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Resale Registration Rights Agreement

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VARI-L COMPANY, INC.


RESALE REGISTRATION RIGHTS AGREEMENT


OCTOBER 7, 2002


VARI-L COMPANY, INC.


RESALE REGISTRATION RIGHTS AGREEMENT


This Resale Registration Rights Agreement (the "AGREEMENT") is made and entered into as of October 7, 2002 by and between Vari-L Company, Inc., a Colorado corporation (the "COMPANY") and Sirenza Microdevices, Inc., a Delaware corporation (the "INVESTOR").


RECITALS


WHEREAS, the Company desires for the Investor to provide a loan facility of up to $5,300,000 to the Company on the terms and conditions stated in the Loan Agreement between the Company and the Investor dated the date hereof (the "LOAN AGREEMENT");


WHEREAS, pursuant to the Loan Agreement, the Company intends to issue to the Investor a $1,300,000 principal amount convertible promissory note (the "TRANCHE A NOTE"), the face amount of which shall be convertible into fully paid, nonassessable shares of Common Stock (as defined below) of the Company (the "NOTE SHARES") upon the terms and subject to the conditions set forth in the Loan Agreement and the Tranche A Note; and


WHEREAS, as an inducement for the Investor to enter into the Loan Agreement, the Company desires to enter into this Agreement with the Investor.


1. RIGHTS OF INVESTORS


The Company hereby grants to the Investor the registration rights and other rights contained herein (collectively the "INVESTOR RIGHTS"). The Investor accepts the Investor Rights, and agrees to be bound by the obligations contained herein.


2. REGISTRATION RIGHTS.


2.1 DEFINITIONS.


(a) Common Stock. The term "COMMON STOCK" means shares of common stock of the Company, par value $0.01.


(b) Exchange Act. The term "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.


(c) Form S-1. The term "FORM S-1" means such form under the Securities Act as is in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.


(d) Form S-3. The term "FORM S-3" means such form under the Securities Act as is in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.


(e) Holder. The term "HOLDER" means any person owning of record Registrable Securities that have not been sold to the public in a registered offering or pursuant to Rule 144 promulgated under the Securities Act or any assignee of record of such Registrable Securities to whom rights under this Section 2 have been duly assigned in accordance with this Agreement.


(f) Registrable Securities. The term "REGISTRABLE SECURITIES" means: (i) all Note Shares issued or issuable pursuant to the Tranche A Note, and (ii) any shares of the Common Stock of the Company or other securities issued in connection with any stock split, stock dividend, recapitalization or similar event relating to the foregoing; excluding in all cases, however, any Registrable Securities sold by a person in a transaction in which rights under this Section 2 are not assigned in accordance with this Agreement or any Registrable Securities sold to the public in a registered offering or sold pursuant to Rule 144 promulgated under the Securities Act.


(g) Registration. The terms "REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement.


(h) Registration Expenses. "REGISTRATION EXPENSES" shall mean all expenses incurred by the Company in complying with Section 2.2 hereof, including, without limitation, all registration and filing fees, listing fees, printing expenses, fees and disbursements of counsel and accountants for the Company, fees and expenses of one counsel for all the Holders (not to exceed $25,000), blue sky fees and expenses 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).


(i) SEC. The term "SEC" or "COMMISSION" means the U.S. Securities and Exchange Commission.


(j) Securities Act. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.


(k) Selling Expenses. "SELLING EXPENSES" shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Securities.


2.2 RESALE REGISTRATION.


(a) Required Registration. The Company shall:


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(i) as soon as practicable, but no later than 30 days after the date of original issuance of the Note Shares pursuant to the conversion of the Tranche A Note (the "SHELF FILING DEADLINE"), cause to be filed with the Commission a registration statement on Form S-1 (or, to the extent available to the Company, Form S-3) pursuant to Rule 415 promulgated under the Securities Act (the "SHELF REGISTRATION STATEMENT"), which Shelf Registration Statement shall provide for the offer and sale of all Registrable Securities held by Holders that have provided to the Company the information required pursuant to the terms of Section 2.6 hereof;


(ii) use its reasonable efforts to cause the Shelf Registration Statement to be declared effective by the Commission as promptly as practicable, but not later than 120 days after the date of original issuance of the Note Shares pursuant to the conversion of the Tranche A Note (the "EFFECTIVENESS TARGET DATE"); and


