EXECUTION COPY
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SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
Dated as of February 1, 2002
By and Among
INFOCROSSING, INC.,
DB CAPITAL INVESTORS, L.P.,
SANDLER CAPITAL PARTNERS V, L.P.,
SANDLER CAPITAL PARTNERS V FTE, X.X.
XXXXXXX TECHNOLOGY PARTNERS, L.P.,
SANDLER CO-INVESTMENT PARTNERS, L.P.,
Xxxxxx Xxxxxxx Strategic Partners Fund, L.P.,
Strategic Associates, L.P.,
Camden Partners Strategic Fund II-A, L.P.,
Camden Partners Strategic Fund II-B, L.P.,
THE MANAGEMENT STOCKHOLDERS
LISTED ON SCHEDULE A HERETO
and
THE NON-MANAGEMENT STOCKHOLDERS
LISTED ON SCHEDULE B HERETO
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SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this
"Agreement"), dated as of February 1, 2002 by and among Infocrossing, Inc., a
Delaware corporation (the "Company"), DB Capital Investors, L.P. ("DB Capital"),
Sandler Capital Partners V, L.P., Sandler Capital Partners V FTE, L.P., Sandler
Technology Partners, L.P., Sandler Co-Investment Partners, L.P. (each
individually, a "Sandler Entity," and, collectively, the "Sandler Entities"1),
Xxxxxx Xxxxxxx Strategic Partners Fund, L.P., Strategic Associates, L.P., Camden
Partners Strategic Fund II-A, L.P., and Camden Partners Strategic Fund II-B,
L.P. (each individually, a "Camden Entity" and, collectively, the "Camden
Entities"), the individuals listed on Schedule A hereto (each individually, a
"Management Stockholder" and, collectively, the "Management Stockholders") and
each of the Persons listed on Schedule B hereto (each, individually a
"Non-Management Stockholder" and, collectively, the "Non-Management
Stockholders") (each of DB Capital, each Sandler Entity, each Camden Entity, the
Management Stockholders and the Non-Management Stockholders is hereinafter
referred to as a "Stockholder").
W I T N E S S E T H :
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WHEREAS, the Management Stockholders own shares of Common Stock, $0.01
par value of the Company (the "Common Stock"); and
WHEREAS, pursuant to the terms of that certain Securities Purchase
Agreement dated as of April 7, 2000 (the "Securities Purchase Agreement"), by
and between the Company, DB Capital and the Sandler Entities, DB Capital and the
Sandler Entities have acquired shares of 8% Series A Cumulative Convertible
Participating Preferred Stock, par value $0.01 per share (the "Series A
Preferred Stock"), together with warrants (the "Warrants") to purchase Common
Stock (the "Warrant Shares"); and
WHEREAS, on May 10, 2000, the Company, and DB Capital, the Sandler
Entities, the Management Stockholders party thereto and the Non-Management
Stockholders party thereto (collectively the "Original Stockholders") entered
into a Stockholders' Agreement (the "Original Stockholders' Agreement") pursuant
to which each of them granted to the others certain rights in connection with
the Series A Preferred Stock, Warrants, Warrant Shares and Common Stock then or
thereafter owned by them as set forth therein and assumed certain obligations;
and
WHEREAS, on December 10, 2000, the Original Stockholders amended and
restated the Original Stockholders' Agreement (the "Existing Stockholders'
Agreement"); and
WHEREAS, the Company has entered into a Securities Purchase Agreement
dated as of the Closing Date (the "Camden Purchase Agreement") with the Camden
Entities; and
WHEREAS, pursuant to the terms of the Camden Purchase Agreement, the
Company shall have authorized for sale, issue and delivery to the Camden
Entities an aggregate of (x) $10.0 million principal amount of Senior
Subordinated Debentures due 2005 (the "Camden Debentures"), together with (y)
warrants (the "Initial Camden Warrants") to purchase, initially 2,000,000 shares
of Common Stock (the "Initial Camden Warrant Shares") subject to adjustment in
accordance with the terms of the Initial Camden Warrants and (z) warrants (the
"Additional Camden Warrants" and, together with the Initial Camden Warrants, the
"Camden Warrants") to purchase additional shares of Common Stock (the
"Additional Camden Warrant Shares" and, together with the Initial Camden Warrant
Shares, the "Camden Warrant Shares") (the Series A Preferred Stock, the
Warrants, the Warrant Shares, the Camden Debentures, the Camden Warrants, the
Camden Warrant Shares and the Common Stock are referred to herein, collectively
as the "Securities) ;
WHEREAS, the Company has entered into a Settlement and Release
Agreement dated as of November 6, 2001 (the "Xxxxxx Settlement Agreement"), with
Xxxxxxx Xxxxxx (the "Exited Stockholder"), pursuant to which the Exited
Stockholder has agreed to resign from his positions of President and Chief
Executive Officer of the Company;
WHEREAS, the requisite number of parties to the Existing Stockholders'
Agreement have agreed to release the Exited Stockholder from his obligations
under the Existing Stockholders' Agreement;
WHEREAS, the Exited Stockholder has agreed to surrender his rights
under the Existing Stockholders' Agreement;
WHEREAS, the execution and delivery of this Agreement is a condition
to the consummation of the transactions contemplated by the Camden Purchase
Agreement; and
WHEREAS, the Company, the Original Stockholders the Camden Entities
and the Exited Stockholder wish to amend and restate in its entirety the
Existing Stockholders' Agreement as set forth below.
