Exhibit 99.2
REGISTRATION RIGHTS AND RIGHT OF FIRST OFFER AGREEMENT
THIS REGISTRATION RIGHTS AND RIGHT OF FIRST OFFER AGREEMENT (the
"Agreement") is made as of August 29, 2003 by and among Halifax
Corporation, a Virginia corporation (the "Company"), and the other
parties identified on the signature page attached hereto (collectively,
the "Purchasers").
RECITALS
A. Pursuant to a certain Agreement and Plan of Merger (the
"Merger Agreement") by and among the Company, Microserv Merger Corp., a
Delaware corporation and wholly owned subsidiary of the Company,
Microserv Merger LLC, a Delaware limited liability company and wholly
owned subsidiary of the Company, Microserv, Inc., a Washington
corporation ("Microserv"), and the shareholders of Microserv parties
thereto, the Company has agreed to acquire Microserv through the
consummation of merger transactions (the "Merger") and other related
transactions, more fully described in the Merger Agreement (the Merger
and such related transactions collectively referred to as the
"Transactions").
B. Pursuant to the Merger Agreement, the Purchasers will receive
from the Company and the Company will issue to the Purchasers a number
of shares of the Company's common stock, $.24 par value ("Common
Stock"), as specified in a schedule attached to the Merger Agreement.
Such issuance of shares of Common Stock pursuant to the Merger Agreement
is referred to herein as the "Offering".
C. To induce the Purchasers to accept Common Stock in the
Offering and to otherwise close the Transactions, the Company is
willing, under certain circumstances, to register under the Securities
Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "Securities Act"), the Common Stock issued to the
Purchasers.
D. The parties desire to impose certain rights and restrictions
on the transfer of the Common Stock issued pursuant to the Offering.
NOW THEREFORE, intending to be legally bound, the parties hereto
agree as follows:
1. Required Registration.
(a) At any time after the twelve month anniversary of the
closing of the Merger and/or such later date in accordance with Section
13.5.3 of the Merger Agreement, and assuming the Company is eligible to
register its securities on Form S-3 (or a successor form), holders of at
least one-half of the then outstanding shares of the Registrable
Securities may request, in writing, that the Company effect the
registration of Registrable Securities (as defined in Section 8 hereof)
owned by such holders on a form that may be used for the registration of
Registrable Securities. If the holders initiating the registration
intend to distribute the Registrable Securities by means of an
underwriting, they shall so advise the Company in their request. In the
event such registration is underwritten, the right of other holders to
participate shall be conditioned on such holders' participation in such
underwriting. Upon receipt of any such request, the Company shall
promptly give written notice of such proposed registration to all
holders of the Registrable Securities and holders of Common Stock who
have been granted registration rights. Such holders shall have the
right, by giving written notice to the Company within 30 days after the
Company provides its notice, to elect to have included in such
registration a number of their securities, including the Registrable
Securities, as such holders may request in such notice of election;
provided that if the underwriter (if any) managing the offering
determines that, because of marketing factors, all of the securities,
including the Registrable Securities, requested to be registered by all
holders may not be included in the offering, then the number of shares
to be included in such offering shall be reduced, and shares shall be
excluded from such offering in a number deemed necessary by such
managing underwriter. In the event an exclusion of shares is necessary,
the Company shall include shares in such registration in the following
order: (i) first, (a) the securities of the Purchasers or their
successors or assigns where such entities hold Registrable Securities,
and (b) the securities of purchasers referenced in that certain
Registration Rights Agreement dated July 23, 2003 executed by the
Company (the "July 23 Agreement"), in the case of (a) and (b), pro rata
among the holders of such securities on the basis of the number of
shares requested for registration by each such holder; and (ii) second,
the other securities requested to be included therein by the other
holders of the Company securities requested to be included in such
registration. To the extent that all of the Registrable Securities
requested to be included in the underwritten offering cannot be
included, holders of Registrable Securities shall participate in such
offering pro rata among such Purchasers, based on the number of shares
of Registrable Securities each holder proposed to include. Thereupon,
the Company shall, as expeditiously as possible, use its best efforts to
effect the registration (on a form that may be used for the registration
of the Registrable Securities) of all the Registrable Securities which
the Company has been requested to so register.
