are in a form eligible for deposit with The Depository Trust Company. (xv) Cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation that is required to be retained in accordance with the rules and regulations of the NASD. (xvi) Otherwise comply with all applicable rules and regulations of the Commission and all reporting requirements under the Exchange Act. (xvii) Cause the Indenture to be qualified under the TIA not later than the effective date of the Shelf Registration Statement required by this Agreement, and, in connection therewith, cooperate with the Trustee and the holders of Notes to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute and cause the Trustee thereunder to execute all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner. (xviii) Cause all Transfer Restricted Securities covered by the Shelf Registration Statement to be listed or quoted, as the case may be, on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed or quoted. (xix) Provide to each Holder upon written request each document filed with the Commission pursuant to the requirements of Section 13 and Section 15 of the Exchange Act after the effective date of the Shelf Registration Statement. (xx) If requested by the underwriter(s), make appropriate officers of the Company available to the underwriter(s) for meetings with prospective purchasers of the Transfer Restricted Securities and prepare and present to potential investors customary "road show" or marketing materials in a manner consistent with other new issuances of other securities similar to the Transfer Restricted Securities. (c) Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice (a "SUSPENSION NOTICE") from the Company of the existence of any fact of the kind described in Section 4(b)(iii)(D) hereof, such Holder will discontinue disposition of Transfer Restricted Securities pursuant to the Shelf Registration Statement until: (i) such Holder has received copies of the supplemented or amended Prospectus contemplated by Section 4(b)(xiii) hereof; or (ii) such Holder is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Company, each Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of such notice of suspension. (d) Each Holder who intends to be named as a selling Holder in the Shelf Registration Statement shall complete the Questionnaire and deliver it to the Company within 20 Business Days after the date of a written request therefor by the Company (which request shall include a copy of the Questionnaire). Prior to such time, each Holder may complete the Questionnaire and deliver it to the Company prior to such request and, as a result, shall be entitled to have its Transfer Restricted Securities included in the initial Shelf Registration Statement filed with the Commission. Holders who do not complete the Questionnaire and deliver it to the Company shall not be eligible to be named as selling securityholders in the Prospectus or preliminary Prospectus included in the Shelf Registration Statement and, therefore, shall not be permitted to sell any Transfer Restricted Securities pursuant to the Shelf Registration Statement. Thereafter, upon receipt of a completed Questionnaire, the Company shall as promptly as practicable, but in any event within ten Business Days of receipt of such Questionnaire, file any amendments or supplements to the Shelf Registration Statement to allow such Holder to be named as a selling Holder in the Prospectus included therein; provided, however, that the Company shall not be obligated to file (i) more than one such pre-effective amendment or supplement for all Holders during any fiscal quarter and (ii) more than one post-effective amendment for all Holders during any semi-annual period, and provided further, in all such cases involving supplements or amendments (whether pre-effective or post-effective), the Company shall only be obligated to make a filing when the principal amount of Notes to be included in such amendment or supplement is more than $1 million. Any period of time during which the Shelf Registration Statement or the related Prospectus ceases to be effective solely as a result of our compliance with the provisions of the preceding sentence shall not constitute a suspension of the Holder's use of the Prospectus by the Company and shall not diminish, in any way, the Company's ability to suspend the Holder's use of such Prospectus for a reasonable period not to exceed 45 days in any 90-day period or an aggregate of 90 days in any 360-day period as described herein. In addition, each Holder who intends to be named as a selling Holder in the Shelf Registration Statement shall promptly respond to the Company by providing such other information as the Company may from time to time reasonably request in writing regarding the Holder and the proposed distribution by such Holder of its Transfer Restricted Securities in connection with the Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. (e) Upon the effectiveness of the Shelf Registration Statement, each Holder shall provide the Company with a notice, in substantially the form attached to the offering memorandum as Exhibit 1 to Annex A, to the Trustee and the Company, at least three Business Days prior to any intended distribution of Transfer Restricted Securities pursuant to the Shelf Registration Statement (a "SALE NOTICE"), which notice shall be effective for five Business Days. Each Holder of Transfer Restricted Securities, by accepting the same, agrees to hold any communication by the Company in response to a Sale Notice in confidence. 5. Registration Expenses. (a) All expenses incident to the Company's performance of or compliance with this Agreement shall be borne by the Company regardless of whether a Shelf Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees and expenses (including filings made by any Initial Purchaser or Holders with the NASD); (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing of Prospectuses and certificates for Conversion Shares to be issued upon conversion of the Notes), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel to the Company and, subject to Section 5(b) below, the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing (or authorizing for quotation) the Conversion Shares on a national securities exchange or automated quotation system pursuant to the requirements hereof; and (vi) all fees and disbursements of independent certified public accountants of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance). The Company shall bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal, accounting or other duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company. (b) In connection with the Shelf Registration Statement required by this Agreement, including any amendment or supplement thereto, and any other documents delivered to any Holders, the Company shall reimburse the Initial Purchaser and the Holders of Transfer Restricted Securities being registered pursuant to the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel (including local counsel), which shall be Simpson Thacher & Bartlett LLP, or such other counsel as may be chosen by a Majority of Holders for whose benefit the Shelf Registration Statement is being prepared. The Company shall not be required to pay any underwriting discount, commission or similar fee related to the sale of any securities. 6. Indemnification and Contribution. (a) The Company shall indemnify and hold harmless each Holder, such Holder's officers, directors and employees and each person, if any, who controls such Holder within the meaning of the Securities Act (each, an "INDEMNIFIED HOLDER"), from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to resales of the Transfer Restricted Securities), to which such Indemnified Holder may become subject, insofar as any such loss, claim, damage, liability or action arises out of, or is based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in (A) the Shelf Registration Statement or Prospectus or any amendment or supplement thereto or (B) any blue sky application or other document or any amendment or supplement thereto prepared or executed by the Company (or based upon written information furnished by or on behalf of the Company expressly for use in such blue sky application or other document or amendment on supplement) filed in any jurisdiction specifically for the purpose of qualifying any or all of the Transfer Restricted Securities under the securities law of any state or other jurisdiction (such application or document being hereinafter called a "BLUE SKY APPLICATION"); or (ii) the omission or alleged omission to state therein any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and shall reimburse each Indemnified Holder promptly upon demand for any legal or other expenses reasonably incurred by such Indemnified Holder in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, (A) any untrue statement or alleged untrue statement or omission or alleged omission made in the Shelf Registration Statement or Prospectus or amendment or supplement thereto or Blue Sky Application or other document referred to in Section 6(a)(i) hereof in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Holder (or its related Indemnified