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree to amend and
restate the Existing Stockholders' Agreement as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Certain Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
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(a) "Affiliate" means, with respect to (i) the Company, any other
Person directly or indirectly controlling, controlled by, or under direct
or indirect common control with, the Company; and (ii) the Camden Entities,
any current or former members of or any general or limited partners or
retired partners of any of the Camden Entities, or any Person or entity
that directly or indirectly, through one or more intermediaries, controls,
with the general partner of the Camden Entities, the Camden Entities. For
the purposes of this definition, "control" when used with respect to any
Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
(b) "Applicable Law" means (a) any United States federal, state, local
or foreign law, statute, rule, regulation, order, writ, injunction,
judgment, decree or permit of any Governmental Authority and (b) any rule
or listing requirement of any applicable national stock exchange or listing
requirement of any national stock exchange or Commission recognized trading
market on which securities issued by the Company or any of the Subsidiaries
are listed or quoted.
(c) "Board of Directors" or "Board" means the Board of Directors of
the Company or any committee thereof duly authorized to act on behalf of
such Board.
(d) "Capital Stock" means, with respect to any Person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting and/or non-voting) of such Person's capital
stock, whether outstanding on the Original Closing Date or issued after the
Original Closing Date, and any and all rights (other than any evidence of
indebtedness), warrants or options exchangeable for or convertible into
such capital stock.
(e) "Change of Control" means the occurrence of any of the following
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
Company or (b) the Company consolidates with, or merges with or into,
another Person or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any Person, or any
Person consolidates with, or merges with or into the Company, in any such
event pursuant to a transaction in which the holders of the outstanding
Voting Capital Stock of the Company immediately prior to such transaction
hold less than 50% of the outstanding Voting Capital Stock of the surviving
or transferee company or its parent company immediately after the
transaction or 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" or "group" shall be deemed to have
"beneficial ownership" of all securities that such "person" or "group" has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more
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than 50% of the total Voting Capital Stock of the surviving or transferee
company or its parent company immediately after the transaction as
applicable or (c) during any consecutive two-year period, individuals who
at the beginning of such period constituted the Board of Directors
(together with any new directors whose election by the Board of Directors
or whose nomination for election by the stockholders of the Company 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 then in office or (d) any
transaction subject to Rule 13e-3 under the Exchange Act if following such
Rule 13e-3 transaction a Person owns more than 50% of the total Voting
Capital Stock of the Company.
(f) "Closing Date" means February 1, 2002.
(g) "Commission" means the United States Securities and Exchange
Commission.
(h) "Exchange Act" means, as of any date, the Securities Exchange Act
of 1934, as amended through such date, and the rules and regulations of the
Commission promulgated thereunder in effect on such date.
(i) "Governmental Authority" means (i) any foreign, Federal, state or
local court or governmental or regulatory agency or authority, (ii) any
arbitration board, tribunal or mediator and (iii) any national stock
exchange or Commission recognized trading market on which securities issued
by the Company or any of the Subsidiaries are listed or quoted.
(j) "Holder" means the Person in whose name any of the Securities are
registered.
(k) "Lonstein" means Xxxx Xxxxxxxx.
(l) "Option Agreements" means each of those certain Option Agreements
dated as of the Original Closing Date between each of DB Capital and each
of the Sandler Entities, on the one hand, and Lonstein, on the other hand.
(m) "Original Closing Date" means May 10, 2000.
(n) "Person" means any individual, partnership, corporation, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or agency or political
subdivision thereof, or other entity.
(o) "Registration Rights Agreement" means the Amended and Restated
Registration Rights Agreement, to be dated as of the Closing Date to be
entered into by and between the Company, DB Capital, the Sandler Entities,
the Camden Entities, and Lonstein.
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(p) "Securities Act" means, as of any date, the Securities Act of
1933, as amended through such date, and the rules and regulations of the
Commission promulgated thereunder in effect on such date.
(q) "Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock or other equity interests entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors or other managing authority thereof is at the time
owned or controlled, directly or indirectly, by such Person and its
Subsidiaries.
(r) "Voting Capital Stock" means with respect to any Person,
securities of any class or classes of Capital Stock in such Person
ordinarily entitling the holders thereof (whether at all times or at the
times that such class of Capital Stock has voting power by reason of the
happening of any contingency) to vote in the election of members of the
board of directors or comparable governing body of such Person.
ARTICLE II
TRANSFER OF SHARES
Section 2.1 Restrictions. (a) No Stockholder shall sell, assign,
pledge, hypothecate, deposit in any voting trust, or in any manner, transfer or
dispose of any of the Securities or any right or interest therein, to any Person
(each such action, a "Transfer") except as permitted by this Agreement.
(b) From and after the Closing Date, all certificates representing
Securities held by any of the Stockholders shall bear a legend which shall state
as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS AGAINST TRANSFER SET FORTH IN A SECOND AMENDED AND
RESTATED STOCKHOLDERS' AGREEMENT (THE "STOCKHOLDERS AGREEMENT") DATED
AS OF FEBRUARY 1, 2002, AS MAY BE AMENDED FROM TIME TO TIME. A COPY OF
SUCH STOCKHOLDERS AGREEMENT HAS BEEN FILED IN THE OFFICE OF THE
COMPANY LOCATED AT 0 XXXXXXXX XXXXXXX XXXXXX, XXXXXX, XXX XXXXXX
00000, WHERE THE SAME MAY BE INSPECTED DAILY DURING BUSINESS HOURS.
Notwithstanding the foregoing, any such certificates representing Securities
issued prior to the Closing Date and bearing a legend required by the Original
Stockholders' Agreement or the Existing Stockholder's Agreement shall not be
required to be relegended.