(b) The Company shall not be required to effect more than one
registration pursuant to the first sentence of paragraph (a) above;
provided, however, in the event of a proration pursuant to the foregoing
paragraph (a) which results in Purchasers holding Registrable Securities
having less than all of the requested securities being included in a
current registration, then, to the extent of such unincluded Registrable
Securities, the Purchasers shall receive an additional demand
registration right upon the expiration of any blackout period, upon the
request of the holders of 50% of the remaining Registrable Securities,
and the Company shall be obligated to file an additional registration
statement (which registration statement shall contain a current
prospectus) relating to the Registrable Securities; and (ii) the Company
shall use its best efforts to effect the registration of such
Registrable Securities as promptly as practicable thereafter.
(c) The Registration Expenses (as defined in Section 4) shall
be paid by the Company with respect to all registrations effected
pursuant to this Section.
(d) The Company may delay the filing or effectiveness of any
registration statement for a period of up to 120 days after the date of
a request pursuant to this Section 1 if at the time of such request to
register Registrable Securities: (i) the Company is engaged or has
fixed plans to engage within 30 days of the time of the request in a
firm commitment underwritten public offering, or (ii) the Company
furnishes to the Purchaser or Purchasers requesting registration a
certificate signed by a senior executive officer of the Company stating
that the Company is engaged in any other activity which, in the good
faith determination of the Company's Board of Directors, is a material
non-public event which would be adversely affected by the requested
registration to the material detriment of the Company. In such case,
the Company may at its option direct that such request be delayed for a
period not in excess of 120 days from the effective date of such
offering or the date of commencement of such other material activity,
as the case may be, provided, however, the Company may not utilize the
right set forth in this clause (ii) more than once in any 12-month
period.
2. Piggyback Registration.
(a) Each time that the Company proposes to register a public
offering solely of its authorized but unissued Common Stock or shares
held in Treasury ("Primary Shares") or other securities, other than
pursuant to a Registration Statement on Form S-4 or Form S-8 or similar
or successor forms (collectively, "Excluded Forms"), the Company shall
promptly give written notice of such proposed registration to all
holders of the Registrable Securities, which shall offer such holders
the right to request inclusion of any Registrable Securities in the
proposed registration statement.
(b) Each holder of the Registrable Securities shall have
twenty (20) days or such longer period as shall be set forth in the
notice from the receipt of such notice to deliver to the Company a
written request specifying the number of shares of Common Stock such
holder intends to sell and the holder's intended plan of disposition.
(c) In the event that the proposed registration by the
Company is, in whole or in part, an underwritten public offering of
securities of the Company, any request under Section 2(b) may specify
that the Registrable Securities be included in the underwriting on the
same terms and conditions as the shares of Common Stock, if any,
otherwise being sold through underwriters under such registration.
(d) Upon receipt of a written request pursuant to Section
2(b), the Company shall promptly use its best efforts to cause all such
Registrable Securities to be registered, to the extent required to
permit sale or disposition as set forth in the written request.
(e) Notwithstanding the foregoing, if the managing
underwriter of an underwritten public offering determines and advises
in writing that the inclusion of all Registrable Securities proposed to
be included in the underwritten public offering, together with any
other issued and outstanding shares of Common Stock proposed to be
included therein by holders other than the holders of Registrable
Securities (such other shares hereinafter collectively referred to as
the "Other Shares"), would interfere with the successful marketing of
the securities proposed to be included in the underwritten public
offering, then the number of such shares to be included in such
underwritten public offering shall be reduced, and shares shall be
excluded from such underwritten public offering in a number deemed
necessary by such managing underwriter. In the event an exclusion of
shares is necessary, shares shall be included in the following order:
(i) first, the Primary Shares; (ii) second, (a) the securities held by
the Purchasers or their successors or assigns requesting registration,
and (b) the securities of purchasers referenced in the July 23
Agreement, in the case of (a) and (b), pro rata among the holders of
such securities on the basis of the number of shares requested for
registration by each such holder; and (iii) third, other shares. To
the extent all of the Registrable Securities requested to be included
in the underwritten public offering can not be included, holders of
Registrable Securities shall participate in such offering pro rata
based on the number of shares of Registrable Securities each holder
proposes to include.