(iii) upon and after the declaration of the effectiveness of the Shelf Registration Statement by the Commission, use its reasonable efforts to keep the Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 2.5 hereof (subject to the right of the Company to suspend the use of the Shelf Registration Statement by delivery of a Suspension Notice in accordance with Section 2.5 hereof) to the extent necessary to ensure that (A) it is available for resales of Registrable Securities by the Holders, and (B) conforms with the requirements of this Agreement and the Securities Act and the rules and regulations of the Commission promulgated thereunder as announced from time to time, for a period (the "EFFECTIVENESS PERIOD") ending on the earliest of:


(1) the date when the Holders of Registrable Securities are able to sell all such Registrable Securities immediately without restriction pursuant to the volume limitation provisions of Rule 144 under the Securities Act; and


(2) the date when all of the Registrable Securities of the Holders have been registered under the Shelf Registration Statement and have been disposed of in accordance with the Shelf Registration Statement.


2.3 LIQUIDATED DAMAGES.


(a) Triggers and Amounts. If:


(i) the Shelf Registration Statement is not filed with the Commission prior to or on the Shelf Filing Deadline;


(ii) the Shelf Registration Statement has not been declared effective by the Commission prior to or on the Effectiveness Target Date;


(iii) except as provided in Section 2.5 hereof, the Shelf Registration Statement is filed and declared effective but, during the Effectiveness Period, shall thereafter cease to be effective or usable or the prospectus contained therein ceases to be usable, in either case, in connection with resales of Registrable Securities without being succeeded within five business days


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by a post-effective amendment to the Shelf Registration Statement, a supplement to the prospectus or a report filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act that cures such failure and, in the case of a post-effective amendment, is itself immediately declared effective; or


(iv) either (1) the use of the prospectus included in the Shelf Registration Statement is suspended by the Company pursuant to Section 2.5(h) hereof for more than 30 days in any particular case or (2) the use of the prospectus included in the Shelf Registration Statement is suspended by the Company pursuant to Section 2.5(h) hereof for more than 60 days in the aggregate in any consecutive twelve-month period,


(each such event referred to in the foregoing clauses (i) through (iv), a "REGISTRATION DEFAULT"), the Company hereby agrees to pay liquidated damages ("LIQUIDATED DAMAGES") to the Holders of Registrable Securities as follows:


(A) from and including the day following the Registration Default to, but excluding, the earlier of (1) the day on which the Registration Default has been cured, (2) the thirtieth day following the date of the Registration Default, and (3) the date the Shelf Registration Statement is no longer required to be kept effective hereunder, the Company shall reserve and accrue daily for later payment to the account of each Holder an amount of cash in respect of each Registrable Security held by such Holder equal to (x) $3,000 divided by (y) the total number of Registrable Securities outstanding as of the date of the Registration Default; and


(B) upon and after the thirtieth day following the date of the Registration Default, each Holder of Registrable Securities shall have the right to sell the Registrable Securities held by him, her or it to the Company for a cash price per share equal to the greater of:


(1) (x) $1,300,000 divided by (y) the total number of Note Shares originally issued upon conversion of the Tranche A Note (as adjusted for any stock split, stock dividend, recapitalization or similar event applicable to such shares through that date); and


(2) the average of the daily closing price per share of the Common Stock of the Company as quoted on the OTC Bulletin Board or any nationally-recognized securities exchange or interdealer quotation system for the thirty trading days prior to and including the thirtieth day following the Registration Default.


(b) Payment. All Liquidated Damages accrued pursuant to subsection (A) above by reason of a Registration Default shall be paid in arrears to the Holders by the Company on the earlier of (1) the day on which such Registration Default has been cured, (2) the thirtieth day following the date of such Registration Default, and (3) the date the Shelf Registration Statement is no longer required to be kept effective hereunder. Upon the cure of any Registration Default, the accrual of Liquidated Damages pursuant to subsection (A) above in respect of such Registration Default will cease. Any Holder of Registrable Securities may exercise its right to sell its Registrable Securities to the Company on the terms stated in subsection (B) above by delivering the certificate(s)


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representing such Registrable Securities (or an executed affidavit of loss in form reasonably acceptable to the Company, without any requirement of a bond or other security) to the principal executive offices of the Company, along with a written demand for payment hereunder. With each payment of Liquidated Damages remitted to a Holder by the Company pursuant hereto, the Company shall provide a written calculation (performed in accordance with the terms of this Section) of the Liquidated Damages so paid.
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