Holder) specifically for use therein or (B) the failure by the Holder or Indemnified Holder to deliver to any purchaser of its Transfer Restricted Securities the Prospectus and any supplement or amendment thereto in the form provided to such Holder or Indemnified Holder by the Company if such Holder is required to so deliver pursuant to the prospectus delivery requirements of the Securities Act. The Company shall not be liable to the Holder under the indemnity agreement in this Section 6(a) to the extent, but only to the extent, that (1) such loss, claim, damage or liability arises out of, or is based upon, an untrue statement of a material fact or an omission of a material fact contained in a preliminary Prospectus, which untrue statement or omission was completely corrected in the final Prospectus and (2) the Company sustains the burden of proving that the Holder sold Notes to the person alleging such loss, claim, damage or liability without sending or giving, at or prior to written confirmation of such sale, a copy of the final Prospectus and (3) the Company had previously furnished sufficient quantities of the final Prospectus to the Holder within a reasonable amount of time prior to such sale or such confirmation and (4) the Holder failed to deliver the final Prospectus to purchasers to whom the Holder initially resold Notes, and such delivery would have been a complete defense against the person asserting such loss, claim, damage or liability. The foregoing indemnity agreement is in addition to any liability which the Company may otherwise have to any Indemnified Holder. (b) Each Holder, severally and not jointly, shall indemnify and hold harmless the Company, its officers, directors and employees and each person, if any, who controls the Company within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company or any such officer, director, employee or controlling person may become subject, insofar as any such loss, claim, damage or liability or action arises out of, or is based upon: (i) any untrue statement or alleged untrue statement of any material fact contained in the Shelf Registration Statement or Prospectus or any amendment or supplement thereto or any Blue Sky Application or other document referred to in Section 6(a)(i) hereof; or (ii) the omission or the alleged omission to state therein any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, but in each case only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder (or its related Indemnified Holder) specifically for use therein, and shall reimburse the Company and any such officer, employee or controlling person promptly upon demand for any legal or other expenses reasonably incurred by the Company or any such officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability which any Holder may otherwise have to the Company and any such officer, director, employee or controlling person. (c) Promptly after receipt by an indemnified party under this Section 6 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 6, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 6 except to the extent it has been materially prejudiced by such failure and, provided, further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 6. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 6 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that a Majority of Holders shall have the right to employ a single counsel to represent jointly a Majority of Holders and their respective officers, employees and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by a Majority of Holders against the Company under this Section 6, if a Majority of Holders be one or more legal defenses available to them and their respective officers, employees and controlling persons that are different from or additional to those available to the Company and its officers, directors, employees and controlling persons, the fees and expenses of a single separate counsel shall be paid by the Company. No indemnifying party shall: (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld) settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. (d) If the indemnification provided for in this Section 6 shall for any reason be unavailable or insufficient to hold harmless an indemnified party under Section 6(a) or 6(b) in respect of any loss, claim, damage or liability (or action in respect thereof) referred to therein, each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability (or action in respect thereof): (i) in such proportion as is appropriate to reflect the relative benefits received by the Company from the offering and sale of the Transfer Restricted Securities on the one hand and a Holder with respect to the sale by such Holder of the Transfer Restricted Securities on the other, or (ii) if the allocation provided by clause (6)(d)(i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 6(d)(i) but also the relative fault of the Company on the one hand and the Holders on the other in connection with the statements or omissions or alleged statements or alleged omissions that resulted in such loss, claim, damage or liability (or action in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and a Holder on the other with respect to such offering and such sale shall be deemed to be in the same proportion as the total net proceeds from the offering of the Notes purchased under the Purchase Agreement (before deducting expenses) received by the Company on the one hand, bear to the total proceeds received by such Holder with respect to its sale of Transfer Restricted Securities on the other. The relative fault of the parties shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Holders on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and each Holder agree that it would not be just and equitable if the amount of contribution pursuant to this Section 6(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the first sentence of this paragraph (d). The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 6 shall be deemed to include, for purposes of this Section 6, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending or preparing to defend any such action or claim. Notwithstanding the provisions of this Section 6, no Holder shall be required to contribute any amount in excess of the amount by which the total price at which the Transfer Restricted Securities purchased by it were resold exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute as provided in this Section 6(d) are several and not joint. 7. Rule 144A. In the event the Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company hereby agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding, to make available to any Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A. 8. Participation in Underwritten Registrations. No Holder may participate in any Underwritten Registration hereunder unless such Holder: (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements; and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements. 9. Selection of Underwriters. The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by a Majority of Holders whose Transfer Restricted Securities are included in such offering; provided, that such investment bankers and managers must be reasonably satisfactory to the Company. 10. Miscellaneous. (A) REMEDIES. The Company acknowledges and agrees that any failure by the Company to comply with its obligations under Section 2 hereof may result in material irreparable injury to the Initial Purchaser or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchaser or any Holder may obtain such relief as may be required to specifically enforce the Company's obligations under Section 2 hereof. The Company further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. (B) ADJUSTMENTS AFFECTING TRANSFER RESTRICTED SECURITIES. The Company shall not, directly or indirectly, take any action with respect to the Transfer Restricted Securities as a class that would adversely affect the ability of the Holders of Transfer Restricted Securities to include such Transfer Restricted Securities in a registration undertaken pursuant to this Agreement. (C) NO INCONSISTENT AGREEMENTS. The Company will not, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. In addition, the Company shall not grant to any of its security holders (other than the Holders of Transfer Restricted Securities in such capacity) the right to include any of its securities in the Shelf Registration Statement provided for in this Agreement other than the Transfer Restricted Securities. The Company has not previously entered into any agreement (which has not expired or been terminated) granting any registration rights with respect to its securities to any Person which rights conflict with the provisions hereof. (D) AMENDMENTS AND WAIVERS. This Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given, unless the Company has obtained the written consent of a Majority of Holders or such greater percentage of the Holders as required by the Indenture. (E) NOTICES. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, facsimile transmission, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the registrar under the Indenture or the transfer agent of the Conversion Shares, as the case may be; and (ii) if to the Company: Infocrossing, Inc. 2 Christie Heights Street Leonia, New Jersey 07605 Attn: General Counsel Tel: (201) 840-4700 Fax: (201) 840-7126 With a copy to: Latham & Watkins LLP 885 Third Avenue Suite 1000 New York, New York 10022 Attn: Robert A. Zuccaro Tel: (212) 906-1295 Fax: (212) 751-4864 All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if transmitted by facsimile; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery. (F) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided, however, that (i) this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities from such Holder and (ii) nothing contained herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Securities in violation of the terms of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Transfer Restricted Securities, in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted Securities such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement. (G) COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (H) SECURITIES HELD BY THE COMPANY OR ITS AFFILIATES. Whenever the consent or approval of Holders of a specified percentage of Transfer Restricted Securities is required hereunder, Transfer Restricted Securities held by the Company or its Affiliates shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. (I) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (J) GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the law of the State of New York. (K) SEVERABILITY. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (L) ENTIRE AGREEMENT. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. INFOCROSSING, INC. By: /s/ NICHOLAS J. LETIZIA ------------------------- Name: Nicholas J. Letizia Title: Senior Vice President, General Counsel and Secretary LEHMAN BROTHERS INC. By: /s/ JOSEPH C. CASTLE ---------------------------- Name: Joseph C. Castle Title: Senior Vice President EXHIBIT A TIME SENSITIVE MATERIAL THIS NOTICE AND QUESTIONNAIRE MUST BE RETURNED TO INFOCROSSING, INC. (AT THE ADDRESS LISTED BELOW) ON OR BEFORE THE 20TH DATE FOLLOWING DELIVERY OF THE NOTICE AND QUESTIONNAIRE BY INFOCROSSING, INC. TO THE TRUSTEE AND THE REGISTERED HOLDER FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE The undersigned beneficial owner of 4.00% Convertible Senior Notes due 2024 (CUSIP No. ) (the "Notes") of Infocrossing, Inc. (the "Company") or shares of common stock, $.01 par value per share, issuable upon conversion thereof (the "CONVERSION SHARES" and together with the NOTES, the "TRANSFER RESTRICTED SECURITIES") of the Company understands that the Company has filed, or intends to file, with the Securities and Exchange Commission (the "SEC") a registration statement on Form S-3 (the "SHELF REGISTRATION STATEMENT"), for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the "SECURITIES ACT"), of the Transfer Restricted Securities in accordance with the terms of the Resale Registration Rights Agreement, dated as of June 30, 2004 (the "REGISTRATION RIGHTS AGREEMENT"), between the Company and Lehman Brothers Inc. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein have the meaning ascribed thereto in the Registration Rights Agreement. Each beneficial owner of Transfer Restricted Securities is entitled to the benefits of the Registration Rights Agreement. In order to sell or otherwise dispose of any Transfer Restricted Securities pursuant to the Shelf Registration Statement, a beneficial owner of Transfer Restricted Securities generally will be required to be named as a selling securityholder in the related Prospectus, deliver a Prospectus to purchasers of Transfer Restricted Securities and be bound by those provisions of the Registration Rights Agreement applicable to such beneficial owner (including certain indemnification provisions, as described below). Beneficial owners are encouraged to complete and deliver this Notice and Questionnaire prior to the effectiveness of the Shelf Registration Statement so that such beneficial owners may be named as selling securityholders in the related prospectus at the time of effectiveness. Upon receipt of a completed Notice and Questionnaire from a beneficial owner following the effectiveness of the Shelf Registration Statement, the Company will, as promptly as practicable, file such amendments to the Shelf Registration Statement or supplements to the related prospectus as are necessary to permit such holder to deliver such prospectus to purchasers of Transfer Restricted Securities. The Company has agreed to pay additional interest pursuant to the Registration Rights Agreement under certain circumstances as set forth therein. Certain legal consequences arise from being named as a selling securityholder in the Shelf Registration Statement and the related Prospectus. Accordingly, holders and beneficial owners of Transfer Restricted Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Shelf Registration Statement and the related Prospectus. NOTICE The undersigned beneficial owner (the "SELLING SECURITYHOLDER") of Transfer Restricted Securities hereby gives notice to the Company of its intention to sell or otherwise dispose of Transfer Restricted Securities beneficially owned by it and listed below in Item 3 (unless otherwise specified under Item 3) pursuant to the Shelf Registration Statement. The undersigned, by signing and returning this Notice and Questionnaire, understands that it will be bound by the terms and conditions of this Notice and Questionnaire and the Registration Rights Agreement. Pursuant to the Registration Rights Agreement, the undersigned has agreed to indemnify and hold harmless the Company, the Company's directors, the Company's officers who sign the Shelf Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against certain losses arising in connection with statements concerning the undersigned made in the Shelf Registration Statement or the related Prospectus in reliance upon the information provided in this Notice and Questionnaire. Upon any sale of Transfer Restricted Securities pursuant to a Shelf Registration Statement, the Selling Securityholder will be required to deliver to the Company and the trustee for the NOTES the Notice to Transfer (completed and signed) set forth in Exhibit 1 to this Notice and Questionnaire. The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate and complete: QUESTIONNAIRE 1. INFORMATION REGARDING SELLING SECURITYHOLDER (a) Full legal name of Selling Securityholder: _______________________ (b) Full legal name of registered holder (if not the same as (a) above) through which Transfer Restricted Securities listed in Item (3) below are held: ---------------------------------------------------------- (c) Full legal name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by the questionnaire): (d) Is the Selling Securityholder an SEC-reporting company? If the Selling Securityholder is not an SEC-reporting company, list below the individual or individuals who exercise dispositive powers with respect to the Notes, and the voting and/or dispositive powers with respect to the common stock underlying the Notes: ____________________________________ (e) Are you a broker-dealer registered pursuant to Section 15 of the Exchange Act? | | Yes. | | No. Note: If yes, the SEC's staff has indicated that you should be identified as an underwriter in the Shelf Registration Statement. (f) If your response to Item 1(e) above is "no," are you an "affiliate" of a broker-dealer registered pursuant to Section 15 of the Exchange Act? | | Yes. | | No. For purposes of this Item 1(f), an "affiliate" of a registered broker-dealer shall include any company that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such broker-dealer, and does not include any individuals employed by such broker-dealer or its affiliates. (g) If you are an affiliate of a broker-dealer, do you certify that you bought the Transfer Restricted Securities to be resold, and at the time of the purchase of the Transfer Restricted Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Transfer Restricted Securities. | | Yes. | | No. Note: If no, the SEC's staff has indicated that you should be identified as an underwriter in the Shelf Registration Statement. (h) Full legal name of person through which you hold the Transfer Restricted Securities - (i.e. name of your broker or the DTC participant, if applicable, through which your Transfer Restricted Securities are held): Name of broker: ___________________________________________ DTC No: _________________________________________________ Contact person: ____________________________________________ Telephone No. (including area code): _______________________ Email address: _____________________________________________ 2. ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER Telephone: ____________________________ Fax: _________________________________ Contact Person: ________________________ Email address: ________________________________ 3. BENEFICIAL OWNERSHIP OF TRANSFER RESTRICTED SECURITIES (a) Type of Transfer Restricted Securities beneficially owned, and principal amount of NOTES or number of Conversion Shares of the Company, as the case may be, beneficially owned: ---------------------------- (b) CUSIP No(s). of such Transfer Restricted Securities beneficially owned: ------------------- 4. BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES OWNED BY THE SELLING SECURITYHOLDER Except as set forth below in this Item (4), the undersigned is not the beneficial or registered owner of any securities of the Company other than the Transfer Restricted Securities listed above in Item (3) ("OTHER SECURITIES"). (a) Type and amount of Other Securities beneficially owned by the Selling Securityholder: -------------------------------------------- (b) CUSIP No(s). of such Other Securities beneficially owned: --------------------------------------------------------- 5. RELATIONSHIP WITH THE COMPANY (a) Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years. 6. SHORT POSITIONS: (a) Do you currently have, or have you previously had, any open short positions with respect to the Company's common stock? | | Yes. | | No. THE COMPANY HEREBY ADVISES YOU THAT, ACCORDING TO PUBLISHED INTERPRETATIONS, THE SEC'S STAFF IS OF THE VIEW THAT SHORT SALES CANNOT BE MADE BEFORE THE SHELF REGISTRATION STATEMENT BECOMES EFFECTIVE BECAUSE THE SHARES UNDERLYING THE SHORT SALE ARE DEEMED TO BE SOLD AT THE TIME SUCH SALE IS MADE. THERE WOULD, THEREFORE, BE A VIOLATION OF SECTION 5 OF THE SECURITIES ACT OF 1933, AS AMENDED, IF THE SHARES WERE EFFECTIVELY SOLD PRIOR TO THE EFFECTIVE DATE. SELLING SECURITYHOLDERS ARE HEREBY REMINDED THAT REGULATION M OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, PROHIBITS CERTAIN ACTIVITIES BY SELLING SECURITYHOLDERS AND CERTAIN OTHER PERSONS IN CONNECTION WITH A DISTRIBUTION OF SECURITIES. SELLING SECURITYHOLDERS ARE HEREBY ADVISED TO CONSULT THEIR OWN LEGAL COUNSEL WITH REGARD TO THESE PROHIBITIONS. 7. PLAN OF DISTRIBUTION Except as set forth below, the undersigned (including its donees or pledgees) intends to distribute the Transfer Restricted Securities listed above in Item (3) pursuant to the Shelf Registration Statement only as follows (if at all). Such Transfer Restricted Securities may be sold from time to time directly by the undersigned or, alternatively, through underwriters, broker-dealers or agents. If the Transfer Restricted Securities are sold through underwriters or broker-dealers, the Selling Securityholder will be responsible for underwriting discounts or commissions or agent's commissions. Such Transfer Restricted Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve crosses or block transactions): (i) on any national securities exchange or quotation service on which the Transfer Restricted Securities may be listed or quoted at the time of sale; (ii) in the over-the-counter market; (iii) in transactions otherwise than on such exchanges or services or in the over-the-counter market; or (iv) through the writing of options. In connection with sales of the Transfer Restricted Securities or otherwise, the undersigned may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Transfer Restricted Securities and deliver Transfer Restricted Securities to close out such short positions, or loan or pledge Transfer Restricted Securities to broker-dealers that in turn may sell such securities. State any exceptions here: ___________________________________________ ----------------------------------------------------------------------- Note: In no event will such method(s) of distribution take the form of an underwritten offering of the Transfer Restricted Securities without the prior agreement of the Company. 8. ACKNOWLEDGMENTS The undersigned acknowledges that it understands its obligation to comply with the provisions of the Securities Exchange Act of 1934, as amended, and the rules thereunder relating to stock manipulation, particularly Regulation M thereunder (or any successor rules or regulations), in connection with any offering of Transfer Restricted Securities pursuant to the Shelf Registration Statement. The undersigned agrees that neither it nor any person acting on its behalf will engage in any transaction in violation of such provisions. The Selling Securityholder hereby acknowledges its obligations under the Registration Rights Agreement to indemnify and hold harmless certain persons as set forth therein. Pursuant to the Registration Rights Agreement, the Company has agreed under certain circumstances to indemnify the Selling Securityholders against certain liabilities. In accordance with the undersigned's obligation under the Registration Rights Agreement to provide such information as may be required by law for inclusion in the Shelf Registration Statement, the undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Shelf Registration Statement remains effective. All notices hereunder and pursuant to the Registration Rights Agreement shall be made in writing at the address set forth above. By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to items (1) through (8) above and the inclusion of such information in the Shelf Registration Statement and the related Prospectus. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Shelf Registration Statement and the related Prospectus. Once this Notice and Questionnaire is executed by the undersigned and received by the Company, the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives and assigns of the Company and the undersigned with respect to the Transfer Restricted Securities beneficially owned by the undersigned and listed in Item (3) above. This Notice and Questionnaire shall be governed in all respects by the laws of the State of New York. IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent. Beneficial Owner By: ________________________________ Name: Title: Dated: PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO INFOCROSSING, INC. NOT LATER THAN THE 20TH DAY AFTER THIS NOTICE AND QUESTIONNAIRE HAVE BEEN DELIVERED TO THE TRUSTEE AND THE REGISTERED HOLDER AT: Secretary Infocrossing, Inc. 2 Christie Heights Street Leonia, New Jersey 07605 Telephone: (201) 840-4700 Facsimile: (201) 840-7126 EXHIBIT 1 NOTICE TO TRANSFER PURSUANT TO REGISTRATION STATEMENT Infocrossing, Inc. 2 Christie Heights Street Leonia, New Jersey 07605 Re: Infocrossing, Inc. (the "Company") 4.00% Convertible Senior Notes due 2024 (the "Notes") Ladies and Gentlemen: Please be advised that ________________has transferred $______________ aggregate principal amount of the above-referenced Notes of the Company or the common stock issued on conversion of the Notes (the "Common Stock"), pursuant to the Registration Statement on Form S-3 (File No._____) filed by the Company. We hereby certify that the prospectus delivery requirements, if any, of the Securities Act of 1933, as amended, have been satisfied with respect to the transfer described above and the above named beneficial owner of the Notes or the Common Stock is named as a selling securityholder in the prospectus dated _______, or in amendments or supplements thereto, and that the aggregate principal amount of the Notes or number of the Common Stock transferred are [all or a portion of] the Notes or the Common Stock listed in such prospectus, as amended or supplemented, opposite such owner's name. Very truly yours, [name] By: ____________________________________ (Authorized Signature) Dated: EX-4 4 x45debt.txt AMENDMENT TO CREDIT AGREEMENT EXHIBIT 4.5 FIRST AMENDMENT TO AMENDED AND RESTATED TERM LOAN AGREEMENT This FIRST AMENDMENT TO AMENDED AND RESTATED TERM LOAN AGREEMENT (this "Amendment"), dated as of June 30, 2004, is by and among INFOCROSSING, INC., a Delaware corporation (the "Borrower"), the Subsidiaries of the Borrower that are signatories hereto (collectively, the "Guarantors"), the financial institutions that are parties hereto as "Lenders" (together with any other financial institutions that become parties to the Loan Agreement defined below, in each case with their successors and assigns, collectively, the "Lenders"), and CAPITALSOURCE FINANCE LLC, a Delaware limited liability company, as such a Lender and as Agent for the Lenders. All capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in Section 1 below. R E C I T A L S: A. The Borrower, the Agent and the Lenders are parties to that certain Amended and Restated Term Loan Agreement dated as of April 2, 2004 (the "Existing Loan Agreement;" the Existing Loan Agreement, as amended hereby, and as the same further may be amended, modified, supplemented or restated in accordance with its terms and as in effect from time to time, the "Loan Agreement"), pursuant to and subject to the terms and conditions of which, among other things, the Lenders have made certain loans and other financial accommodations to the Borrower. B. The Borrower has requested that the Lenders (i) consent to the Convertible Notes Issuance and (ii) agree to amend the Existing Loan Agreement in certain respects. C. The Agent and the Lenders agree to accommodate such requests of the Borrower, on the terms and subject to the conditions herein set forth. NOW, THEREFORE, in consideration of the mutual agreements herein contained, and for other good and valuable consideration, the receipt, sufficiency and adequacy of which hereby are acknowledged, the parties hereto agree as follows: 1. Definitions. Capitalized terms used but not elsewhere defined herein shall have the respective meanings ascribed to such terms in the Loan Agreement. 