Exhibit 10.5
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[HALIFAX]
REGISTRATION RIGHTS AGREEMENT
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THIS REGISTRATION RIGHTS AGREEMENT ("Registration Rights Agreement"),
entered into as of January 30, 1997, between HALIFAX FUND, L.P., with offices at
c/o The Palladin Group, L.P., 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attn: Xxxxxxx X. Xxxxxx (the "Purchaser"), and GRC INTERNATIONAL, INC., a
Delaware corporation with offices at 0000 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxx 00000
(the "Company").
WITNESSETH:
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WHEREAS, pursuant to a Convertible Securities Subscription Agreement,
dated as of January 21, 1997 (the "Agreement"), by and between the Company and
the Purchaser, the Company has agreed to sell and the Purchaser has agreed to
purchase U.S. $4,000,000 of the Company's 5% Convertible Debentures due January
30, 2000 (the "Debentures") convertible into shares of the Company's Common
Stock, $0.10 par value (the "Shares");
WHEREAS, the Company has agreed to issue a Common Stock Purchase
Warrant, dated January 30, 1997 (the "Warrant");
WHEREAS, pursuant to the terms of, and in partial consideration for,
Purchaser's purchase of the Debenture, the Company has agreed to provide the
Purchaser with certain registration rights with respect to the Shares issuable
upon conversion of the Debenture and exercise of the Warrant as set forth in
this Registration Rights Agreement;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the Agreement
and this Registration Rights Agreement, the Company and the Purchaser agree as
follows:
1. Certain Definitions. As used in this Agreement, the following
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terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Registrable Securities" shall mean any Shares or other securities
issued or issuable to Purchaser or any Holder upon the conversion or exercise or
exchange of any Debentures, Warrant or Shares.
The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses to be incurred by the
Company in connection with Purchaser's exercise of its registration rights under
this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses, reasonable fees and disbursements of counsel to Holder for a
"due diligence" examination of the Company and review of the Registration
Statement and related documents, and the expense of any special audits incident
to or required by any such registration (but excluding the compensation of
regular employees of the Company, which shall be paid in any event by the
Company). With respect to the "due diligence" examination of the Company, the
Registration Expenses shall include only fees and disbursements for one (1)
designated counsel for all the Holders of Debentures.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for Holder not included with "Registration Expenses".
"Holder" shall include the Purchaser and any transferee of Debentures,
Shares or Registrable Securities which have not been sold to the public to whom
the registration rights conferred by this Agreement have been transferred in
compliance with Section 10 of this Agreement.
"Registration Statement" shall have the meaning set forth in Section
2(a) herein.
"Regulation D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"Securities Act" shall mean the Securities Act of 1933, as amended.
2. Registration Requirements. The Company shall use its diligent
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best efforts to effect the registration of the Registrable Securities
contemplated by the Agreement (including, without limitation, the execution of
an undertaking to file post-effective amendments, appropriate qualification
under applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Securities Act) as would
permit or facilitate the sale or distribution of all the Registrable Securities
in the manner (including manner of sale) and in all states reasonably requested
by the Holder for purposes of maximizing the proceeds realizable by the Holder
from such sale or distribution. Such best efforts by the Company shall include
without limitation the following:
(a) The Company shall, as soon as practicable after the date
hereof but in no event later than thirty (30) days after the date hereof, file
(i) a registration statement with the Commission pursuant to Rule 415 under the
Securities Act on Form S-3 under the Securities Act (or in the event that the
Company in ineligible to use such form, such other form as the Company is
eligible to use under the Securities Act) covering the Registrable Securities so
requested to be registered ("Registration Statement"); (ii) such blue sky
filings as shall have been requested by the Holder; and (iii) any required
filings with the National Association of Securities Dealers, Inc. or exchange or
market where the Shares are traded. Thereafter the Company shall use its best
efforts to have such Registration Statement and other filings declared effective
as promptly as practicable.