(f) All shares of Common Stock that are not included in the
underwritten public offering shall be withheld from the market by the
holders thereof for a period, not to exceed 180 days following an
initial public offering and 90 days for any offering thereafter, that
the managing underwriter reasonably determines as necessary in order to
effect the underwritten public offering. The holders of such shares
shall execute such documentation as the managing underwriter reasonably
requests to evidence this lock-up.
3. Procedures. Whenever the holders of Registrable Securities
have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company shall use its reasonable best efforts to
effect the registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof; and
pursuant thereto the Company shall as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement on the
appropriate form under the Securities Act, which form shall be
available for the sale of such Registrable Securities in accordance
with the intended method or methods of distribution thereof, and use
its commercially reasonable efforts to cause such registration
statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements
thereto, the Company shall furnish to the counsel selected by the
holders of a majority of the Registrable Securities covered by such
registration statement copies of all such documents proposed to be
filed, which documents shall be subject to the review and comment of
such counsel);
(b) notify each holder of Registrable Securities of the
effectiveness of each registration statement filed hereunder and
prepare and file with the Commission, such amendments, post-effective
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary or
appropriate to keep such registration statement effective for the
period required for sale of the Registrable Securities, (provided that
in no event shall the Company be obligated to keep such registration
statement effective (i) if the Company is eligible to use the Form S-3,
at such time as there are no longer any Registrable Securities
outstanding, and (ii) if the Company is not eligible to register on
Form S-3, until such time as the Purchasers are eligible to sell all
of the Registrable Securities pursuant to Rule 144 (k)), cause such
prospectus as so supplemented to be filed as required under the
Securities Act, and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in
such registration statement or supplement to the prospectus;
(c) if requested by the managing underwriter or underwriters
or a holder of Registrable Securities being sold in connection with an
underwritten offering, immediately incorporate in a Prospectus
supplement or post-effective amendment such information as the managing
underwriters and the holders of a majority in interest of the
Registrable Securities being sold reasonably agree should be included
therein relating to the plan of distribution with respect to such
Registrable Securities, including, without limitation, information with
respect to the principal amount of Registrable Securities being sold to
such underwriters, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the underwritten
(or best efforts underwritten) offering of the Registrable Securities
to be sold in such offering, and make all required filings of such
Prospectus supplement or post-effective amendment as soon as notified
of the matters to be incorporated in such Prospectus supplement or post-
effective amendment;
(d) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration
statement (including each preliminary prospectus) and such other
documents as such seller may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such seller;
(e) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of
such jurisdictions where such registration or qualification is required
as any seller reasonably requests and do any and all other acts and
things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller (provided that the Company
shall not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but
for this subparagraph (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);
(f) notify each seller of such Registrable Securities, at
any time when a prospectus relating thereto is required to be delivered
under the Securities Act, upon discovery that, or upon the happening of
any event as a result of which the prospectus included in such
registration statement as then in effect, contains an untrue statement
of a material fact or omits any fact necessary to make the statements
therein not misleading in the light of the circumstances under which
they were made, and, at the request of any such seller, the Company
shall promptly prepare a supplement or amendment to such prospectus so
that, thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not contain an untrue statement of a
material fact required to be stated therein or omit to state any fact
necessary to make the statements therein not misleading;
(g) cause all such Registrable Securities to be listed on
the securities exchange on which similar securities issued by the
Company are then listed or traded, and, if not so listed or traded, to
be listed on the NASDAQ Stock Market;
(h) cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive
legends; enable such Registrable Securities to be in such denominations
and registered in such names as the selling holders or the managing
underwriters, if any, may request at least ten Business Days prior to
any sale of Registrable Securities; and provide a transfer agent and
registrar for all such Registrable Securities not later than the
effective date of such registration statement;
(i) enter into such customary agreements (including, if
there is an underwriter, underwriting agreements in customary form
including, without limitation, the requirement to obtain an opinion of
counsel to the Company and a "comfort letter" from the independent