(c) In addition to the legend required by Section 2.1(b) above, all
certificates representing Securities held by any of the Stockholders shall bear
a legend which shall state as follows:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH SECURITIES MAY
NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OTHER THAN PURSUANT TO
AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS."
(d) Promptly upon execution and delivery of this Agreement, each
Stockholder shall deliver to the Secretary of the Company all certificates then
held by such Stockholder representing Securities which do not have such legends
affixed thereto as are required by this Section 2.1. The Company shall cause
such legends to be affixed promptly to each of such certificates and such
certificates to be returned promptly to the registered Holder thereof. The
Company agrees that it will not cause or permit the Transfer of any Securities
to be made on its books unless the Transfer is permitted by this Agreement and
has been made in accordance with the terms hereof.
(e) For so long as any indebtedness under the Camden Debentures
remains outstanding, Lonstein shall not make a Transfer of more than 20% of the
Securities beneficially owned by him, provided that such Transfer restriction
shall not apply to any Transfer made by Lonstein pursuant to Sections 2.2(a)(i),
(ii), (vi), (vii) and (ix) below (a "Permitted Lonstein Transfer").
Section 2.2 Permitted Transfers. (a) Notwithstanding anything to the
contrary contained herein, a Stockholder may at any time effect any of the
following Transfers (each a "Permitted Transfer" and each transferee, a
"Permitted Transferee"):
(i) A Stockholder's Transfer of any or all Securities owned by such
Stockholder following such Stockholder's death by will or intestacy to such
Stockholder's legal representative, heir or legatee.
(ii) A Stockholder's Transfer of any or all Securities owned by such
Stockholder as a gift or gifts during such Stockholder's lifetime to such
Stockholder's spouse, children, grandchildren or a trust or other legal
entity for the benefit of any Stockholder or any of the foregoing, provided
that such Stockholder retains voting control of the Securities so
transferred.
(iii) With respect to the Management Stockholders prior to the second
anniversary of the Original Closing Date, any Transfer approved in advance
by the Board of Directors.
(iv) With respect to any Management Stockholder, a Transfer of any or
all Securities owned by such Management Stockholder (a) which occurs after
the second anniversary of the Original Closing Date and (b) is (i) in any
transaction in compliance with Rule 144 under the Securities Act or any
successor rule or regulation; provided, however, that, without the consent
of the Board of Directors of the Company, no
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Management Stockholder shall Transfer an amount of Securities in any twelve
month period which exceeds the number of such Securities which such
Management Stockholder could permissibly sell under Rule 144(e)(1) under
the Securities Act (whether or not such Management Stockholder is then
subject to Rule 144(e)(1)), (ii) in any transaction exempt from the
registration requirements of the Securities Act or (iii) pursuant to a
registration statement.
(v) With respect to any of DB Capital, any Sandler Entity, any Camden
Entity or any Non-Management Stockholder, a Transfer of any or all
Securities owned by it (a) to an Affiliate that has agreed in writing to be
bound by the terms and provisions of Section 2.1 and 2.2 to the same extent
that such party would be bound if it beneficially owned the Securities
transferred to such Affiliate or (b) (i) in any transaction in compliance
with Rule 144 under the Securities Act or any successor rule or regulation,
(ii) in a transaction exempt from the registration requirements of the
Securities Act or (iii) pursuant to a registration statement.
(vi) With respect to any Management Stockholder, any transfer to any
Person at any time after the date on which (x) the Company has terminated
the employment of such Management Stockholder other than for cause or (y)
such Management Stockholder has terminated his employment with the Company
for "good reason" as defined in such Management Stockholder's employment
agreement or consulting agreement with the Company (or if such Management
Stockholder does not have an employment or consulting agreement with the
Company or such employment agreement or consulting agreement does not
define "good reason", as "good reason" is defined in Lonstein's employment
agreement with the Company).
(vii) A Transfer pursuant to a registered offering of securities which
is effected pursuant to rights granted to the transferring Stockholder
pursuant to the Registration Rights Agreement.
(viii) A Transfer by a Stockholder to the Company.
(ix) A Transfer by Lonstein to DB Capital or any Sandler Entity
pursuant to any Option Agreement.
(b) In any such Transfer referred to above in Section 2.2(a)(i), (ii)
or (ix), the Permitted Transferee shall receive and hold such Securities subject
to the provisions of this Agreement as if such Permitted Transferee were an
original signatory hereto and such Permitted Transferee shall be deemed to be a
party to this Agreement.
(c) Not later than ten (10) days before effecting any Transfer of
Securities, the Holder proposing to make such Transfer shall give notice to the
Company (with a copy to DB Capital, the Sandler Entities and the Camden
Entities) of such proposed Transfer, specifying the method of disposition and
the amount of shares to be so Transferred (the "Transfer Notice").
