REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made
and entered into as of March 24, 2004, by
and among Infocrossing, Inc., a
Delaware corporation (the "COMPANY"), and
the investors signatory hereto (each a
"PURCHASER" and collectively, the
"PURCHASERS").
This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of the date hereof
among the Company and the Purchasers (the
"PURCHASE AGREEMENT").
The Company and the Purchasers hereby agree as follows:
1. Definitions. Capitalized terms used and
not otherwise defined herein that are
defined in the Purchase Agreement shall
have the meanings given such terms in
the Purchase Agreement. As used in this
Agreement, the following terms shall
have the respective meanings set forth in
this Section 1:
"EFFECTIVE DATE" means the date that the Registration
Statement filed pursuant to Section 2(a) is
first declared effective by the
Commission.
"EFFECTIVENESS DATE" means the earlier of (a) the 90th
calendar day following the Closing Date;
provided, that, if the Commission
reviews and has written comments to the
filed Registration Statement that would
require the filing of a pre-effective
amendment thereto with the Commission,
then the Effectiveness Date under this
clause (a) shall be the 120th calendar
day following the Closing Date, and (b) the
fifth Trading Day following the date
on which the Company is notified by the
Commission that the Registration
Statement will not be reviewed or is no
longer subject to further review and
comments. "EFFECTIVENESS DATE" shall also
have the meaning specified in Section
2(b).
"EFFECTIVENESS PERIOD" shall have the meaning set forth in
Section 2(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FILING DATE" means the 30th calendar day following the
Closing Date. "FILING DATE" shall also have
the meaning specified in Section
2(b).
"HOLDER" or "HOLDERS" means the holder or holders, as the case
may be, from time to time of Registrable
Securities.
"INDEMNIFIED PARTY" shall have the meaning set forth in
Section 5(c).
"INDEMNIFYING PARTY" shall have the meaning set forth in
Section 5(c).
"LOSSES" shall have the meaning set forth in Section 5(a).
"PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation,
an investigation or partial
proceeding, such as a deposition), whether
commenced or threatened.
"PROSPECTUS" means the prospectus included in a Registration
Statement (including, without limitation, a
prospectus that includes any
information previously omitted from a
prospectus filed as part of an effective
registration statement in reliance upon
Rule 430A promulgated under the
Securities Act), as amended or supplemented
by any prospectus supplement, with
respect to the terms of the offering of any
portion of the Registrable
Securities covered by the Registration
Statement, and all other amendments and
supplements to the Prospectus, including
post-effective amendments, and all
material incorporated by reference or
deemed to be incorporated by reference in
such Prospectus.
"REGISTRABLE SECURITIES" means the Shares.
"REGISTRATION STATEMENT" means the initial registration
statement required to be filed in
accordance with Section 2(a) and any
additional registration statement(s)
required to be filed under Section 2(b),
including (in each case) the Prospectus,
amendments and supplements to such
registration statements or Prospectus,
including pre- and post-effective
amendments, all exhibits thereto, and all
material incorporated by reference or
deemed to be incorporated by reference in
such registration statements.
"RULE 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such
Rule may be amended from time to time,
or any similar rule or regulation hereafter
adopted by the Commission having
substantially the same effect as such
Rule.
"RULE 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such
Rule may be amended from time to time,
or any similar rule or regulation hereafter
adopted by the Commission having
substantially the same effect as such
Rule.
"RULE 424" means Rule 424 promulgated by the Commission
pursuant to the Securities Act, as such
Rule may be amended from time to time,
or any similar rule or regulation hereafter
adopted by the Commission having
substantially the same effect as such
Rule.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means the shares of Common Stock issued or issuable
to the Purchasers pursuant to the Purchase
Agreement.
"SPECIAL COUNSEL" means Bryan Cave LLP.
2. Registration.
(a) On or prior to the Filing Date, the
Company shall prepare and file with the
Commission a Registration Statement
covering the resale of all Registrable
Securities not already covered by an
existing and effective Registration
Statement for an offering to be made on a
continuous basis pursuant to Rule 415.
The Registration Statement shall be on Form
S-3 (except if the Company is not
then eligible to register for resale the
Registrable Securities on Form S-3, in
which case such registration shall be on
another appropriate form for such
purpose) and shall contain (except if
otherwise required pursuant to written
comments received from the Commission upon
a review of such Registration
Statement) the "Plan of Distribution"
attached hereto as Annex A. The Company
shall use its reasonable best efforts to
cause the Registration Statement to be
declared effective under the Securities Act
as soon as possible but, in any
event, no later than the Effectiveness
Date, and shall use its reasonable best
efforts to keep the Registration Statement
continuously effective under the
Securities Act (subject to Section 6(d)
hereof) until the earlier of (i) the
date that all Registrable Securities
covered by such Registration Statement have
been publicly sold, or (ii) the date on
which all Registrable Securities covered
by the Registration Statement may be sold
without volume restrictions pursuant
to Rule 144(k) and, if requested by an
affected Holder or the Company's transfer
agent, as determined by the counsel to the
Company pursuant to a written opinion
letter to such effect, addressed and
acceptable to the Company's transfer agent
and such affected Holders (the
"EFFECTIVENESS PERIOD").