public accountants to the Company in the usual and customary form for
such an underwritten offering);
(j) make available for inspection by any seller of
Registrable Securities, any underwriter participating in any
disposition pursuant to such registration statement and any attorney,
accountant or other agent retained by any such seller or underwriter,
all financial and other records, pertinent corporate documents and
properties of the Company that are customary, and cause the Company's
officers, directors, employees and independent accountants to supply
all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement;
(k) cooperate, and cause the Company's officers, directors,
employees and independent accountants to cooperate, with the selling
holders of Registrable Securities and the managing underwriters, if
any, in the sale of the Registrable Securities and take any actions
necessary to promote, facilitate or effectuate such sale;
(l) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make available
to its security holders, as soon as reasonably practicable, an earning
statement covering the period of at least twelve months, beginning with
the first fiscal quarter beginning after the effective date of the
registration statement, which earning statement shall satisfy the
provisions of Section 11(a) of the Securities Act;
(m) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any
order suspending or preventing the use of any related prospectus or
suspending the qualification of any common stock included in such
registration statement for sale in any jurisdiction, the Company shall
use its best efforts promptly to obtain the withdrawal of such order;
and
(n) otherwise use its best effects to take all other steps
necessary to effect the registration of the Registrable Securities.
4. Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all
registration and filing fees (including, if applicable, the fees and
expenses of any "qualified independent underwriter" and its counsel as
may be required under the rules and regulations of the NASD), fees and
expenses of compliance with securities or blue sky laws (including fees
and disbursements of counsel for the underwriters or selling holders in
connection with blue sky qualifications and determination of their
eligibility for investment under applicable laws), printing expenses,
messenger, telephone and delivery expenses, fees and disbursements of
custodians, and fees and disbursements of counsel for the Company and
all independent certified public accountants (including the expenses of
any special audit and "cold comfort" letters required by or incident to
such performance), underwriters (excluding underwriters' discounts and
commissions) and other Persons retained by the Company (all such
expenses being herein called "Registration Expenses"), shall be borne
by the Company and the Company shall, in any event, pay its internal
expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the
expense of any annual audit or quarterly review, the expense of any
liability insurance if such insurance coverage is obtained by the
Company and the expenses and fees for listing the securities to be
registered on each securities exchange on which similar securities
issued by the Company are then listed or on the American Stock
Exchange.
(b) Each holder of securities included in any registration
hereunder shall pay those expenses which are not Registration Expenses
which are allocable to the registration of such holder's securities so
included (such as the fees and disbursements of any counsel engaged by
any holder of the Registrable Securities), and any such expenses not so
allocable, such as the underwriting discount and any selling
commissions shall be borne by all sellers of securities included in
such registration in proportion to the aggregate selling price of the
securities to be so registered.
5. Indemnification and Contribution
(a) The Company agrees to indemnify and hold harmless each
holder of Registrable Securities which is included in a registration
statement pursuant to the terms of this Agreement, its officers and
directors and each Person who controls such holder (within the meaning
of the Securities Act) against all losses, claims, damages, liabilities
and expenses, including without limitation attorneys' fees, except as
limited by Paragraph 5(c), which arise out of or are based upon: (i)
any untrue or alleged untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, or with respect to a
prospectus, necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except
insofar as the same are caused by or contained in any information
furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements
thereto after the Company has furnished such holder with a sufficient
number of copies of the same; and (ii) any violation by the Company of
the Securities Act, the Exchange Act (as defined below), any applicable
state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law. In
connection with an underwritten offering, the Company shall indemnify
such underwriters, their officers and directors and each Person who
controls such underwriters (within the meaning of the Securities Act)
to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
(b) In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder
shall furnish to the Company in writing such information and affidavits
as the Company and any underwriter reasonably requests for use in
connection with any such registration statement or prospectus and shall
indemnify the Company, its directors and officers and each Person who
controls the Company (within the meaning of the Securities Act) against
any losses, claims, damages, liabilities and expenses, including
without limitation attorneys' fees, except as limited by Paragraph
5(c), resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or omission is contained
in any information or affidavit so furnished in writing by such holder.