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ARTICLE III
BOARD OF DIRECTORS OF THE COMPANY
Section 3.1 Board of Directors. (a) Each Stockholder agrees to vote
all of the Securities held by such Stockholder (to the extent all such
Securities are entitled to vote) so as to elect and maintain a Board composed of
the following: (i) two people designated by Lonstein; provided that so long as
Lonstein is the Chief Executive Officer of the Company one such designee shall
be Lonstein, (ii) two people designated by DB Capital (the "DB Capital
Directors"), (iii) two people designated by the Sandler Entities (the "Sandler
Directors") and (iv) not less than three additional directors, each of whom
shall be unaffiliated with the Company, designated by mutual consent of
Lonstein, DB Capital and the Sandler Entities; provided that, for so long as any
indebtedness under the Camden Debentures remains outstanding, the Camden
Entities shall have the right to (x) designate one observer to attend and
participate (but not vote) in each meeting of the Board of Directors at the
Company's reasonable expense; (y) be notified of each regular or special meeting
of the Board of Directors concurrently with notification given to the directors
of the Company; and (z) receive all materials provided to directors concurrently
with delivery to other directors (other than the Company's annual budget and
operating plan for each fiscal year which shall be presented to such observer
within a reasonable time (but, in no event, no more than five (5) business days)
after the Company's management has first presented such budget and operating
plan to the Board); provided, further, that, in the event that Lonstein is
neither Chief Executive Officer nor Chairman of the Board of the Company, then
Xxxxx Xxxxxxx ("Xxxxxxx") will (A) be designated as a member of the Board of
Directors and (B) be appointed to the nominating committee of the Board of
Directors; provided, further, that, notwithstanding anything to the contrary
herein, if the Chief Executive Officer of the Company has not been designated as
a director of the Company pursuant to clause (i), (ii) or (iii) of this Section
3.1(a), then one of the persons designated as a director pursuant to this clause
(iv) (other than Xxxxxxx) shall be the Chief Executive Officer of the Company.
(b) In the event that any director designated by any Stockholder for
any reason ceases to serve as a director during his term of office, the
resulting vacancy on the Board shall be filled by a director designated by such
Stockholder.
Section 3.2 Election. Promptly upon the execution and delivery of this
Agreement, the Stockholders shall take all such action as may be necessary
(including, but not limited to, the removal of directors).
ARTICLE IV
CERTAIN DECISIONS
Section 4.1 Series A Preferred Stock Directors Approval. The following
acts, expenditures, decisions and obligations made or incurred by the Company
shall require the prior written approval of the DB Capital Directors and the
Sandler Directors:
(a) the hiring or termination of any senior officers of the Company or
any Subsidiary including, without limitation, with respect to the Company
and Infocrossing,
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Inc., the Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer, President or any officer reporting directly to the President, or
Chief Executive Officer and, with respect to any other Subsidiary, the
Chief Executive Officer, Chief Operating Officer or President;
(b) approval of the Company's annual business plan, operating budget
and capital budget;
(c) any capital expenditure or series of related capital expenditures
by the Company or any Subsidiary to the extent (i) not otherwise included
in the approved annual capital budget or (ii) such expenditure or series of
expenditures would cause, together with all other capital expenditures to
such time, the Company's capital budget to be exceeded by $250,000 in the
aggregate;
(d) in a single transaction or series of related transactions, the
consolidation or merger with or into, or sale, assignment, transfer, lease,
conveyance or disposal of all or substantially all of the Company's assets
to, any Person; the agreement to any plan of recapitalization; consent to,
approval or recommendation of any tender offer for any class or series of
the Company's Capital Stock or consent to, approval or recommendation of
any Change of Control of, or action which is expected to result in a Change
of Control of, the Company; or adoption of a plan of liquidation or the
making of any payments in liquidation or with respect to the winding up of
the Company;
(e) the authorization or creation of, modification of the terms of or,
increase in the authorized amount of any class or series of equity
securities of the Company or the issuance or sale of any equity securities
or any equity securities which are convertible or exchangeable into or
exercisable for any equity securities of the Company, other than (i)
compensatory or incentive stock options (or any shares of Common Stock
issued upon the exercise thereof) issued pursuant to employee stock option
plans of the Company which have been approved by the Board of Directors of
the Company, (ii) issuances of Common Stock to employees, officers,
directors and consultants of the Company, pursuant to employee benefit
plans approved by the Board of Directors of the Company, or (iii) shares of
Common Stock issued upon (x) the conversion of the Series A Preferred Stock
or (y) the exercise of the Warrants or Camden Warrants.
(f) the making, or permitting of any of the Subsidiaries to make, any
acquisition or divestiture in which the total consideration exceeds
$5,000,000;
(g) incurring, guaranteeing or otherwise incurring or assuming any
obligations or any indebtedness for borrowed money or capitalized leases
(other than indebtedness of the Company to any of its wholly owned
Subsidiaries or of any Subsidiary of the Company to the Company or any
wholly owned Subsidiary of the Company) (other than trade payables in the
ordinary course of business) in excess of $2,500,000 in the aggregate;
(h) entering into any transaction with (including, without limitation,
the purchase, lease or sale of any property of the rendering of or
contracting for any services)
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with any Affiliate (other than a wholly owned Subsidiary) of the Company;
provided, that the Company may issue options or shares of Common Stock to
Affiliates (other than wholly owned Subsidiaries) of the Company to the
extent such options or shares are issued pursuant to the terms of employee
benefit plans approved by the Board of Directors of the Company; and
(i) increasing the number of options, shares of Common Stock, or other
securities which may be granted under, or which are subject to or underlie
any employee benefits plan of the Company or any Subsidiary, including,
without limitation, any stock option plan, stock incentive plan, restricted
stock plan, stock appreciation rights plan, phantom stock plan or other
similar plan.
Section 4.2 Certain Actions. Each Stockholder hereby agrees to take
all such action as may be required to give effect to Section 4.1, including, but
not limited to, the adoption by the Board of Directors of the Company of
resolutions giving effect to such Section, and shall take all such action as may
be necessary (including the removal of directors) to cause any Person designated
by such Stockholder as a director pursuant to Article III hereof and cause such
resolutions to be adopted.