(b) (i) If the Company fails to file a Registration Statement
complying with the requirements of this Registration Rights Agreement within 30
days from the date hereof or if such Registration Statement has not become
effective within 120 days from
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the Closing Date the Holder shall have, in addition to and without limiting any
other rights it may have at law, in equity or under the Debentures, the
Agreement or this Registration Rights Agreement (including the right to specific
performance), the right to receive, as liquidated damages, the payments as
provided in subparagraph (ii) of this section.
(ii) If after one hundred twenty (120) days from the Closing
Date, the Registration Statement has not been declared effective by the
Commission, then the Company shall pay to the Purchaser an amount equal to 2% of
the Outstanding Principal Amount (as defined in the Debenture) of the Debenture,
in cash, for each 30-day period after such 120-day period that such Registration
Statement is not effective (which payment shall be pro rata for any period of
less than 30 days. In addition to the foregoing, if after 180 days from the date
hereof the Registration Statement has not been declared effective by the
Commission, then upon demand of such Holder, the Company shall redeem all the
Debentures held by such Holder at a redemption price equal to 130% of the
Outstanding Principal Amount of the Debenture plus accrued interest thereon,
together with all other payments due under this paragraph and under the
Debenture and the Agreement.
(c) If the Holder intends to distribute the Registrable
Securities covered by its request by means of an underwriting, the Holder shall
so advise the Company. The Holder will have the right to select the investment
bankers for such underwriting subject to such investment bankers being
reasonably satisfactory to the Company.
(d) The Company shall enter into such customary agreements
(including a customary underwriting agreement with the underwriter or
underwriters, if any) and take all such other reasonable actions in connection
therewith in order to expedite or facilitate the disposition of such Registrable
Securities and in such connection, whether or not an underwriting agreement is
entered into and whether or not the Registrable Securities are to be sold in an
underwritten offering:
(i) make such representations and warranties to the Holder
and the underwriter or underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in secondary underwritten offerings;
(ii) cause to be delivered to the sellers of Registrable
Securities and the underwriter or underwriters, if any, opinions of counsel to
the Company, dated the effective date (or in the case of an underwritten
offering, dated the date of delivery of any Registrable Securities sold pursuant
thereto) of the Registration Statement (which counsel, and opinions (in form,
scope and substance), shall be reasonably satisfactory to the managing
underwriter or underwriters, if any, and the appointed representative or counsel
of the Holder), addressed to the Holder and each underwriter, if any, covering
the matters customarily covered in opinions requested in secondary underwritten
offerings and, in the case of an underwritten offering, such other matters as
may be reasonably requested by the Holder;
(iii) cause to be delivered, immediately prior to the
effectiveness of the Registration Statement (and, in the case of an underwritten
offering, at the time of delivery of any Registrable Securities sold pursuant
thereto), a "comfort" letter from the Company's independent certified public
accountants addressed to the Holder and each underwriter, if any, stating that
such accountants are independent public accountants within the meaning of the
Securities Act and the applicable published rules and regulations thereunder,
and otherwise in customary form and covering such financial and accounting
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matters as are customarily covered by letters of the independent certified
public accountants delivered in connection with secondary underwritten public
offerings;
(iv) if an underwriting agreement is entered into, the same
shall set forth in full the indemnification and contribution provisions and
procedures of sections 6 and 7 with respect to all parties to be indemnified
pursuant to such sections; and
(v) the Company shall deliver such documents and
certificates as may be reasonably requested by the Holder being sold or the
managing underwriter or underwriters, if any, to evidence compliance with clause
(i) above and with any customary conditions contained in the underwriting
agreement, if any, or other agreement entered into by the Company;
the foregoing in this paragraph 2(d) shall be done at each closing under such
underwriting or similar agreement or as and to the extent required thereunder;
provided, however, the foregoing in paragraph 2(d) shall not be required on more
than two (2) occasions.
(f) The Company shall make available for inspection by a
representative or representatives of the Holder, any underwriter participating
in any disposition pursuant to a Registration Statement, and any attorney or
accountant retained by such Holder or underwriter, all financial and other
records customary for such purposes, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with such
Registration Statement. The Holder will agree to keep all non-public
information supplied to it confidential until such information is included in
the Registration Statement.
