-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A0a2au4UVzGlyoRa+gm/yZa7ArrEdXhzN7k2UYTF54bF3m/tPXz8/So2Fcj9yek5 FT5nJSV+K/x4Zv2Qs5szgQ== 0000895755-97-000034.txt : 19970416 0000895755-97-000034.hdr.sgml : 19970416 ACCESSION NUMBER: 0000895755-97-000034 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19970414 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VARI L CO INC CENTRAL INDEX KEY: 0000917173 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 060678347 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-25173 FILM NUMBER: 97580350 BUSINESS ADDRESS: STREET 1: 11101 E 51ST AVE CITY: DENVER STATE: CO ZIP: 80239 BUSINESS PHONE: 3033711560 MAIL ADDRESS: STREET 1: 11101 EAST 51ST AVENUE CITY: DENVER STATE: CO ZIP: 80239 S-3 1 As filed with the Securities and Exchange Commission on April 14, 1997 Registration No. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------------------- Vari-L Company, Inc. (Exact name of registrant as specified in its charter) Colorado 06-0679347 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 11101 East 51st Avenue Denver, Colorado 80239 (303) 371-1560 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) JOSEPH H. KISER Chairman of the Board Vari-L Company, Inc. 11101 East 51st Avenue Denver, Colorado 80239 (303)371-1560 (Address, including zip code, and telephone number, including area code, of registrant's agent for service) --------------------- With copies to: S. LEE TERRY, JR., Esq. Gorsuch Kirgis L.L.C. 1401 17th Street, Suite 1100 Denver, Colorado 80202 (303) 299-8900 --------------------- Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes effective when warranted by market conditions and other factors. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE
Proposed Title of Each Maximum Proposed Class of Offering Maximum Securities Amount Price Aggregate Amount of to be to be per Offering Registration Registered Registered Share(1) Price(11) Fee Common Stock, $.01 par value per share 1,943,900 $8.50 $16,523,150 $5,007.02
(1) Estimated solely for the purpose of calculating the amount of the registration fee. The price of $8.50 per share is the last sale price reported by The Nasdaq Stock Market on April 10, 1997. The Registrant hereby amends this Registration Statement on such dates or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. SUBJECT TO COMPLETION, DATED APRIL 14, 1997 [LOGO TO BE VARI-L COMPANY, INC. INSERTED] 1,943,900 Shares Common Stock $0.01 Par Value This Prospectus relates to the offer and sale of 1,943,900 shares of common stock, par value $0.01 per share (the "Shares") of Vari-L Company, Inc. (the "Company") by certain debenture holders, warrant holders and shareholders of the Company (the "Selling Shareholders"). The Shares may be sold from time to time by the Selling Shareholders, through ordinary brokerage transactions in negotiated transactions or otherwise, at fixed prices which may be changed, at market prices prevailing at the time of sale or at negotiated prices. See - "Selling Shareholders" and "Plan of Distribution." The Company will not receive any of the proceeds from the sale of the Shares. The Company has agreed to bear certain expenses in connection with the registration of the Shares being offered and sold by the Selling Shareholders. The Company's Common Stock, $0.01 par value per share (the "Common Stock") is traded on The Nasdaq Stock Market -- National Market System under the symbol "VARL." On April 10, 1997, the last reported sale price of the Company's Common Stock was $8.50. THESE ARE SPECULATIVE SECURITIES. SUCH SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS." THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. No person has been authorized to give any information or to make any representation other than those contained in the Prospectus in connection with the offering made hereby, and if given or made, such information or representation must not be relied upon as having been authorized by the Company or by the Selling Shareholders. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that the information herein is correct as of any time subsequent to the date hereof. --------------------------------- The date of this Prospectus is April 14, 1997. AVAILABLE INFORMATION Vari-L Company, Inc. (the "Company") has filed with the Securities and Exchange Commission (the "Commission") a Registration Statement on Form S-3 (the "Registration Statement" ) under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Common Stock offered hereby. This Prospectus, which constitutes a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement and the exhibits and schedules thereto or incorporated by reference therein. Such information, including exhibits and schedules to the Registration Statement incorporated by reference therein, can be inspected and copied at the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C 20549. Statements made in this Prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and, in each instance, reference is made to the copy of such contract or document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and in accordance therewith files reports, proxy statements and other information with the Commission. All such information may be inspected and copied at the public reference facilities maintained by the Commission at its principal office at 450 Fifth Street, N.W., Room 1024, Judiciary Plaza, Washington, D.C. 20549, and at the following