Section 4.3 Issuance of Camden Warrants. Each of DB Capital, each
Sandler Entity and Lonstein, severally and jointly, covenants and agrees to
vote, or cause the vote of, all shares of Voting Capital Stock of the Company
and other voting securities of the Company and which such Person has voting
control, and will take all other necessary or desirable actions within his, her
or its control as a Stockholder of the Company (and not in any other capacity)
to approve the issuance of all Camden Warrants in accordance with the terms
thereof.
ARTICLE V
RIGHT OF CO-SALE; PREEMPTIVE RIGHTS
Section 5.1 Co-Sale. (a) For so long as any indebtedness under the
Camden Debentures remains outstanding and Lonstein is either the Chief Executive
Officer or Chairman of the Board of Directors of the Company, if Lonstein
proposes to sell Securities other than pursuant to a Permitted Lonstein
Transfer, each of the Camden Entities shall have the right (the "Co-Sale
Right"), exercisable upon written notice to the Company within ten (10) days
following receipt of the Transfer Notice, to participate in Lonstein's proposed
Transfer of Securities pursuant to the specified terms and conditions set forth
in the Transfer Notice, provided that, Lonstein shall be permitted to sell up to
50,000 shares of Common Stock per year without giving such Transfer Notice to
the Camden Entities. To the extent that any of the Camden Entities exercises
such Co-Sale Right in accordance with the terms and conditions set forth below,
the number of Camden Warrant Shares which such Camden Entity may transfer in
such Transfer shall be subject to the following terms and conditions (and the
number of Securities proposed to be sold by Lonstein shall be correspondingly
reduced):
(i) Calculation of Shares. Each of the Camden Entities may transfer
all or any part of that number of Camden Warrant Shares then held by such
Camden Entity equal to the product obtained by multiplying (x) the
aggregate number of shares of
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Common Stock covered by the Transfer Notice by (y) a fraction, the
numerator of which is the number of Camden Warrant Shares then held by such
Camden Entity (assuming the exercise of all the Camden Warrants) and the
denominator of which is the total number of Camden Warrant Shares plus the
number of shares of Common Stock then held by Lonstein on a fully-diluted
basis (the "Co-Sale Shares").
(ii) Delivery of Certificates. Each of the Camden Entities may effect
their participation in the Transfer by delivering to Lonstein for transfer
to the Permitted Transferee one or more certificates, properly endorsed for
transfer, which represent the number of Co-Sale Shares which such Camden
Entities elect to be subject to such Transfer.
(b) The certificates which the Camden Entities deliver to Lonstein
pursuant to Section 5.1(a)(ii) shall be delivered by Lonstein to the Permitted
Transferee in consummation of the Transfer pursuant to the terms and conditions
specified in the Transfer Notice, and Lonstein shall promptly thereafter remit
that portion of any proceeds to which the Camden Entities are entitled by reason
of their participation in such Transfer.
(c) The exercise or non-exercise of the rights of any of the Camden
Entities hereunder to participate in one or more Transfers made by Lonstein
shall not adversely affect their rights to participate in subsequent Transfers
made by Lonstein to the extent of their remaining holdings of Camden Warrant
Shares.
(d) Any transferee or assignee of any Securities (including Camden
Warrants and Camden Warrant Shares), regardless or whether the Transfer or
assignment was made in compliance with this Agreement, shall receive and hold
such Securities subject to all of the provisions and restrictions of Articles II
and III.
Section 5.2 Preemptive Rights. (a) The Company hereby grants to the
Camden Entities the right to purchase, pro rata, "New Securities" (as defined in
this Section 5.2) that the Company may, from time to time propose to sell and
issue (such right, the "Preemptive Rights"). Such pro rata share, for purposes
of such Preemptive Rights, is equal to the product obtained by multiplying (x)
the aggregate number of New Securities to be issued by (y) a fraction, the
numerator of which is the number of Camden Warrant Shares then held by the
Camden Entities and the denominator of which is the total number of shares of
Common Stock then outstanding on a fully-diluted basis. Such Preemptive Rights
shall be subject to the following provisions:
(b) "New Securities" shall be Common Stock (or any security
convertible into Common Stock) issued by the Company after the date of this
Agreement, other than shares of Common Stock issued or issuable:
(i) to officers, directors or employees of, or consultants to, the
corporation pursuant to a stock grant, stock option, restricted stock
purchase agreement, stock appreciation right, option plan, purchase plan or
other employee stock incentive program or agreement, in each case, where
the grant of such options is approved by the Board of Directors ;
(ii) upon conversion of shares of the Series A Preferred Stock;
-11-
(iii) upon the exercise of (x) Warrants and/or (y) Camden Warrants;
(iv) (x) as a dividend or other distribution on the Series A Preferred
Stock or (y) as a paid in kind interest payment made pursuant to the Camden
Debentures;
(v) pursuant to an underwritten public offering;
(vi) pursuant to a consolidation of the Company with, or merger of the
Company into, any other Person, or in case of any merger of another Person
into the Company (other than a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company), or in case of any sale, conveyance
or transfer of all or substantially all the assets of the Company;
(vii) to customers and suppliers of the Company; provided that such
issuance is approved by a majority of the -------- Board of Directors;
(viii) to banks, savings and loan associations, equipment lessors or
other similar lending institutions in connection with such entities
providing working capital credit facilities or equipment financing to the
Company; provided that such arrangements are approved by a majority of the
Board of Directors; and
(ix) in any stock split, stock dividend, or like recapitalization.