(b) If for any reason the Commission does
not permit all of the Shares to be
included in the Registration Statement
filed pursuant to Section 2(a), or for
any other reason any Registrable Securities
are not permitted by the Commission
to be included in a Registration Statement
filed under this Agreement, then the
Company shall use its reasonable best
efforts to prepare and file as soon as
possible after the date on which the
Commission shall indicate as being the
first date or time that such filing may be
made, but in any event by the 30th
calendar day following such date (such date
for such Registration is referred to
as such Registration Statement's "Filing
Date"), an additional Registration
Statement covering the resale of all
Registrable Securities not already covered
by an existing and effective Registration
Statement for an offering to be made
on a continuous basis pursuant to Rule 415,
on Form S-3 (except if the Company
is not then eligible to register for resale
the Registrable Securities on Form
S-3, in which case such registration shall
be on another appropriate form for
such purpose). Each such Registration
Statement shall contain (except if
otherwise required pursuant to written
comments received from the Commission
upon a review of such Registration
Statement) the "Plan of Distribution"
attached hereto as Annex A. The Company
shall use its reasonable best efforts to
cause each such Registration Statement to
be declared effective under the
Securities Act as soon as possible but, in
any event, no later than the 90th
calendar day following the date on which
the Company becomes aware that such
Registration Statement is required under
this Agreement (each such 90th calendar
day, the "Effectiveness Date" for such
Registration Statement), and shall use
its reasonable best efforts to keep such
Registration Statement continuously
effective under the Securities Act during
the entire Effectiveness Period,
subject to Section 6(d) hereof.
(c) Notwithstanding anything contained
herein to the contrary, including
Sections 3(c) and 6(d) (and without regard
to the efforts of the Company to
avoid such occurrence), if: (i) a
Registration Statement is not filed on or
prior to its Filing Date (if the Company
files a Registration Statement without
affording the Holders the opportunity to
review and comment on the same as
required by Section 3(a) hereof, the
Company shall not be deemed to have
satisfied this clause (i)), or (ii) a
Registration Statement is not declared
effective by the Commission on or prior to
the required Effectiveness Date, or
(iii) after the Effective Date, such
Registration Statement ceases to be
effective and available to the Holders as
to all Registrable Securities to which
it is required to cover (1) for an
aggregate of 20 Trading Days (which need not
be consecutive Trading Days) during the two
years following the Effective Date,
and (2) for 20 Trading Days in each year
thereafter through the expiration of
the Effectiveness Period (it being
understood that any unused allocation during
any one year may not be carried forward to
subsequent years) (any such failure
or breach being referred to as an "EVENT,"
and for purposes of clauses (i) or
(ii) the date on which such Event occurs,
or for purposes of clause (iii) the
date which an applicable 20 Trading
Day-period(s) is exceeded, being referred to
as "EVENT DATE"), then, in addition to any
other rights available to the
Holders: (x) on each such Event Date the
Company shall pay to each Holder an
amount in cash, as liquidated damages and
not as a penalty, equal to .000333333%
of the product of (1) the number of Shares
then held by such Holder (2) the
closing sales price of the common Stock on
the Event Date (except that, Shares
that maybe resold by the Holder pursuant to
Rule 144(k), as evidenced by a legal
opinion provided by Company counsel and
paid for by the Company that is
acceptable to the transfer agent for the
Company to reissue all of such Holder's
Shares without any restrictive or other
legends, shall be excluded for these
purposes) for each day until the applicable
Event is cured upon the occurrence
of such filing in the case of clause (i)
and upon the effectiveness of the
Registration Statement in the case of
clause (ii) and (iii); provided, however,
that the Company shall not in any event be
required to pay such liquidated
damages for more than one Event or Event
Date at any given time and the
aggregate amount of such liquidated damages
shall not exceed 1.0% of the
aggregate unsold portion of the Investment
Amount with respect to any calendar
month, which shall be deemed to have 30
days for purposes of this Section 2(c).
If the Company fails to pay any liquidated
damages pursuant to this Section in
full within seven days after the date
payable, the Company will pay interest
thereon at a rate of 9% per annum (or such
lesser maximum amount that is
permitted to be paid by applicable law) to
the Holder, accruing daily from the
date such liquidated damages are due until
such amounts, plus all such interest
thereon, are paid in full.