regional offices of the Commission: 1801 California Street, Suite 4800, Denver, Colorado 80202- 2648; Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such material can also be obtained from the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission also maintains a site on the World Wide Web at http://www.sec.gov/edgarhp.htm that contains reports, proxy and information statements and other information concerning registrants that file electronically with the Commission. The Common Stock is traded on the National Association of Securities Dealers, Inc., Automated Quotation System ("Nasdaq"). Information filed by the Company with Nasdaq may be inspected at the offices of Nasdaq at 1735 K Street, N.W., Washington, D.C. 20006. This Prospectus incorporates by reference documents which are not presented herein or delivered herewith. Copies of these documents (other than exhibits to such documents unless such exhibits are specifically incorporated by reference) are available to any person, including any beneficial owner, to whom this Prospectus is delivered, on written or oral request, without charge, directed to David G. Sherman, President, Vari-L Company, Inc., 11101 East 51st Avenue, Denver, Colorado 80239, telephone number 303/371-1560. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The following documents filed by the Company with the Commission pursuant to the Exchange Act are incorporated herein by reference (Commission File No. 0-23866): 1. Annual Report on Form 10-KSB for the year ended December 31, 1996, filed March 31, 1997; 2. Form 8-A (Commission File No. 0-23866) filed April 20, 1994; All reports and other documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such reports and documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein prior to the date hereof shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. A copy of the documents incorporated by reference other than exhibits to such documents (unless such exhibits are specifically incorporated by reference in the information contained in this Prospectus), may be obtained upon request without charge to each person, including any beneficial owner, to whom a copy of this Prospectus has been delivered upon the written or oral request of such person. Requests for such copies should be made to David G. Sherman, President, Vari-L Company, Inc., 11101 East 51st Avenue, Denver, Colorado 80239, telephone number 303/371-1560. In addition, such materials filed electronically by the Company with the Commission are available at the Commission's World Wide Web site at http://www.sec.gov/edgarhp.htm. The Company Vari-L Company, Inc. (the "Company") designs, manufactures and markets a wide range of signal processing components and devices which are used in communications equipment and systems, such as cellular telephones and base stations, local area computer networks, and satellite communications equipment, as well as military and aerospace applications, such as advanced radar systems, missile guidance systems, and navigational systems. The Company sells its products primarily to original equipment manufacturers of communications systems. The Company was founded in 1953 in Stamford, Connecticut, relocated to Denver, Colorado in 1969, and reincorporated under Colorado law in 1985. The Company's manufacturing and corporate facilities are located at 11101 East 51st Avenue, Denver, Colorado 80239, and its telephone number is 303/371-1560. The Company's products are used in wireless communications equipment. Wireless communication is the transmission of voice and data signals through the air, without a physical connection, such as a metal wire or fiber-optic cable. Wireless communications systems currently in use include cellular telephones and base stations, wireless cable (LMDS), satellite communications, global positioning systems, local area networks, as well as radar systems, missile guidance systems and navigational systems. Communications systems currently in the development stage include personal communications systems and direct broadcast satellites. The Company's products are designed for use in all of these applications. RISK FACTORS AN INVESTMENT IN THE COMPANY INVOLVES A HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION SET FORTH IN THIS PROSPECTUS, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS WHEN EVALUATING AN INVESTMENT IN THE COMPANY. PRODUCT OBSOLESCENCE. The industry in which the Company competes, and the technologies for which the Company's products are designed, are subject to rapid technological changes. These rapid changes may result in product obsolescence or declining prices. Accordingly, the ability of the Company to remain competitive will depend in a large part upon its ability to innovate and generally keep abreast of technological changes, of which there can be no assurance. COMPETITION. The Company faces competition in the sale of virtually all of its products, including competition from major corporations with greater financial, technical, marketing and other resources than the Company. There can be no assurance that the Company will be able to remain competitive in the future. DEFENSE INDUSTRY DOWNSIZING: HISTORICAL DEPENDENCE ON GOVERNMENT CONTRACTS. World events have resulted in a decreased demand for defense- related products and a general downsizing of the American defense industry. This factor, along with federal budget constraints, is likely to have an