3. Expenses of Registration. Registration Expenses incurred in
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connection with any registration, qualification or compliance with registration
pursuant to this Agreement shall be borne by the Company, and all Selling
Expenses shall be borne by the Holder.
4. Registration on Form S-3. The Company shall use its best efforts
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to qualify for registration on Form S-3 or any comparable or successor form or
forms, or in the event that the Company is ineligible to use such form, such
form as the Company is eligible to use under the Securities Act. The foregoing
is not intended to require the Company to pay dividends in order to use
Form S-3.
5. Registration Procedures. In the case of each registration
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effected by the Company pursuant to this Agreement, the Company will keep the
Holder advised in writing as to the initiation of each registration and as to
the completion thereof. At its expense, the Company will use its best efforts
to:
(a) Keep such registration effective for the period ending
thirty-six (36) months, as extended pursuant to Section 5A hereof, after the
Closing Date (in the case of the Registration Statement for the Shares issuable
upon conversion of the Debentures) and sixty (60) months, as extended pursuant
to Section 5A hereof, after the Closing Date (in the case of the Registration
Statement for the Shares issuable upon exercise of the Warrants) or until the
Holder has completed the distribution of the Shares issuable upon conversion of
the Debentures and exercise of the Warrants, whichever first occurs.
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(b) Furnish such number of prospectuses, and amendments and
supplements thereto, and other documents incident thereto as the Holder from
time to time may reasonably request.
(c) Prepare and file with the Commission such amendments and
post-effective amendments to a Registration Statement as may be necessary to
keep such Registration Statement effective for the applicable period; cause the
related Prospectus to be supplemented by any required Prospectus supplement, and
as so supplemented to be filed pursuant to Rule 424 under the Securities Act;
and comply with the provisions of the Securities Act applicable to it with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended methods
of disposition by the sellers thereof set forth in such Registration Statement
or supplement to such Prospectus;
(d) Notify each Holder of Registrable Securities included in the
Registration Statement, their counsel and the managing underwriters, if any,
promptly, and (if requested by any such Person) confirm such notice (a "Notice")
in writing, (1) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (2) of any request
by the Commission for amendments or supplements to a Registration Statement or
related Prospectus or for additional information, (3) of the issuance by the
Commission of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purposes, (4) if at any
time the representations and warranties of the Company contained in agreements
contemplated by Section 2 (d) cease to be true and correct, (5) of the receipt
by the Company of any notification with respect to the suspension of the
qualification of any of the Registrable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose, (6) of the
happening of any event as a result of which the Prospectus included in the
Registration Statement (as then in effect) contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein (in the case of the Prospectus or
any preliminary Prospectus, in light of the circumstances under which they were
made) not misleading and (7) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate or
that there exist circumstances not yet disclosed to the public which make
further sales under such Registration Statement inadvisable pending such
disclosure and post-effective amendment;
(e) Upon the occurrence of any event contemplated by Section
5(d)(2)-(7) and immediately upon the expiration of any Blocking Period (as
defined in Section 5A), prepare, if the occurrence of such event or period
requires such preparation, a supplement or post-effective amendment to the
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 the Registrable Securities being sold thereunder,
such Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading;
(f) Make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement, or the lifting
of any suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction, at the earliest possible moment;
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(g) Insure that all Registrable Securities subject to the
Registration Statement shall at all times be registered or qualified for offer
and sale under the securities or blue sky laws of such jurisdictions as any
Holder or underwriter reasonably requests in writing; use its best efforts to
keep each such registration or qualification effective, including through new
filings or amendments or renewals, during the period such Registration Statement
is required to be kept effective and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the applicable Registration Statement;
provided, however, that the Company will not be required to qualify to do
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business or take any action that would subject it to taxation or general service
of process in any jurisdiction where it is not then so qualified or subject;
(h) Use its best efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriter or underwriters, if any, to
consummate the disposition of such Registrable Securities in accordance with the
chosen method or methods of distribution;
(i) Cause all Registrable Securities included in such Registration
Statement to be listed, by the date of first sale of Registrable Securities
pursuant to such Registration Statement, on the principal securities exchange or
automated interdealer system on which the same type of securities of the Company
are then listed or traded;
5A. Suspensions of Effectiveness. The Company may suspend