(c) In the event that the Company proposes to undertake an issuance of
New Securities, it shall give the Camden Entities written notice of its
intention, describing the price and the general terms upon which the Company
proposes to issue the same. The Camden Entities shall have thirty (30) days
after receipt of such notice to agree to purchase up to their pro rata share of
such New Securities (determined pursuant to Section 5.2(a)) at the price and
upon the terms specified in the notice by giving written notice to the Company
and stating therein the quantity of New Securities to be purchased.
(d) Whether or not any of the Camden Entities exercise their
respective Preemptive Rights within the thirty (30) day period specified above,
the Company shall have ninety (90) days thereafter to sell (or enter into an
agreement pursuant to which the sale of New Securities covered thereby shall be
closed, if at all, within ninety (90) days from the date of said agreement) the
New Securities at a price and upon terms no more favorable to the purchasers
thereof than specified in the Company's notice. In the event the Company has not
sold the New Securities within such 90-day period (or sold and issued New
Securities in accordance with the foregoing within ninety (90) days from the
date of such agreement) the Company shall not thereunder issue or sell any New
Securities without first offering such New Securities to the Camden Entities in
the manner provided above. The closing of the sale of New Securities to the
Camden Entities and other purchasers shall occur simultaneously.
(e) The Preemptive Rights shall terminate at such time as the Camden
Entities cease to own, in aggregate, Camden Warrants to purchase at least
1,000,000 Camden Warrant Shares, subject to adjustment in connection with a
stock split, stock dividend or like recapitalization.
-12-
ARTICLE VI
MISCELLANEOUS
Section 6.1 Entire Agreement. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior arrangements or understandings (whether written or
oral) with respect thereto.
Section 6.2 Captions. The Article and Section captions used herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 6.3 Counterparts. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by the parties hereto
and each such executed counterpart shall be deemed to be an original instrument.
Section 6.4 Notices. All notices, consents, requests, instructions,
approvals and other communications provided for herein and all legal process in
regard hereto shall be validly given, made or served, if in writing and
delivered by personal delivery, overnight courier, telecopier or registered or
certified mail, return-receipt requested and postage prepaid addressed as
follows:
If to the Company, to:
Infocrossing, Inc.
0 Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxxxxxx, Chief Executive Officer
Tel.: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: X. Xxxx Xxxxxxxxx, Esq.
Tel.: (000) 000-0000
Fax: (000) 000-0000
if to DB Capital, to:
c/o DB Capital Partners, L.P.
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Managing Director
Tel.: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: X. Xxxx Xxxxxxxxx, Esq.
Tel.: (000) 000-0000
Fax: (000) 000-0000
if to the Sandler Entities, to:
c/o Sandler Capital Management
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx, Managing Director
Tel: (000) 000-0000
Fax: (000) 000-0000
if to the Camden Entities, to:
c/o Camden Partners, Inc.
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxx & Xxxxxxxxx
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
if to any of the Management Stockholders or Non-Management
Stockholders, to the addresses set forth on the books and records
of the Company.
or to such other address as any such party hereto may, from time to time,
designate in writing to all other parties hereto, and any such communication
shall be deemed to be given, made or served as of the date so delivered or, in
the case of any communication delivered by mail, as of the date so received.
Secton 6.5 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Company, the Stockholders and their
respective heirs, devisees, legal representatives, successors, permitted assigns
and other permitted transferees. The rights of a Stockholder under this
Agreement may not be assigned or otherwise conveyed by any Stockholder except in
connection with a Transfer of shares which is in compliance with this Agreement.
Section 6.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO SUCH STATE'S CHOICE OF LAW PROVISIONS.
Section 6.7 Submission to Jurisdiction. (a) Each of the parties hereto
hereby irrevocably acknowledges and consents that any legal action or proceeding
brought with respect to any of the obligations arising under or relating to this
Agreement may be brought in the courts of the State of New York or in the United
States District Court for the Southern District of New York, as the party
bringing such action or proceeding may elect, and each of the parties hereto
hereby irrevocably submits to and accepts with regard to any such action or
proceeding, for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Subject to Section
6.7(b), the foregoing shall not limit the rights of any party to serve process
in any other manner permitted by law. The foregoing consents to jurisdiction
shall not constitute general consents to service of process in the State of New
York for any purpose except as provided above and shall not be deemed to confer
rights on any Person other than the respective parties to this Agreement.
(b) Each of the parties hereto hereby waives any right it may have
under the laws of any jurisdiction to commence by publication any legal action
or proceeding with respect to this Agreement. To the fullest extent permitted by
Applicable Law, each of the parties hereto hereby irrevocably waives the
objection which it may now or hereafter have to the laying of the venue of any
suit, action or proceeding arising out of or relating to this Agreement in any
of the
-3-
courts referred to in Section 6.7(a) and hereby further irrevocably waives any
claim that any such court is not a convenient forum for any such suit, action or
proceeding.
(c) The parties hereto agree that any judgment obtained by any party
hereto or its successors or assigns in any action, suit or proceeding referred
to above may, in the discretion of such party (or its successors or assigns), be
enforced in any jurisdiction, to the extent permitted by Applicable Law.
(d) The parties hereto agree that the remedy at law for any breach of
this Agreement may be inadequate and that should any dispute arise concerning
the sale or disposition of any shares or the voting thereof or any other similar
matter hereunder, this Agreement shall be enforceable in a court of equity by an
injunction or a decree of specific performance. Such remedies shall, however, be
cumulative and nonexclusive, and shall be in addition to any other remedies
which the parties hereto may have.