(c) Any Person entitled to indemnification hereunder shall
(i) give prompt written notice to the indemnifying party of any claim
with respect to which it seeks indemnification (provided that the
failure to give prompt notice shall not impair any Person's right to
indemnification hereunder to the extent such failure has not materially
prejudiced the indemnifying party) and (ii) unless in such indemnified
party's reasonable judgment (based upon a written opinion of counsel) a
conflict of interest between such indemnified and indemnifying parties
may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory
to the indemnified party. If such defense is assumed, the indemnifying
party shall not be subject to any liability for any settlement made by
the indemnified party without its consent (but such consent shall not
be unreasonably withheld). An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such
claim.
(d) If the indemnification provided for in this Section 5 is
unavailable to an indemnified party under paragraphs (a) or (b) hereof
in respect to any losses, claims, damages, liabilities or expenses
referred to therein, then an 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, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the Company and the holder
of Registrable Securities in connection with the statements or
omissions that resulted in such losses, claim, damages, liabilities or
expenses. The relative fault of the Company and the holder of
Registrable Securities in connection with the statements that resulted
in such losses, claims, liabilities or expenses shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of material facts or the omission or alleged omission to
state a material fact relates to information supplied by the Company or
the holder of the Registrable Securities and the parties relative
intent, knowledge, access to information and opportunity to correct
such statement or omission. The parties hereto agree that it would not
be just and equitable if contribution pursuant to this Section 5(d)
were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to in this Section 5(d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to
above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such indemnified party in connection with
investigating or, except as provided in Section 5(c), defending any
such action or claim.
(e) Notwithstanding any other provision of this Section, the
liability of any holder of Registrable Securities for indemnification
or contribution under this Section shall be individual to each holder
and shall not exceed an amount equal to the number of shares sold by
such holder of Registrable Securities multiplied by the net amount per
share which he receives in such underwritten offering.
(f) The indemnification and contribution provided for under
this Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any
officer, director or controlling Person of such indemnified party and
shall survive the transfer of securities.
6. Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless
such Person (i) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements; provided
that no holder of Registrable Securities included in any underwritten
registration shall be required to make any representations or
warranties to the Company or the underwriters other than
representations and warranties directly regarding such holder and such
holder's intended method of distribution.
7. Restrictions on Transfer of Common Stock. Prior to the
twelve month anniversary of the Closing Date (as defined in the Merger
Agreement) and/or such later date in accordance with Section 13.5.3 of
the Merger Agreement, the Purchasers shall not transfer, sell, assign,
pledge, encumber or otherwise dispose of (collectively, "Transfer")
their respective shares of Common Stock issued pursuant to the Offering
without the prior written consent of the Company. Thereafter,
Transfers, if any, of the Common Stock issued pursuant to the Offering
shall be in accordance with all securities laws applicable thereto and,
other than Transfers pursuant to (i) an effective registration
statement or (ii) the Resale Rules (as defined below), which items (i)
and (ii) shall also be in accordance with all securities laws
applicable thereto, subject to the terms of this Section 7.
(a) Offer. If a Purchaser or one or more Purchasers acting
together (collectively the "Selling Shareholder") has a bona fide
intent to sell, in a single transaction or a series of related
transactions, greater than 10,000 shares of Common Stock issued
pursuant to the Offering (as appropriately adjusted for any
combination, division or similar recapitalization affecting such Common
Stock), such Selling Shareholder must first give the Company the
opportunity to offer to purchase such shares of Common Stock in
accordance with subsection 7(b) herein, by giving written notice of the
Selling Shareholder's intent to sell ("Selling Shareholder Sale
Notice") to the Company.