3. Registration Procedures
In connection with the Company's registration obligations
hereunder, the Company shall:
(a) Not less than three Trading Days prior
to the filing of a Registration
Statement or in the case of any related
Prospectus or any amendment or
supplement thereto such shorter notice, but
in no event less than two Trading
Days prior to the applicable filing, as may
be reasonable under the
circumstances, the Company shall furnish to
the Holders and the Special Counsel
copies of all such documents (other than
those incorporated by reference)
proposed to be filed which documents will
be subject to the review of such
Holders and the Special Counsel. The
Company shall not file a Registration
Statement or any such Prospectus or any
amendments or supplements thereto to
which the Holders of a majority of the
Registrable Securities or the Special
Counsel shall reasonably object in good
faith.
(b) (i) Prepare and file with the
Commission such amendments, including
post-effective amendments, to each
Registration Statement and the Prospectus
used in connection therewith as may be
necessary to keep such Registration
Statement continuously effective as to the
applicable Registrable Securities for
its Effectiveness Period; (ii) cause the
related Prospectus to be amended or
supplemented by any required Prospectus
supplement, and as so supplemented or
amended to be filed pursuant to Rule 424;
(iii) respond as promptly as
reasonably possible to any comments
received from the Commission with respect to
each Registration Statement or any
amendment thereto and, as promptly as
reasonably possible provide the Holders
true and complete copies of all
correspondence from and to the Commission
relating to such Registration
Statement that would not result in the
disclosure to the Holders of material and
non-public information concerning the
Company; and (iv) comply in all material
respects with the provisions of the
Securities Act and the Exchange Act with
respect to the Registration Statements and
the disposition of all Registrable
Securities covered by each Registration
Statement.
(c) Notify the Holders and the Special
Counsel as promptly as reasonably
possible (and, in the case of (i)(A) below,
not less than three Trading Days
prior to such filing) and (if requested by
any such Person) confirm such notice
in writing no later than one Trading Day
following the day (i)(A) when a
Prospectus or any Prospectus supplement or
post-effective amendment to a
Registration Statement is proposed to be
filed; (B) when the Commission notifies
the Company whether there will be a
"review" of such Registration Statement and
whenever the Commission comments in writing
on such Registration Statement (the
Company shall provide true and complete
copies thereof and all written responses
thereto to each of the Holders and the
Special Counsel that pertain to the
Holders as a Selling Stockholder or to the
Plan of Distribution, but not
information which the Company believes
would constitute material and non-public
information); and (C) with respect to each
Registration Statement or any
post-effective amendment, when the same has
become effective; (ii) of any
request by the Commission or any other
Federal or state governmental authority
for amendments or supplements to a
Registration Statement or Prospectus or for
additional information; (iii) of the
issuance by the Commission of any stop
order suspending the effectiveness of a
Registration Statement covering any or
all of the Registrable Securities or the
initiation of any Proceedings for that
purpose; (iv) of the receipt by the Company
of any notification with respect to
the suspension of the qualification or
exemption from qualification of any of
the Registrable Securities for sale in any
jurisdiction, or the initiation or
threatening of any Proceeding for such
purpose; (v) of the occurrence of any
event or passage of time that makes the
financial statements included in a
Registration Statement ineligible for
inclusion therein or any statement made in
such Registration Statement or Prospectus
or any document incorporated or deemed
to be incorporated therein by reference
untrue in any material respect or that
requires any revisions to such Registration
Statement, Prospectus or other
documents so that, in the case of such
Registration Statement or the Prospectus,
as the case may be, it will not contain any
untrue statement of a material fact
or omit to state any material fact required
to be stated therein or necessary to
make the statements therein, in light of
the circumstances under which they were
made, not misleading and (vi) when the
continued effectiveness of a Registration
Statement would require the Company to
disclose a material financing,
acquisition or other corporate transaction,
which disclosure the Company shall
have determined in good faith is not in the
best interests of the Company and
its stockholders at that time.
(d) Use its reasonable best efforts to
avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order
suspending the effectiveness of a
Registration Statement, or (ii) any
suspension of the qualification (or
exemption from qualification) of any of the
Registrable Securities for sale in
any jurisdiction, at the earliest
practicable moment.
(e) Furnish to each Holder, without charge,
at least one conformed copy of each
Registration Statement and each amendment
thereto and all exhibits to the extent
requested by such Person (including those
previously furnished) promptly after
the filing of such documents with the
Commission.
(f) Promptly deliver to each Holder,
without charge, as many copies of each
Prospectus or Prospectuses (including each
form of prospectus) and each
amendment or supplement thereto as such
Persons may reasonably request. Subject
to Section 6(d), the Company hereby
consents to the use of such Prospectus and
each amendment or supplement thereto by
each of the selling Holders in
connection with the offering and sale of
the Registrable Securities covered by
such Prospectus and any amendment or
supplement thereto.