(e) The parties hereto agree that the prevailing party or parties, as
the case may be, in any action, suit, arbitration or other proceeding arising
out of or with respect to this Agreement or the transactions contemplated hereby
shall be entitled to reimbursement of all costs of litigation, including
reasonable attorneys' fees, from the non-prevailing party. For purposes of this
Section 6.7(e), each of the "prevailing party" and the "non-prevailing party" in
any action, suit, arbitration or other proceeding shall be the party designated
as such by the court, arbitrator or other appropriate official presiding over
such action, suit, arbitration or other proceeding, such determination to be
made as a part of the judgment rendered thereby.
Section 6.8 Benefits Only to Parties. Nothing expressed by or
mentioned in this Agreement is intended or shall be construed to give any
Person, other than the parties hereto and their respective successors or
permitted assigns, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained, this Agreement and
all conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of the parties hereto and their respective successors and
permitted assigns, and for the benefit of no other Person.
Section 6.9 Termination. This Agreement shall terminate upon the
happening of any one of the following events:
(a) with respect to all parties, the voluntary or involuntary
dissolution of the Company;
(b) with respect to DB Capital and the Sandler Entities only, upon
each of DB Capital and the Sandler Entities ceasing to hold at least 25% of
the shares of Common Stock (calculated assuming the conversion of the
Series A Preferred Stock and the exercise of the Warrants) held by DB
Capital or the Sandler Entities, as the case may be, on the Original
Closing Date;
(c) with respect to the Camden Entities only, upon the Camden Entities
ceasing to own, in aggregate, Camden Warrants to purchase at least
1,000,000 Camden Warrant Shares, subject to adjustment in connection with a
stock split, stock dividend or
-16-
like recapitalization and there ceasing to be any indebtedness outstanding
under the Camden Debentures; and (d) with respect to all parties, upon the
occurrence of the events specified in clauses (b) and (c) of this Section
6.5.
Section 6.10 Sunset Provisions. (a) On the date on which Lonstein
ceases to hold at least 50% of the shares of Common Stock (calculated assuming
the exercise of all vested in-the-money stock options) held by Lonstein on the
Original Closing Date, then the number of persons whom Lonstein shall have the
right to designate to serve as directors of the Company under Section 3.1(a)(i)
shall be reduced to one. On the date on which Lonstein ceases to hold at least
25% of the shares of Common Stock (calculated assuming the exercise of all
vested in-the-money stock options) held by Lonstein on the Original Closing
Date, Lonstein's right to designate Persons to serve as directors of the Company
under Section 3.1(a)(i) and 3.1(a)(iv) shall terminate as of such date.
(b) Upon the date on which DB Capital ceases to hold at least 25% of
the shares of Common Stock (calculated assuming the conversion of the Series A
Preferred Stock and the exercise of the Warrants) held by DB Capital on the
Original Closing Date, then DB Capital's right to designate Persons to serve as
directors of the Company under Section 3.1(a)(ii) and 3.1(a)(iv) and DB
Capital's right to approve the actions specified under Section 4.1 shall
terminate as of such date.
(c) Upon the date on which the Sandler Entities and/or Sandler Capital
Partners V FTE, L.P. cease to hold at least 25% of the shares of Common Stock
(calculated assuming the conversion of the Series A Preferred Stock and the
exercise of the Warrants) held by the Sandler Entities on the Original Closing
Date, then the Sandler Entities' right to designate Persons to serve as
directors of the Company under Section 3.1(a)(iii) and 3.1(a)(iv) and the
Sandler Entities' right to approve the actions under Section 4.1 shall terminate
as of such date.
(d) Upon the date on which any indebtedness under the Camden
Debentures ceases to remain outstanding, the Camden Entities' (i) rights to
maintain an observer role or serve as a director of the Company under Section
3.1(a)(iv) and (ii) Co-Sale Right pursuant to Section 5.1 shall terminate as of
such date. Upon the date on which the Camden Entities cease to own, in
aggregate, Camden Warrants to purchase at least 1,000,000 Camden Warrant Shares,
subject to adjustment in connection with a stock split, stock dividend or like
recapitalization, the Camden Entities' Preemptive Rights pursuant to Section 5.2
shall terminate as of such date.
Section 6.11 Publicity. Except as otherwise required by Applicable
Laws, none of the parties hereto shall issue or cause to be issued any press
release or make or cause to be made any other public statement in each case
relating to or connected with or arising out of this Agreement or the matters
contained herein, without obtaining the prior approval of DB Capital, a majority
in interest of the Sandler Entities, a majority of interest of the Camden
Entities (for so long as any indebtedness under the Camden Debentures remains
outstanding) and the Company to the contents and the manner of presentation and
publication thereof.
-17-
Section 6.12 Amendments; Waivers. No provision of this Agreement may
be amended, modified or waived without approval of DB Capital, a majority in
interest of the Sandler Entities, a majority in interest of the Camden Entities
(for so long as any indebtedness under the Camden Debentures remains
outstanding), the Company, 66-2/3% in interest of the Management Stockholders
(calculated based on ownership of Common Stock) and 66-2/3% in interest of the
Non-Management Stockholders (calculated based on ownership of Common Stock);
provided that no such amendment or waiver of a provision of this Agreement which
adversely affects the rights of any Stockholder in a manner that does not
adversely affect all other Stockholders equally may be made without such
Stockholder's consent; provided that (x) the Management Stockholders shall be
considered as a group with the determination by the holders of 66-2/3% of the
outstanding shares of Common Stock held by the Management Stockholders to be
binding on all Management Stockholders and (y) the Non-Management Stockholders
shall be considered as a group with the determination by the holders of 66-23%
of the outstanding shares of Common Stock held by the Non-Management
Stockholders to be binding on all Non-Management Stockholders; provided,
further, that in no circumstances shall Article III or Article IV be amended,
modified, waived or repealed without the express written consent of DB Capital
and the Sandler Entities.