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dispositions under the Registration Statement and notify the Holder that it may
not sell the Registrable Securities pursuant to any Registration Statement or
Prospectus (a "Blocking Notice") if the Company's management determines in its
reasonable good faith judgment that the Company's obligation to ensure that such
Registration Statement and Prospectus are current and complete would require the
Company to take actions that might reasonably be expected to have a materially
adverse detrimental effect on the Company and its stockholders; provided that
such suspension pursuant to a Blocking Notice or the Notice described below or
as a result of the circumstances described in 5(d)(2)-(7) may not exceed ninety
(90) days (whether or not consecutive) in any twelve (12) month period. The
Holder agrees by acquisition of the Registrable Securities that, upon receipt of
a Blocking Notice or "Notice" from the Company of the existence of any fact of
the kind described in the following sentence, such Holder shall not dispose of,
sell or offer for sale the Registrable Securities pursuant to the Registration
Statement until such Holder receives (i) copies of the supplemented or amended
Prospectus, or until counsel for the Company shall have determined that such
disclosure is not required due to subsequent events, (ii) notice in writing (the
"Advice") from the Company that the use of the Prospectus may be resumed and
(iii) copies of any additional or supplemental filings that are incorporated by
reference in the Prospectus. Pursuant to the immediately preceding sentence,
the Company may provide such Notice to the Holder upon the determination by the
Company of the existence of any fact or the happening or any event that makes
any statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document incorporated by
reference therein untrue in any material respect, or that requires the making of
any additions to or changes in the Registration Statement or the Prospectus, in
order to make the statements therein not misleading in any material respect. If
so directed by the Company in connection with any such notice, 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 Registrable Securities that was current immediately prior to the
time of receipt of such notice.
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In the event the Company shall give any such Blocking Notice or Notice, the time
regarding the effectiveness of such Registration Statement set forth in Section
5(a) and the maturity date of the Debenture shall be extended by one and one-
half (1-1/2) times the number of days during the period from and including the
date of the giving of such Blocking Notice or Notice to and including the date
when the Holder shall have received the copies of the supplemented or amended
Prospectus, the Advice and any additional or supplemental filings that are
incorporated by reference in the Prospectus. Delivery of a Blocking Notice or
Notice and the related suspension of any Registration Statement shall not
constitute a default under this Agreement and shall not create any obligation to
pay liquidated damages under Section 2 hereof. However, if the Holder's ability
to sell under the Registration Statement is suspended for more than the 90 day
periods described above (an "Excess Blocking Period"), then the rate of interest
on all of the Debentures shall, to the maximum extent permitted by law, be
permanently increased by two percent (2%) (i.e., from 5% to 7%) commencing on
the first day of the thirty (30) day period (or part thereof) following the
beginning of an Excess Blocking Period; an additional two percent (2%)
commencing on the first day of each of the second and third such thirty (30) day
periods (or part thereof) thereafter; and an additional one (1%) percent on the
first day of each consecutive thirty (30) day period (or part thereof)
thereafter until the Excess Blocking Period terminates. In addition, if the
Excess Blocking Period continues for more than an aggregate of 180 days in any
360-day period, then at Holder's option, the Company shall redeem Holder's
Debentures at a redemption price equal to 130% of the Outstanding Principal
Amount of the Debentures plus accrued interest thereon to the date of
redemption, together with all payments due under this paragraph and under the
Debenture and the Agreement.
6. Indemnification.
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(a) Company Indemnity. Company will indemnify the Holder, each of
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its of ricers, directors and partners, and each person controlling Holder,
within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, and each underwriter,
if any, and each person who controls, within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder, any underwriter,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular or
other document (including any related registration statement, notification or
the like) incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or any state
securities law or in either case, any rule or regulation thereunder applicable
to the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse the Holder, each of its officers, directors and partners, and each
person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission (or alleged untrue
statement or omission) that is made in reliance upon and in conformity with
written information furnished to the Company by Holder or the underwriter and
stated to be specifically for use therein. In addition to any other information
furnished in writing to the Company by the Holder, the information in the
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Registration Statement concerning the Holder under the captions "Selling
Shareholders" (or any similarly captioned section containing the information
required pursuant to Item 507 of Regulation S-K promulgated pursuant to the
Securities Act) and "Plan of Distribution" (or any similarly captioned section
containing information required pursuant to Item 508 of Regulation S-K) shall be
deemed information furnished in writing to the Company by the Holder to the
extent it conforms to information actually supplied in writing by the Holder.