2. Amendments to the Existing Loan Agreement. The Existing Loan Agreement hereby is amended as follows: 2.1 Section 1.1 - Substituted Definitions. Section 1.1 of the Existing Loan Agreement hereby is amended by substituting the following definitions of the terms set forth below in lieu of the current versions of such definitions contained in the Existing Loan Agreement: "Change of Control": means the occurrence of any of the following events, whether in a single transaction or a series of related transactions, and any other similar events: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total Voting Capital Stock of the Borrower; or (b) the Borrower consolidates with, or merges with or into, another Person or Persons or sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets to any Person or Persons, or any Person or Persons consolidate with, or merge with or into the Borrower, in any such event pursuant to a transaction in which (i) the holders of the outstanding Voting Capital Stock of the Borrower immediately prior to such transaction hold less than 50% of the outstanding Voting Capital Stock of the surviving or transferee company or its direct or indirect parent company immediately after the transaction or (ii) immediately after such transaction any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total Voting Capital Stock of the surviving or transferee company or its direct or indirect parent company immediately after the transaction; or (c) during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of the Borrower (together with any new directors whose election by the Board of Directors of the Borrower or whose nomination for election by the stockholders of the Borrower was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Borrower then in office provided, however, that the change in individuals constituting the Board of Directors in connection with the closing of the transactions contemplated by the Exchange Agreement shall be deemed not to result in a Change of Control pursuant to this clause (c); or (d) any transaction subject to Rule 13e-3 under the Exchange Act if following such Rule 13e-3 transaction such Person owns more than 50% of the total Voting Capital Stock of the Borrower; or (e) any "Change of Control" under the Convertible Notes Indenture Documents. 2.2 Section 1.1 - Additional Definitions. Section 1.1 of the Existing Loan Agreement hereby is amended further by adding the following terms and respective definitions to such Section 1.1 in the appropriate alphabetical order: "Convertible Notes": those certain 4.00% Convertible Senior Notes due 2024 in the aggregate principal amount of up to $72,000,000 issued by the Borrower pursuant to the Convertible Notes Indenture, including all notes issued in exchange therefor or substitution thereof. "Convertible Notes Indebtedness": the unsecured Indebtedness of the Borrower that is incurred pursuant to the Convertible Notes Issuance. "Convertible Notes Indenture": that certain Indenture dated as of June __, 2004 between Wells Fargo, National Association, as Trustee, and the Borrower, as the same may be amended, modified and/or supplemented from time to time in accordance with the terms hereof. "Convertible Notes Indenture Documents": collectively, the Convertible Notes Indenture, the Convertible Notes and all related agreements, documents and instruments evidencing or otherwise relating to the Convertible Notes Indebtedness. "Convertible Notes Issuance": the offering by the Borrower of up to an aggregate of $72,000,000 in principal amount of Convertible Notes Indebtedness upon the terms and conditions set forth in that certain Offering Memorandum of the Borrower dated as of June 24, 2004. "First Amendment": that certain First Amendment to Amended and Restated Term Loan Agreement dated as of June 30, 2004 among the Borrower, its Subsidiaries, the Agent and the Lenders. "First Amendment Effective Date": shall mean June 30, 2004. 2.3 Section 3. Section 3 of the Existing Loan Agreement hereby is amended by adding the following Sections 3.23 and 3.24 to such Section 3 in the appropriate numerical order: 3.23 Convertible Notes Indenture Documents. The Loan Obligations are permitted under the Convertible Notes Indenture Documents. The execution, delivery and performance by the Borrower and its Subsidiaries of the Loan Documents to which they are parties do not and will not conflict with or result in any breach or contravention of, or result in the creation of any Lien or default or event of default under, any of the Convertible Notes Indenture Documents. None of the Convertible Notes Indenture Documents prohibits or otherwise restricts in any manner the making of any payments hereunder by the Borrower or any of its Subsidiaries. The Convertible Notes Issuance was made in compliance with all Requirements of Law, including, without limitation, the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb), as amended. 3.24 Representations and Warranties Incorporated from the Convertible Notes Indenture Documents. As of the First Amendment Effective Date, and each other date on which the following described representations and warranties are made or deemed made under the Convertible Notes Indenture Documents, each of the representations and warranties made in each of the Convertible Notes Indenture Documents is true and correct in all material respects, and, without limiting any other representation or warranty contained in any Loan Document, such representations and warranties hereby are incorporated herein by this reference, mutatis mutandis, with the same effect as though such representations and warranties were expressly set forth in their entirety herein. 2.4 Section 5.2. Section 5.2 of the Existing Loan Agreement hereby is amended by (x) deleting the "and" at the end of clause (d) of such Section 5.2, (y) deleting clause (e) of such Section 5.2 and substituting clause (e) below in lieu thereof, and (z) adding clause (f) below to such Section 5.2 in the appropriate alphabetical order: (e) concurrently with the delivery thereof to the trustee under the Convertible Notes Indenture, copies of any and all notices, certificates, statements, reports and other deliveries required to be made thereunder, including without limitation, all compliance certificates and reports required to be filed pursuant to Sections 13 and 15(d) of the Securities Exchange Act of 1934, as amended; and (f) promptly, such additional financial and other information as any Lender may from time to time reasonably request. 2.5 Section 6.2. Section 6.2 of the Existing Loan Agreement hereby is amended by (x) deleting the "and" at the end of clause (k) of such Section 6.2, (y) deleting the "." at the end of clause (l) of such Section 6.2 and substituting "; and" in lieu thereof, and (z) adding the following clause (m) below to such Section 6.2 in the appropriate alphabetical order: (m) Convertible Notes Indebtedness not to exceed $72,000,000 in aggregate principal amount at any time outstanding (reduced from time to time by principal payments made, or deemed made as a result of conversion, thereon, the making of which remain subject to the terms of this Agreement) evidenced by the Convertible Notes. 2.6 Section 6.7. Section 6.7 of the Existing Loan Agreement hereby is amended by (x) deleting the "and" at the end of clause (iii) of such Section 6.2, (y) deleting the "." at the end of clause (iv) of such Section 6.2 and substituting "; and" in lieu thereof, and (z) adding the following clause (v) below to such Section 6.2 in the appropriate numerical order: (v) for the avoidance of doubt, the Borrower may make regularly scheduled semi-annual payments of interest in respect of the Convertible Notes Indebtedness and may convert the Convertible Notes Indebtedness into shares of the Borrower's common stock in accordance with the terms of the Convertible Notes Indenture Documents. 2.7 Section 6.10. Section 6.10 of the Existing Loan Agreement hereby is deleted in its entirety and the following is substituted in lieu thereof: 6.10 Modifications of Debt Instruments. Amend, modify or change, or consent or agree to any amendment, modification or change to any of the terms of any material Indebtedness, except for such amendments, modifications or waivers that could not reasonably be expected to effect any change materially adverse to the interests and rights of the Agent or the Lenders under any Loan Document. Without limiting the generality of the foregoing, and anything contained herein to the contrary notwithstanding, the Company shall not amend, modify or change, or consent or agree to any amendment, modification or change to any of the terms of the Convertible Notes Indebtedness or the Convertible Notes Indenture Documents, except for such amendments, modifications, changes, consents or agreements that do not, will not and could not reasonably be expected to effect any change adverse to the interests, rights, remedies and/or claims of the Agent or any of the Lenders under any of the Loan Documents. 