(b) Option to the Company. Subject to Section 7(c) hereof,
the Company (or its nominee as set forth in Section 7(d) hereof) shall
have the option to offer to purchase, insofar as it may be permitted by
law, the Common Stock subject to the Selling Shareholder's Sale Notice
("Subject Stock") , or such reduced number of shares as described in
Section 7(c) hereof, and may exercise the option by giving written
notice (the "Offer Notice") of its offer to the Selling Shareholder
within five business days after the date of delivery of the Selling
Shareholder Sale Notice. Notwithstanding the foregoing, the Company
may not deliver an Offer Notice or purchase such Subject Stock if such
purchase would cause the Transactions to fail to comply with the 50%
continuity of interest standard set forth in Section 3.02 of Revenue
Procedure 77-37, applied as set forth in Section 8.9 of the Merger
Agreement, and this condition is intended to ensure that the continuity
of interest requirements of Treasury Regulation Section 1.368-1(e) are
satisfied and shall be interpreted and applied consistently therewith.
The Company's Offer Notice must state the price per share on which it
is it offering to purchase the Subject Stock (the "Offered Price").
(c) Purchase of All Stock. Unless otherwise agreed to by
the Selling Shareholder and except for any reduction so as to satisfy
the requirements of Section 7(b) hereof, all and not less than all of
the Subject Stock must be purchased pursuant to subsection 7(b) by the
Company.
(d) Company's Nominee. Should the Company be unable to
purchase all the Subject Stock in order to comply with Section 7(b)
hereof, the Company may designate one or more nominees who shall each
have the same rights as the Company hereunder, provided that any such
nominee shall not be a person "related" (as defined in Treasury
Regulation Section 1.368-1(e)(3)) to the Company, or an agent of the
Company under applicable law. The purpose of such designation of a
nominee is to satisfy the requirements of Section 7(b) hereof.
(e) Acceptance of Offer; Delivery. The Selling Shareholder
shall have five business days following its receipt of the Offer Notice
to accept, by delivery of written notice (the "Acceptance Notice") to
the Company, the Company's offer to purchase the Subject Stock. If the
Selling Shareholder accepts the offer, within three business days of
the Company's receipt of the Acceptance Notice, the Company shall
deliver to the Selling Shareholder the purchase price for the Subject
Stock, in immediately available funds, against delivery to the Company
of all certificates for the Subject Stock (or, if the Subject Stock is
subject to pledge, hypothecation or other encumbrance, evidence of the
Selling Shareholder's rights therein) duly endorsed for transfer, at
the then principal office of the Company.
(f) Right to Transfer. If (i) the Company does not give the
Selling Shareholder an Offer Notice within the time period required by
Section 7(b), or (ii) the Selling Shareholder does not deliver to the
Company the Acceptance Notice in accordance with Section 7(e), the
Selling Shareholder may, for a period of one month following the final
date for acceptance under Section 7(e) herein, sell the Subject Stock
to any Person or Persons; provided, however, that if the Company has
timely given the Selling Shareholder an Offer Notice, such shares may
be sold only at a price per share not less than the Offered Price in
such Offer Notice. If the Selling Shareholder wishes to sell some or
all of the Subject Stock for a price per share less than the Offered
Price or if the Selling Shareholder has not sold the Subject Stock
within that one-month period, the Selling Shareholder shall be obliged
to make a new Sale Notice to the Company, in accordance with this
Section 7, before the Selling Shareholder shall be permitted to
transfer such Subject Stock, or any part thereof, to any Person.
(g) Covenant Not To Circumvent. The Purchasers and the
Company agree that at no time will any of them take any action,
directly or indirectly, with the intent to circumvent their respective
obligations under, or to deprive the Purchasers or the Company of any
benefit intended by, any provision of Section 7 of this Agreement.
8. Definitions.
"AMEX" means the American Stock Exchange.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"NASD" means the National Association of Securities Dealers.