The indemnity agreement contained in this Section 6(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
will not be unreasonably withheld).
(b) Holder Indemnity. The Holder will, if Registrable Securities held
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by it are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors, of ricers, partners, and each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder, each other Holder (if
any), and each of their of ricers, directors and partners, and each person
controlling such other Holder against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statement therein not
misleading, and will reimburse the Company and such other Holders and their
directors, officers and partners, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by Holder and
stated to be specifically for use therein, and provided that no Holder shall be
liable under this indemnity for an amount in excess of the proceeds received by
the Holder from the sale of the Registrable Securities pursuant to such
registration statement.. In addition to any other information furnished in
writing to the Company by the Holder, the information in the Registration
Statement concerning the Holder under the captions "Selling Shareholders" (or
any similarly captioned section containing the information required pursuant to
Item 507 of Regulation S-K promulgated pursuant to the Securities Act) and "Plan
of Distribution" (or any similarly captioned section containing information
required pursuant to Item 508 of Regulation S-K) shall be deemed information
furnished in writing to the Company by the Holder to the extent it conforms to
information actually supplied in writing by the Holder. The indemnity agreement
contained in this Section 6(b) shall not apply to amounts paid in settlement of
any such claims, losses, damages or liabilities if such settlement is effected
without the consent of Holder (which consent shall not be unreasonably
withheld).
(c) Procedure. Each party entitled to indemnification under this
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Article (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may
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participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Article
except to the extent that the Indemnifying Party is materially and adversely
affected by such failure to provide notice. The indemnifying party shall not,
in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for such indemnified party, provided,
however, that if separate firm(s) of attorneys are required due to a conflict of
interest, then the indemnifying party shall be liable for the reasonable fees
and expenses of each such separate firm. No Indemnifying Party, in the defense
of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
7. Contribution. If the indemnification provided for in Section 6
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herein is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities (i) as between the Company and the Holder on the one hand and the
underwriters on the other, in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Holder on the one hand or
underwriters, as the case may be, on the other from the offering of the
Registrable Securities, or if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand and of the
Holder or underwriters, as the case may be, on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations and (ii) as
between the Company on the one hand and the Holder on the other, in such
proportion as is appropriate to reflect the relative fault of the Company and of
the Holder in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations.
The relative benefits received by the Company on the one hand and the
Holder or the underwriters, as the case may be, on the other shall be deemed to
be in the same proportion as the proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
from the initial sale of the Registrable Securities by the Company to the Holder
pursuant to this Registration Rights Agreement bear to the proceeds received by
the Holder from the sale of Registrable Securities pursuant to the registration
statement or the total underwriting discounts and commissions received by the
underwriters as set forth in the table on the cover page of the prospectus, as
the case may be. The relative fault of the Company on the one hand and of the
Holder or underwriters, as the case may be, on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company, by the Holder or by the
underwriters.
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In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 6(a) or 6(b) hereof had been
available under the circumstances.
The Company and the Holder agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Holder or the underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of the Holder, the total price at which the shares of Common Stock offered
by such Holder and distributed to the public, or offered to the public, exceed
the amount paid by such Holder for the underlying debentures converted into such
shares of Common Stock, (ii) in the case of an underwriter, the total price at
which the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any damages
that the Holder or underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section 11
(f) of the Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
8. Survival. The indemnity and contribution agreements contained in
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Sections 6 and 7 and the representations and warranties of the Company referred
to in Section 2(e)(i) shall remain operative and in full force and effect
regardless of (i) any termination of the Agreement or any underwriting
agreement, (ii) any investigation made by or on behalf of any Indemnified Party
or by or on behalf of the Company and (iii) the consummation of the sale or
successive resales of the Registrable Securities.