2.8 Section 6. Section 6 of the Existing Loan Agreement hereby is amended by adding the following Section 6.18 to the end of such Section 6: 6.18 Specific Restricted Payments. (i) Make any payment or prepayment of principal of, premium, if any, interest, fees, redemption, exchange, purchase, retirement, defeasance, sinking fund or similar payment with respect to, the Convertible Notes Indebtedness other than regularly scheduled semi annual payments of interest in respect thereof, (ii) grant any Lien as security for any of the Convertible Notes Indebtedness or (iii) use the proceeds thereof for purposes other than (a) those permitted under the terms of this Agreement and (b) to repay any of the Loan Obligations subject to the terms of the First Amendment. 2.9 Section 6. Section 6 of the Existing Loan Agreement hereby is amended by adding the following paragraph to the end of such Section 6: Anything contained in this Section 6 to the contrary notwithstanding, no act, transaction or other action otherwise permitted under this Section 6 shall be permitted if such act, transaction or other action is prohibited or is otherwise not permitted under any of the Convertible Notes Indenture Documents and the Agent shall have the right, at any time, to require the Borrower to deliver a certificate executed by a Responsible Officer of the Borrower and otherwise in form and substance reasonably satisfactory to the Agent which certifies to the Agent and the Lenders that any such act, transaction or other action, at the time such act, transaction or other action is to be taken or consummated, is permitted under the Convertible Notes Indenture Documents. Furthermore, all covenants contained in each of the Convertible Notes Indenture Documents hereby are incorporated herein, mutatis mutandis, as if such covenants were set forth in this Agreement, and shall be deemed in addition to, and not in substitution of, the covenants contained in the Loan Documents. 2.10 Section 7. Section 7 of the Existing Loan Agreement hereby is amended by (x) adding "or" at the end of clause (k) of such Section 7, and (y) adding the following clause (l) below to such Section 7 in the appropriate alphabetical order: (l) Without limiting any of the foregoing, the occurrence of any default (and continuation beyond any applicable cure or grace period) under the Convertible Notes Indenture Documents or otherwise in respect of the Convertible Notes Indebtedness, or the exercise of any rights or remedies by any Person thereunder or in respect thereof due to the occurrence of any such default (and continuation beyond any applicable cure or grace period); the exercise of any put option or similar right by any Person in respect of the Convertible Notes Indebtedness; or the receipt of a default notice by the Borrower from the trustee or any other Person under the Convertible Notes Indenture Documents; 2.11 General Agreements. The Borrower has requested that the Agent and the Lenders consent to the Convertible Notes Issuance and the incurrence by the Borrower of the Convertible Notes Indebtedness pursuant to the terms of the Convertible Notes Indenture Loan Documents. On the terms and subject to the conditions set forth in this Amendment (including, without limitation, the conditions set forth in this Section 2.11) and subject to the effectiveness of this Amendment in accordance with Section 3, the Agent and the Lenders hereby consent to the Convertible Notes Issuance and the incurrence of the Convertible Notes Indebtedness. In consideration for the granting of the foregoing consents, and anything contained in any Loan Document to the contrary notwithstanding, the parties hereto hereby agree that: (a) unless such amounts shall have been paid earlier in accordance with the terms of the Loan Agreement (and the Agent and the Lenders hereby agree and acknowledge that the Borrower may pay such amounts at any time prior to the Scheduled Repayment Date (as defined below)) or in accordance with paragraph (e) below, the outstanding principal amount of the Loan, together with all accrued and unpaid interest thereon and all other Loan Obligations (other than the prepayment premium that otherwise shall have been due and owing in respect of the repayment of the Loan Obligations with the proceeds of the Convertible Notes Indebtedness), shall be due and payable on July 30, 2004 (the "Scheduled Repayment Date"), and the Borrower hereby agrees to pay such amounts to the Agent and the Lenders, unless paid earlier, on the Scheduled Repayment Date; (b) each of the parties hereto hereby agrees to use good faith efforts to negotiate, document and close an acquisition facility (the "Acquisition Facility"), on terms and conditions consistent with the term sheet dated June 21, 2004 executed by the Borrower and CapitalSource Finance LLC, which documentation shall be generally consistent in nature with the Loan Documents currently in effect and with acquisition facilities of the types contemplated by such term sheet and otherwise mutually agreeable to the Borrower and the Agent, on or before the Scheduled Repayment Date; (c) if the Acquisition Facility shall not have been documented and executed in accordance with paragraph (b) above on or before the Scheduled Repayment Date for any reason other than due to the failure of the Agent to comply with its obligations under paragraph (b) above (as determined by a court of competent jurisdiction on a final and nonappealable basis), then, as consideration for the agreements of the Agent and the Lenders herein set forth, the Borrower shall pay to the Agent a consent and amendment fee (the "First Amendment Fee") on the Scheduled Repayment Date in an amount equal to 6.645% of the aggregate principal amount of the Loan in excess of $15,000,000 that shall have been repaid or prepaid, or required to be repaid or prepaid (in each case, other than repayments constituting regularly scheduled amortization installments of principal thereof) during the period commencing on the First Amendment Effective Date and ending on the date the Borrower complies with its payment obligations under paragraph (a) above (including in such calculation all principal of the Loan required to be repaid on the Scheduled Repayment Date), and the obligations of the Borrower under this paragraph (c) shall constitute Loan Obligations and shall be secured by the Collateral and the Security Documents (and this Amendment and the other Loan Documents shall remain in full force and effect regardless of the payment of all Loan Obligations other than the First Amendment Fee); (d) the payment by the Borrower of the First Amendment Fee in accordance with the terms of paragraph (c) above shall be in substitution of, and not in addition to, the other prepayment premium that otherwise shall have been due and owing in respect of the repayment of Loan Obligations with the proceeds of the Convertible Notes Indebtedness; (e) if the Acquisition Facility becomes effective in accordance with paragraph (b) above on or before the Scheduled Repayment Date, then simultaneously therewith the Borrower shall repay to the Agent and the Lenders the then-outstanding principal amount of the Loan, if any, together with all accrued and unpaid interest thereon and all other Loan Obligations, if any, and the Loan Documents shall terminate in accordance with their terms (other than provisions and terms therein contained that expressly survive repayment of the Loan Obligations) and, if the Borrower shall have complied with the foregoing, no First Amendment Fee shall be due or owing and the Borrower shall not have any further obligation to pay the prepayment premium that otherwise shall have been due and owing in respect of the repayment of Loan Obligations with the proceeds of the Convertible Notes Indebtedness; (f) if the Borrower shall have paid the First Amendment Fee to the Agent and shall have repaid the outstanding principal amount of the Loan, together with all accrued and unpaid interest thereon and all other Loan Obligations, then the Loan Documents shall terminate in accordance with their respective terms (other than provisions and terms therein contained that expressly survive repayment of the Loan Obligations); provided, that, for clarification, (i) the Loan Documents shall not terminate, even if the outstanding principal amount of the Loan, together with all accrued and unpaid interest thereon and all other Loan Obligations (other than the First Amendment Fee) are repaid in full, until the earlier of (A) the payment of the First Amendment Fee to the Agent or (B) the effectiveness of the Acquisition Facility in accordance with paragraphs (b) and (c) above and (ii) the Loan Documents shall be reinstated, be revived and continue in full force and effect if at any time any payment of any of the Loan Obligations subsequently is rescinded, declared to be fraudulent or preferential, set aside, required to be paid to any receiver, trustee in bankruptcy or similar Person, or under any insolvency, receivership, fraudulent conveyance, preference or similar law, or must otherwise be returned by the Agent or any Lender; and (g) the failure of the Borrower to make any payment required by this Section 2.11 shall result automatically in an Event of Default, without notice or other action by or on behalf of the Agent, any Lender or any other Person, and any and all unfulfilled or unsatisfied payment obligations of the Borrower under this Section 2.11 hereby expressly shall survive any payment or repayment of other Loan Obligations. 