"Person" means any individual, corporation, partnership,
limited liability company, trust, estate, association, cooperative,
government or governmental entity (or any branch, subdivision or agency
thereof) or any other entity.
"Registrable Securities" means (i) any of the shares of
Common Stock issued in the Offering and (ii) any other securities that
subsequently may be issued or issuable with respect to such shares of
Common Stock as a result of a stock split or dividend or any sale,
transfer, assignment or other transaction involving such shares of the
Company and any securities into which such shares of Common Stock may
thereafter be changed as a result of merger, consolidation,
recapitalization or other similar transaction. As to any particular
Registrable Securities, such securities shall cease to be Registrable
Securities when they have been distributed to the public pursuant to an
offering registered under the Securities Act or eligible to be sold to
the public pursuant to Rule 144(k) under the Securities Act (or any
such rule then in force) or, if held by an affiliate of the Company,
when all such securities of such person are eligible for resale
pursuant to Rule 144 and could be sold in one transaction in accordance
with the volume limitations contained in Rule 144(e)(1)(i). For
purposes of this Agreement, a Person shall be deemed to be a holder of
Registrable Securities whenever such Person has the right to acquire
directly or indirectly such Registrable Securities (upon conversion or
exercise in connection with a transfer of securities or otherwise, but
disregarding any restrictions or limitations upon the exercise of such
right), whether or not such acquisition has actually been effected.
"Securities Act" means the Securities Act of 1933, as
amended.
9. Form S-3. The Company represents and warrants that the
Company is currently eligible to register for resale on Form S-3 the
Registrable Securities issued to the Purchasers, and the Company
covenants that it will use its reasonable best efforts to remain so
eligible until it has filed a Form S-3 (or a successor form) covering
the Registrable Securities pursuant to this Agreement and the
Commission has declared such registration statement effective, or until
the Company has no further obligation hereunder to register any
Registrable Securities.
10. Rule 144. In order to permit each Purchaser to sell the
securities of the Company it holds from time to time pursuant to Rule
144 promulgated by the Commission or any successor to such rule or any
other rule or regulation of the Commission that may at any time permit
each Purchaser to sell its securities to the public without
registration ("Resale Rules"), the Company will:
(a) comply with all rules and regulations of the Commission
applicable in connection with use of the Resale Rules;
(b) make and keep adequate and current public information
available, as those terms are understood and defined in the Resale
Rules, at all times;
(c) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act
and the Exchange Act;
(d) furnish annually to the Purchasers material containing
the information required by Rule 14a-3(b) under the Exchange Act;
(e) furnish to each Purchaser promptly upon request (i) a
written statement by the Company that it has complied with the
reporting requirements of the Resale Rules, the Securities Act and the
Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and any other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably
requested in availing the Purchasers of any rule or regulation of the
Commission which permits the selling of any shares of Common Stock
holding the Purchasers without registration; and
(f) take any action (including cooperating with the
Purchasers to cause the transfer agent to remove any restrictive legend
on certificates evidencing the shares of Common Stock held by the
Purchasers) as shall be reasonably requested by the Purchasers or which
shall otherwise facilitate the sale of shares of Common Stock held by
the Purchasers from time to time by the Purchasers pursuant to the
Resale Rules.
11. Miscellaneous.
(a) No Inconsistent Agreements. The Company shall not
hereafter enter into any agreement with respect to its securities which
is inconsistent with or violates the rights granted to the holders of
Registrable Securities in this Agreement, or grant to any person any
registration rights, ("New Registration Rights") with respect to
securities of the Company if such New Registration Rights are, in the
reasonable opinion of the Purchasers, superior in any fashion to the
registration rights granted to the Purchasers pursuant to this
Agreement, unless the holders of a majority of the Registrable
Securities then outstanding consent in writing to such Registration
Rights or such other inconsistent agreement, provided however this
limitation shall not apply to any registration rights currently
outstanding or which the Company is legally obligated to grant as of
the date hereof.