(g) Prior to any public offering of
Registrable Securities, use its reasonable
best efforts to register or qualify or
cooperate with the selling Holders in
connection with the registration or
qualification (or exemption from such
registration or qualification) of such
Registrable Securities for offer and sale
under the securities or Blue Sky laws of
such jurisdictions within the United
States as the selling Holders may
reasonably request, to keep each such
registration or qualification (or exemption
therefrom) effective during the
Effectiveness Period and to do any and all
other acts or things reasonably
necessary or advisable to enable the
disposition in such jurisdictions of the
Registrable Securities covered by the
Registration Statements; provided, that
the Company shall not be required to
qualify generally to do business or become
subject to general service of process in
any jurisdiction where it is not then
so qualified or subject, or to subject the
Company to any taxation in any such
jurisdiction where it is not then so
subject.
(h) Cooperate with the Holders to
facilitate the timely preparation and delivery
of certificates representing Registrable
Securities to be delivered to a
transferee pursuant to the Registration
Statements, which certificates shall be
free, to the extent permitted by the
Purchase Agreement, of all restrictive
legends, and to enable such Registrable
Securities to be in such denominations
and registered in such names as any such
Holders may request.
(i) Upon the occurrence of any event
contemplated by Section 3(c)(v), as
promptly as reasonably possible, prepare a
supplement or amendment, including a
post-effective amendment, to the affected
Registration Statements or a
supplement to the related Prospectus or any
document incorporated or deemed to
be incorporated therein by reference, and
file any other required document so
that, as thereafter delivered, no
Registration Statement nor any Prospectus will
contain an untrue statement of a material
fact or omit to state a material fact
required to be stated therein or necessary
to make the statements therein, in
light of the circumstances under which they
were made, not misleading.
(j) Each selling Holder agrees to furnish
to the Company a selling security
holder questionnaire in the form attached
hereto as Annex B (a "SELLING HOLDER
QUESTIONNAIRE").
(k) The Company shall not be required to
include the Registrable Securities of
any Holder in the Registration Statement
and shall not be required to pay any
liquidated or other damages under Section
2(c) hereof to any Holder who fails to
furnish to the Company (i) a fully
completed Selling Holder Questionnaire at
least three (3) Trading Days prior to the
Filing Date or (ii) any other
information that the Commission's staff may
require as a condition to allowing
such Registration Statement to be declared
effective under the Securities Act
(as evidenced by written comments made by
the Commission in it is review of such
Registration Statement).
4. Registration Expenses. All fees and
expenses incident to the performance of
or compliance with this Agreement by the
Company shall be borne by the Company
whether or not any Registrable Securities
are sold pursuant to a Registration
Statement. The fees and expenses referred
to in the foregoing sentence shall
include, without limitation, (i) all
registration and filing fees (including,
without limitation, fees and expenses (A)
with respect to filings required to be
made with any Trading Market on which the
Common Stock is then listed for
trading, and (B) in compliance with
applicable state securities or Blue Sky
laws), (ii) printing expenses (including,
without limitation, expenses of
printing certificates for Registrable
Securities and of printing prospectuses if
the printing of prospectuses is reasonably
requested by the holders of a
majority of the Registrable Securities
included in the Registration Statement),
(iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of
counsel for the Company and up to $5,000 of
the fees and disbursements of
Special Counsel for each Registration
Statement upon presentation of an invoice,
(v) Securities Act liability insurance, if
the Company so desires such
insurance, and (vi) fees and expenses of
all other Persons retained by the
Company in connection with the consummation
of the transactions contemplated by
this Agreement. In addition, the Company
shall be responsible for all of its
internal expenses incurred in connection
with the consummation of the
transactions contemplated by this Agreement
(including, without limitation, all
salaries and expenses of its officers and
employees performing legal or
accounting duties), the expense of any
annual audit and the fees and expenses
incurred in connection with the listing of
the Registrable Securities on any
securities exchange as required
hereunder.
5. Indemnification.
(a) Indemnification by the Company. The
Company shall, notwithstanding any
termination of this Agreement, indemnify
and hold harmless each Holder, the
officers, directors, partners, agents,
investment advisors, members and
employees of each of them, each Person who
controls any such Holder (within the
meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act)
and the officers, directors, partners,
agents and employees of each such
controlling Person, to the fullest extent
permitted by applicable law, from and
against any and all losses, claims,
damages, liabilities, costs (including,
without limitation, reasonable costs of
preparation and reasonable attorneys'
fees) and expenses (collectively,
"LOSSES"), as incurred, arising out of or
relating to any untrue or alleged untrue
statement of a material fact contained
in any Registration Statement, any
Prospectus or any form of prospectus or in
any amendment or supplement thereto or in
any preliminary prospectus, or arising
out of or relating to any omission or
alleged omission of a material fact
required to be stated therei