9. Information by Holder. The Holder shall promptly furnish to the
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Company such information regarding such Holder and the distribution proposed by
such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement. All information provided to the
Company by Holder shall be accurate and complete in all material respects and
Holder shall promptly notify the Company if any such information becomes
incorrect or incomplete. If the Holder does not timely provide all such
reasonably requested information, the Holder shall not be entitled to the
liquidated damages contemplated by paragraph 2(b)(ii) to the extent that such
delay in the Registration Statement becoming effective is caused by such failure
to timely provide information unless such Holder shall be able to demonstrate to
the Company's satisfaction that such failure to timely provide did not
proportionately contribute to the event giving rise to the indemnity obligation.
10. Transfer or Assignment of Registration Rights. The rights,
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granted to Purchaser by the Company under this Registration Rights Agreement, to
cause the Company to register Registrable Securities, may be transferred or
assigned to a transferee or assignee
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of any of not less than $100,000 in Outstanding Principal Amount of Debentures
or any permitted transferee or assignee of the Warrants, provided that the
Company is given written notice by Holder at the time of or within a reasonable
time after said transfer or assignment, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
registration rights are being transferred or assigned, and provided further that
the transferee or assignee of such rights is not deemed by the board of
directors of the Company, in its reasonable judgment, to be a competitor of the
Company; and provided further that the transferee or assignee of such rights
agrees to be bound by this Registration Rights Agreement.
11. Miscellaneous.
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(a) Entire Agreement. This Registration Rights Agreement contains
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the entire understanding and agreement of the parties, and may not be modified
or terminated except by a written agreement signed by both parties.
(b) Notices. Any notice or other communication given or permitted
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under this Agreement shall be in writing and shall be deemed to have been duly
given if personally delivered or sent by registered or certified mail, return
receipt requested, postage prepaid or by air courier, (a) if to Purchaser, at
its address hereinabove set forth, (b) if to the Company, to GRC International,
Inc., at its address hereinabove set forth, and (c) if to a Holder other than
Purchaser, at the address thereof furnished by like notice to the Company, or
(d) to any such addresses at such other address or addresses as shall be so
furnished to the other parties by like notice.
(c) Gender of Terms. All terms used herein shall be deemed to
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include the feminine and the neuter, and the singular and the plural, as the
context requires.
(d) Governing Law; Consent of Jurisdiction; Waiver of Jury Trial.
This Registration Rights Agreement and the validity and performance of the terms
hereof shall be governed by and construed in accordance with the laws of the
State of New York without regard to principles of conflicts of law or choice of
law, except to the extent that the law of Delaware regulates the Company's
issuance of securities. The parties hereto hereby agree that all actions or
proceedings arising directly or indirectly from or in connection with this
Registration Rights Agreement shall be litigated only in the Supreme Court of
the State of New York or the United States District Court for the Southern
District of New York located in New York County, New York. To the extent
permitted by applicable law, the parties hereto consent to the jurisdiction and
venue of the foregoing courts and consent that any process or notice of motion
or other application to either of said courts or a judge thereof may be served
inside or outside the State of New York or the Southern District of New York by
registered mail, return receipt requested, directed to the such party at its
address set forth in this Registration Rights Agreement (and service so made
shall be deemed complete five (5) days after the same has been posted as
aforesaid) or by personal service or in such other manner as may be permissible
under the rules of said courts. The parties hereto hereby waive any right to a
jury trial in connection with any litigation pursuant to this Registration
Rights Agreement.
(e) Titles. The titles used in this Registration Rights Agreement
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are used for convenience only and are not to be considered in construing or
interpreting this Registration Rights Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed as of the date first above written.
HALIFAX FUND, L.P., a Cayman Islands
exempted limited partnership
By: THE PALLADIN GROUP, L.P.,
as Attorney-in-Fact
By: PALLADAIN CAPITAL MANAGEMENT, L.L.C.,
General Partner
By:
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Xxxxxx Xxxxxx, Authorized Representative
GRC INTERNATIONAL, INC.,
a Delaware Corporation
By:
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Name:
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Title:
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