3. Conditions to Effectiveness. The effectiveness of this Amendment shall be subject to the satisfaction of all of the following conditions in a manner, form and substance satisfactory to the Agent: (a) Representations and Warranties. All of the representations and warranties of the Borrower and each of its Subsidiaries set forth in the Existing Loan Agreement and the other Loan Documents (including, without limitation, this Amendment) to the extent such Person is a party thereto shall be true and correct in all material respects (or, with respect to any such representation or warranty that, by its terms, is qualified by materiality, Material Adverse Effect or similar qualification, such representation or warranty shall be true and correct in all respects), except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date (or, with respect to any such representation or warranty that, by its terms, is qualified by materiality, Material Adverse Effect or similar qualification, such representation or warranty shall be true and correct in all respects as of such earlier date). (b) Delivery of Documents. The following shall have been delivered to the Agent, each duly authorized and executed, as applicable: (1) this Amendment; (2) such evidence of the authority of the Borrower and each of its Subsidiaries to execute and deliver this Amendment and all other Loan Documents delivered in connection herewith as the Agent may require, including, but not limited to, (i) a copy of resolutions duly adopted by the board of directors of each such Person, authorizing the execution by each such Person of this Amendment and the other agreements, documents and instruments to be executed by each such Person pursuant to this Amendment (collectively, the "Other Amendment Documents"), certified as complete and correct by the secretary, the assistant secretary or any Responsible Officer of each such Person, and (ii) a certificate of the secretary or assistant secretary of each such Person to the effect that neither the articles of incorporation nor the bylaws of such Person have been amended or modified since the Original Closing Date or, if more recent than the Original Closing Date, the date on which certified copies of such documents previously were delivered to the Agent; (3) a certificate executed by a Responsible Officer or the Vice Chairman of the Borrower on behalf of the Borrower certifying to the Agent and the Lenders that all necessary governmental, regulatory, creditor, shareholder, partner, member and other material consents, approvals and exemptions required to be obtained by the Borrower in connection with the transactions evidenced hereby have been duly obtained and are in full force and effect; (4) a certificate signed by a Responsible Officer or the Vice Chairman of the Borrower dated as of the Effective Date affirming the matters set forth in this Section 3 and the satisfaction of the conditions precedent herein contained; and (5) such other instruments, documents, certificates, consents, waivers and opinions (including opinions from Latham & Watkins LLP, counsel to the Borrower and its Subsidiaries) as the Agent reasonably may request. (c) [Reserved]. (d) No Default. No Default or Event of Default shall exist or be created hereby, and no default or event of default shall exist or be created under the Convertible Notes Indenture Documents. (e) No Material Adverse Effect. No Material Adverse Effect shall have occurred since December 31, 2003. (f) Copies of Documents. Delivery to Agent of copies, certified by a Responsible Officer or the Vice Chairman of the Borrower, of the material Convertible Notes Indenture Documents. (g) Filings, Registrations and Recordings. The Agent shall have received each document (including Uniform Commercial Code financing statements and in lieu financing statements or amendments thereto) required by the Loan Documents or under law or reasonably requested by the Agent to be filed, registered or recorded in order to create in favor of the Agent, for the benefit of the Agent and the Lenders, a perfected Lien on the Collateral described therein, prior and superior to any other Person, in proper form for filing, registration or recording. (h) Satisfaction of the Agent's Counsel. All legal matters incident to the transactions contemplated hereby shall be reasonably satisfactory to counsel for the Agent. The date on which the foregoing conditions shall have been satisfied shall be referred to herein as the "Effective Date." The execution and delivery of this Amendment by the Borrower and the Guarantors shall be deemed a representation and warranty by such Persons that the foregoing conditions precedent have been satisfied in all respects as of the date hereof. 4. References. From and after the Effective Date, all references in the Existing Loan Agreement and the other Loan Documents to the Loan Agreement shall be deemed to refer to the Existing Loan Agreement, as amended hereby. This Amendment constitutes a Loan Document. 5. Representations and Warranties. The Borrower and each of its Subsidiaries (individually, an "Obligor" and collectively, the "Obligors") each hereby confirms to the Agent and the Lenders that the representations and warranties set forth in the Loan Agreement and the other Loan Documents are true and correct in all material respects as of the date hereof (or, with respect to any such representation or warranty that, by its terms, is qualified by materiality, Material Adverse Effect or similar qualification, such representation or warranty are true and correct in all respects), except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date (or, with respect to any such representation or warranty that, by its terms, was qualified by materiality, Material Adverse Effect or similar qualification, such representation or warranty shall have been true and correct in all respects as of such earlier date). Each Obligor further represents and warrants to the Agent and the Lenders that (a) it has full power and authority to execute and deliver this Amendment and the Other Amendment Documents and to perform its obligations hereunder and thereunder, (b) upon the execution and delivery hereof and thereof, this Amendment and the Other Amendment Documents will be valid, binding and enforceable upon it in accordance with their respective terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors' rights generally and to general principles of equity, (c) the execution, delivery and performance of this Amendment and/or the Other Amendment Documents do not and will not contravene, conflict with, violate or constitute a default under (i) the articles of incorporation, certificate of limited partnership, bylaws or agreement of limited partnership of such Obligor, as applicable, or (ii) any applicable law, rule or regulation, or any judgment, decree or order, of which such Obligor has knowledge or any material agreement, indenture or instrument to which such Obligor is a party or is bound or which is binding upon or applicable to all or any portion of its property and (d) no Default or Event of Default presently exists. 6. [Reserved]. 7. No Further Amendments; Ratification of Liability; Waiver. Except as amended hereby, the Existing Loan Agreement and each of the other Loan Documents shall and do remain in full force and effect in accordance with their respective terms. Each Obligor, as a debtor, grantor, pledgor, guarantor or assignor, or in any similar capacity in which it has granted Liens or acted as an accommodation party or guarantor, as the case may be, hereby ratifies, confirms and reaffirms its liabilities, its payment and performance obligations (contingent or otherwise) and its agreements under the Loan Agreement and the other Loan Documents to the extent such Person is a party thereto, all as amended by this Amendment, and the liens and security interests granted, created and perfected thereby, and acknowledges that (a) it has no defenses, claims or set-offs to the enforcement of such liabilities, obligations and agreements, (b) the Agent and the Lenders have fully performed all obligations to such Person which such Persons may have had or have on and as of the date hereof and (c) other than as specifically set forth herein, neither the Agent nor any of the Lenders waives, diminishes or limits any term or condition contained in the Existing Loan Agreement or any other Loan Document. The Agent and the Lenders' agreement to the terms of this Amendment or any other amendment of the Existing Loan Agreement or any other Loan Document shall not be deemed to establish or create a custom or course of dealing among the Obligors, the Agent and the Lenders, or any of them. This Amendment and the Other Amendment Documents contain the entire agreement among the Obligors, the Agent and the Lenders contemplated by this Amendment. 8. Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, and all of which, when taken together, shall constitute one and the same instrument. Delivery of a counterpart by facsimile shall as effective as delivery of a manually-executed counterpart. 9. Further Assurances. Each Obligor covenants and agrees that it will at any time and from time to time do, execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered, all such further acts, documents and instruments as reasonably may be required by the Agent in order to effectuate fully the intent of this Amendment. 10. Severability. If any term or provision of this Amendment or the application thereof to any party or circumstance shall be held to be invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, the validity, legality and enforceability of the remaining terms and provisions of this Amendment shall not in any way be affected or impaired thereby, and the affected term or provision shall be modified to the minimum extent permitted by law so as most fully to achieve the intention of this Amendment. 11. Captions. The captions in this Amendment are inserted for convenience of reference only and in no way define, describe or limit the scope or intent of this Amendment or any of the provisions hereof. 12. Governing Law. This Amendment shall be a contract made under and governed by the laws of the State of New York, without regard to conflict of laws principles that may direct the application of the laws of any other jurisdiction. [the remainder of this page intentionally left blank] First Amendment to Amended and Restated Term Loan Agreement Delivered at Chicago, Illinois as of the day and year first above written. BORROWER: INFOCROSSING, INC. By: /s/ ZACH LONSTEIN ------------------------------- Name: Zach Lonstein Its: Chief Executive Officer GUARANTORS: INFOCROSSING SOUTHEAST, INC., a Georgia corporation formerly known as Amquest, Inc. By: /s/ ZACH LONSTEIN ------------------------------- Name: Zach Lonstein Its: Chief Executive Officer ETG, INC., a Delaware corporation By: /s/ ZACH LONSTEIN ------------------------------- Name: Zach Lonstein Its: Chief Executive Officer INFOCROSSING SERVICES, INC., a Delaware corporation By: /s/ ZACH LONSTEIN ------------------------------- Name: Zach Lonstein Its: Chief Executive Officer INFOCROSSING SERVICES SOUTHEAST, INC., a Georgia corporation formerly known as Amquest Services, Inc. By: /s/ ZACH LONSTEIN ------------------------------- Name: Zach Lonstein Its: Chief Executive Officer INFOCROSSING WEST, INC., a California corporation formerly known as ITO Acquisition, Inc. and doing business as Systems Management Specialists By: /s/ ZACH LONSTEIN ------------------------------- Name: Zach Lonstein Its: Chief Executive Officer LENDERS: CAPITALSOURCE FINANCE LLC, as a Lender By: /s/ STEVEN A. MUSELES ---------------------------- Steven A. Museles Its: Senior Vice President AGENT: CAPITALSOURCE FINANCE LLC, as the Agent By: /s/ STEVEN A. MUSELES ---------------------------- Steven A. Museles Its: Senior Vice President EX-12 5 x121debt.txt COMPUTATION OF FIXED CHARGE RATIO EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Dollar Amounts in Thousands) Two Month Three Months Fiscal Years Periods Ended Years Ended Ended Ended March 31, December 31, October 31, December 31, 2004 2003 2002 2001 2000 1999 2000 1999 Income from continuing operations before income taxes $ 582 $ 1,398 $ 929 $(35,827) $(17,156) $2,707 $(4,440) $(562) Add: Fixed charges (see below) 1,064 8,635 9,625 7,987 4,445 2,936 1,204 589 -------------------------------------------------------------------------------- Earnings available for fixed charges $1,646 $10,033 $10,554 $(27,840) $(12,711) $5,643 $(3,236) $ 27 -------------------------------------------------------------------------------- Fixed Charges: Interest expense, including amortized discounts and capitalized debt expenses $ 703 $ 2,601 $ 2,137 $ 491 $ 114 $ 19 $ 29 $ 71 Interest component of rents and leases (a) 361 1,513 1,854 2,291 2,012 2,917 347 518 Preferred stock dividends accrued - 4,521 5,634 5,205 2,319 - 828 - -------------------------------------------------------------------------------- Total fixed charges $1,064 $ 8,635 $ 9,625 $ 7,987 $ 4,445 $2,936 $ 1,204 $ 589 -------------------------------------------------------------------------------- Ratio of Earnings to Fixed Charges 1.5 1.2 1.1 (b) (b) 1.9 (b) (b) - --------------------------------------------------------------------------------------------------------------------------------- (a) Fixed Charges in excess of Earnings - - - $ 35,827 $ 17,156 - $ 4,440 $ 562
EX-23 6 x231debt.txt CONSENT OF ERNST & YOUNG, LLP Consent of Independent Registered Public Accounting Firm 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 $72,000,000 of Convertible Senior Notes and to the incorporation by reference therein of our report dated February 13, 2004, with respect to the consolidated financial statements and schedule of Infocrossing, Inc. and subsidiaries' included in its Form 10-K for the year ended December 31, 2003, filed with the Securities and Exchange Commission. /s/ ERNST & YOUNG, LLP New York, New York July 12, 2004 EX-25 7 x251debt.txt WELLS FARGO FORM T-1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ----------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO - ----- SECTION 305(b) (2) WELLS FARGO BANK, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) A NATIONAL BANKING ASSOCIATION 94-1347393 (Jurisdiction of incorporation or (I.R.S. Employer organization if not a U.S. national Identification No.) bank) 101 NORTH PHILLIPS AVENUE SIOUX FALLS, SOUTH DAKOTA 57104 (Address of principal executive offices) (Zip code) WELLS FARGO & COMPANY LAW DEPARTMENT, TRUST SECTION MAC N9305-175 SIXTH STREET AND MARQUETTE AVENUE, 17TH FLOOR MINNEAPOLIS, MINNESOTA 55479 (612) 667-4608 (Name, address and telephone number of agent for service) ----------------------------- INFOCROSSING, INC. (Exact name of obligor as specified in its charter) DELAWARE 13-3252333 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2 CHRISTIE HEIGHTS STREET LEONIA, NJ 07605 (Address of principal executive offices) (Zip code) ----------------------------- 4.00% CONVERTIBLE SENIOR NOTES DUE 2024 (Title of the indenture securities) ================================================================================ Item 1. General Information. Furnish the following information as to the -------------------- trustee: (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of the Currency Treasury Department Washington, D.C. Federal Deposit Insurance Corporation Washington, D.C. Federal Reserve Bank of San Francisco San Francisco, California 94120 (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. Item 2. Affiliations with Obligor. If the obligor is an affiliate of the -------------------------- trustee, describe each such affiliation. None with respect to the trustee. No responses are included for Items 3-14 of this Form T-1 because the obligor is not in default as provided under Item 13. Item 15. Foreign Trustee. Not applicable. ---------------- Item 16. List of Exhibits. List below all exhibits filed as a part of this ----------------- Statement of Eligibility. Exhibit 1. A copy of the Articles of Association of the trustee now in effect.* Exhibit 2. A copy of the Comptroller of the Currency Certificate of Corporate Existence and Fiduciary Powers for Wells Fargo Bank, National Association, dated February 4, 2004.** Exhibit 3. See Exhibit 2 Exhibit 4. Copy of By-laws of the trustee as now in effect.*** Exhibit 5. Not applicable. Exhibit 6. The consent of the trustee required by Section 321(b) of the Act. Exhibit 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority.**** Exhibit 8. Not applicable. Exhibit 9. Not applicable. * Incorporated by reference to the exhibit of the same number to the trustee's Form T-1 filed as exhibit 25 to the Form T-3 dated March 3, 2004 of Trans-Lux Corporation file number 022-28721. ** Incorporated by reference to the exhibit of the same number to the trustee's Form T-1 filed as exhibit 25 to the Form T-3 dated March 3, 2004 of Trans-Lux Corporation file number 022-28721. *** Incorporated by reference to the exhibit of the same number to the trustee's Form T-1 filed as exhibit 25 to the Form T-3 dated March 3, 2004 of Trans-Lux Corporation file number 022-28721. **** Incorporated by reference to the exhibit of the same number to the trustee's Form T-1 filed as exhibit 25 to the form S-4 dated May 25, 2004 of Amkor Technology, Inc. file number 333-115821. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Wells Fargo Bank, National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Minneapolis and State of Minnesota on the 8th day of July 2004. WELLS FARGO BANK, NATIONAL ASSOCIATION /s/TIMOTHY MOWDY -------------------------- Timothy Mowdy Assistant Vice President EXHIBIT 6 July 8, 2004 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, the undersigned hereby consents that reports of examination of the undersigned made by Federal, State, Territorial, or District authorities authorized to make such examination may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, WELLS FARGO BANK, NATIONAL ASSOCIATION /s/TIMOTHY MOWDY ------------------------ Timothy Mowdy Assistant Vice President -----END PRIVACY-ENHANCED MESSAGE-----