Section 6.13 Effectiveness. This Agreement shall become effective upon
the execution and delivery of this Agreement by each of DB Capital, the Sandler
Entities, the Camden Entities, Lonstein, 66-2/3% of the Management Stockholders
(including, without limitation, Lonstein) and 66-2/3% of the Non-Management
Stockholders.
Section 6.14 No Inconsistent Agreements. Each Stockholder hereby
covenants and agrees that neither it nor any of its Affiliates shall enter into
any voting agreement or grant a proxy or power of attorney with respect to the
Securities it beneficially owns which is inconsistent with this Agreement.
Section 6.15 Exited Stockholder. The Exited Stockholder hereby agrees
to surrender his rights under the Existing Stockholders' Agreement and agrees
that he shall have no rights under this Agreement.
[SIGNATURE PAGE FOLLOWS]
-18-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
INFOCROSSING, INC.
By:
--------------------------------
Name: Xxxx Xxxxxxxx
Title: Chief Executive Officer
DB CAPITAL INVESTORS, L.P.
By: DB Capital Partners, L.P.,
its general partner
By: DB Capital Partners, Inc.,
its general partner
By:
--------------------------------
Name:
Title:
Signature Page to the Stockholders Agreement
SANDLER CAPITAL PARTNERS V, L.P.
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By:
--------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
SANDLER CAPITAL PARTNERS V FTE, L.P.
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By:
--------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
SANDLER TECHNOLOGY PARTNERS, L.P.
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By:
--------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
Signature Page to the Stockholders Agreement
SANDLER CO-INVESTMENT PARTNERS, L.P.
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By:
--------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
Signature Page to the Stockholders Agreement
CAMDEN PARTNERS STRATEGIC FUND II-A, L.P.
By: Camden Partners Strategic II, LLC,
its General Partner
By:
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
CAMDEN PARTNERS STRATEGIC FUND II-B, L.P.
By: Camden Partners Strategic II, LLC,
its General Partner
By:
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
XXXXXX, XXXXXXX STRATEGIC PARTNERS FUND, L.P.
By: Camden Partners Strategic II, LLC,
its General Partner
By:
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
Signature Page to the Stockholders Agreement
STRATEGIC ASSOCIATES, L.P.
By: Camden Partners Strategic II, LLC,
its General Partner
By:
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
Signature Page to the Stockholders Agreement
MANAGEMENT STOCKHOLDERS
-------------------------------------
Name: Xxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxxx XxXxxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxx
Signature Page to the Stockholders Agreement
EXITED STOCKHOLDER
-------------------------------------
Name: Xxxxxxx Xxxxxx
Signed solely for the purpose of acknowledgment
of Section 6.15 above.
Signature Page to the Stockholders Agreement
NON-MANAGEMENT STOCKHOLDERS
PRICE FAMILY LIMITED PARTNERS
By:
--------------------------------
Name:
Title:
XXXXXX, X.X.
By:
--------------------------------
Name:
Title:
Signature Page to the Stockholders Agreement
Management Stockholders:
Xxxx Xxxxxxxx
Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx
Xxxxxxx XxXxxxx
Xxxxxxxx X. Xxxxxxx
Xxxxx Xxxxxxxxxx
Xxxx X. Xxxxx
Non-Management Stockholders:
Price Family Limited Partners
Xxxxxx, X.X.
TABLE OF CONTENTS
Page
ARTICLE I CERTAIN DEFINITIONS.........................................2
Section 1.1 Certain Definitions.........................................2
ARTICLE II TRANSFER OF SHARES..........................................5
Section 2.1 Restrictions................................................5
Section 2.2 Permitted Transfers.........................................6
ARTICLE III BOARD OF DIRECTORS OF THE COMPANY...........................8
Section 3.1 Board of Directors..........................................8
Section 3.2 Election....................................................8
ARTICLE IV CERTAIN DECISIONS...........................................8
Section 4.1 Series A Preferred Stock Directors Approval.................8
Section 4.2 Certain Actions............................................10
Section 4.3 Issuance of Camden Warrants................................10
ARTICLE V RIGHT OF CO-SALE; PREEMPTIVE RIGHTS........................10
Section 5.1 Co-Sale....................................................10
Section 5.2 Preemptive Rights..........................................11
ARTICLE VI MISCELLANEOUS..............................................13
Section 6.1 Entire Agreement...........................................13
Section 6.2 Captions...................................................13
Section 6.3 Counterparts...............................................13
Section 6.4 Notices....................................................13
Section 6.5 Successors and Assigns.....................................15
Section 6.6 GOVERNING LAW..............................................15
Section 6.7 Submission to Jurisdiction.................................15
Section 6.8 Benefits Only to Parties...................................16
Section 6.9 Termination................................................16
Section 6.10 Sunset Provisions..........................................17
Section 6.11 Publicity..................................................17
Section 6.12 Amendments; Waivers........................................18
Section 6.13 Effectiveness..............................................18
Section 6.14 No Inconsistent Agreements.................................18
Section 6.15 Exited Stockholder.........................................18
SCHEDULE A - Management Stockholders
SCHEDULE B - Non-Management Stockholders