(b) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may be amended or waived only
upon the prior written consent of the Company and holders of a majority
of the Registrable Securities.
(c) Successors and Assigns. All covenants and agreements in
this Agreement by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of
the parties hereto whether so expressed or not. In addition, whether
or not any express assignment has been made, the provisions of this
Agreement which are for the benefit of purchasers or holders of the
Registrable Securities are also for the benefit of, and enforceable by,
any subsequent holder of the Registrable Securities. A person is
deemed to be a holder of the Registrable Securities whenever such
person is the registered holder of the Registrable Securities. Upon the
transfer of any Registrable Securities, the transferring holder of the
Registrable Securities shall cause the transferee to execute and
deliver to the Company a counterpart of this Agreement.
(d) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is
held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of this Agreement.
(e) Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, including by facsimile, any
one of which need not contain the signatures of more than one party,
but all such counterparts taken together shall constitute one and the
same Agreement.
(f) Descriptive Heading. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a
part of this Agreement.
(g) Governing Law. The corporate law of Virginia shall
govern all issues and questions concerning the relative rights of the
Company and its shareholders. All issues and questions concerning the
construction, validity, interpretation and enforcement of this
Agreement shall be governed by, and construed in accordance with, the
laws of the Commonwealth of Virginia, without giving effect to any
choice of law or conflict of law rules or provisions (whether of
Virginia or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than Virginia.
(h) Neutral Construction. In view of the fact that each of
the parties hereto has been represented by its own counsel (or has had
the opportunity to consult with counsel of its choice) and this
Agreement has been fully negotiated by all parties, the legal principle
that ambiguities in a document are construed against the draftsperson
of that document shall not apply to this Agreement.
(i) Notices. Notices required or permitted to be given
hereunder shall be in writing and shall be deemed to be received when
personally delivered or sent by overnight courier or registered mail,
return receipt requested, addressed (i) if to the Company, at Halifax
Corporation, 5250 Cherokee Avenue, Alexandria, VA 22312, Attention:
President and to Blank Rome LLP, 1 Logan Square, Philadelphia,
Pennsylvania 19103, Attn: Barry H. Genkin, Esquire; and (ii) if to any
holder of the Registrable Securities, to the address set forth on
Schedule I attached hereto (or at such other address as each party
furnishes by notice given in accordance with this Section 10(i)).
(j) Use of Pronouns. All pronouns and any variations
thereof used herein shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as the identity of the person or
entities referred to may require. Without in any way limiting the
generality of the foregoing, use of the pronoun "he" or "his" herein
with respect to the Purchasers shall be deemed to refer to any
Purchaser that the context requires, regardless of whether such
Purchaser is male, female or an entity.
[Signature page follows]
IN WITNESS WHEREOF, the parties have executed or caused to be
executed this Agreement effective as of the day and year first above
written.
HALIFAX CORPORATION
By: /s/ Charles McNew
Name: Charles McNew
Title: President & CEO
/s/ Gary M. Lukowski
Gary M. Lukowski
The Dempsey 1996 Revocable Trust dated
November 13, 1996
By: /s/ Neal Dempsey III
Name: Neal Dempsey III
Title: Trustee
G. and A. Ryles Living Trust dated
October 29, 1968
By: /s/ Gerald F. Ryles
Name: Gerald F. Ryles
Title: Trustee
/s/ Robert S. Johanson
Robert S. Johanson
[Signature page to Registration Rights And Right Of First Offer
Agreement]
/s/ Charles W. Lewis
Charles W. Lewis
/s/ Kris Hansen
Kris Hansen
/s/ Jonathan L. Scott
Jonathan L. Scott
NEW VENTURE ASSOCIATES, LLC PROFIT
SHARING PLAN
By: /s/ Patrick E. Green
Name:
Title:
/s/ Richard M. Brooks
Richard M. Brooks
/s/ Mark Working
Mark Working
/s/ T.J. Leffingwell
T.J. Leffingwell
/s/ Leo C. Manson
Leo C. Manson
[Signature page to Registration Rights And Right Of First Offer
Agreement]