adverse impact on the Company's ability to continue to attract and retain orders from defense contractors which, as a group, still account for a significant portion of the Company's business. While the Company has mitigated this risk by the addition of commercial business, there is no assurance that it will always to be able to do so. DEPENDENCE ON SUPPLIERS. The success of the business of the Company may depend in part upon the reliability of the Company's suppliers of subcomponents and raw materials. The Company is subject to the risks of shortages and delays in delivery of subcomponents and such materials. There can be no assurance that the Company will continue to be able to locate reliable secondary sources of these subcomponents and materials. DEPENDENCE ON KEY MANAGEMENT AND EMPLOYEES. The Company is highly dependent upon the efforts of its management for its success. The loss of the services of one or more of its key officers, particularly Joseph H. Kiser, Chairman of the Board and Chief Scientific Officer and David G. Sherman, President and Chief Executive Officer, could have a material adverse effect on the Company's business. The Company maintains "key man" life insurance on the lives of Messrs. Kiser and Sherman, each of whom has an employment agreement with the Company. The success of the Company also depends upon the Company's ability to attract and retain other qualified personnel, particularly technical personnel for research and development, of which there can be no assurance. PRICE STABILITY. Competition provides constant downward pressure on the prices of the components sold by the Company in the commercial marketplace. The Company's sales to defense-related contractors and manufacturers have historically occurred in a relatively stable price environment. Moreover, political pressures on defense spending may adversely affect prices and profit margins in that market comparable to those already present in the commercial market. While the Company believes that its ongoing expansion into high volume, low-cost production capabilities will permit it to respond successfully to these price pressures, there can be no assurance that it will do so. LIMITED PATENT PROTECTION. The Company's success is dependent upon its proprietary technology. Currently, only some of the Company's products are protected by patents. The Company relies on confidentiality and non-disclosure agreements and on trade secret laws to protect its unpatented technology. There can be no assurance that the steps taken by the Company in this regard will be adequate to deter misappropriation of its proprietary technology or that the protection afforded by trade secret laws will adequately protect the Company. Although the Company believes that its products and technology do not infringe on any existing proprietary rights of others, there can be no assurance that third parties will not assert infringement claims in the future. RELIANCE ON KEY CUSTOMERS. While the Company sold its products to over 450 separate companies or divisions of companies in 1996, the Company relies on certain key customers, defense programs, and commercial programs throughout periods of the year. No single customer represented more than 11% of total sales in 1996. Nevertheless, the loss of certain key customers could materially and adversely affect the Company. POSSIBLE PRICE VOLATILITY. The market price of the Common Stock may be significantly affected by factors such as announcements of new products by the Company or its competitors, as well as variations in the Company's results of operations and market conditions in the electronic components industry in general. Market prices may also be affected by movements in prices of securities in general. Although the Common Stock is traded on the Nasdaq Stock Market, there is no assurance that it will remain eligible to be included on Nasdaq. USE OF PROCEEDS The Company will not receive any proceeds from the sale of the Shares of Common Stock by the Selling Shareholders. The Selling Shareholders have agreed to pay all commissions and other compensation to any securities broker-dealers through whom they sell any of the Shares. SELLING SHAREHOLDERS The following table sets forth certain information regarding the Selling Shareholders and the Shares offered by the Selling Shareholders pursuant to this Prospectus. None of the Selling Shareholders within the past three years has had any material relationship with the Company or any of its affiliates except as described below.
Shares to be Beneficially No. of No. of Owned on Shares Shares Completion Name of Beneficially Being of the Selling Shareholder Owned Offered Offering Number % of Class Millenco LP(1)(2)(3) 369,780 369,780(4) 0 0 Newark Sales(1)(2)(3) 110,934 110,934(4) 0 0 Sales Link(1)(2)(3) 443,736 443,736(4) 0 0 Rita Folger(1)(2)(3) 36,978 36,978(4) 0 0 Carla Stuart(1)(2)(3) 36,978 36,978(4) 0 0 Ace Foundation(1)(2)(3) 110,934 110,934(4) 0 0 Julie Nordlicht(1)(2)(3) 369,780 369,780(4) 0 0 Mark Nordlicht(1)(2)(3) 147,912 147,912(4) 0 0 Broadway Partners(1)(2)(3) 110,934 110,934(4) 0 0 Robert Cohen(1)(2)(3) 55,467 55,467(4) 0 0 Ellen Cohen(1)(2)(3) 18,489 18,489(4) 0 0 Lenore Katz(1)(2)(3) 18,489 18,489(4) 0 0 Jeff Rubin(1)(2)(3) 18,489 18,489(4) 0 0 Eugene L. Neidiger 5,470 5,470(5) 0 0 Charles C. Bruner 10,470 5,470(5) 5,000 * J. Henry Morgan 4,800 2,000(5) 2,800 * Robert L. Parrish 17,944 2,250(5) 15,694 * Anthony B. Petrelli 7,908 5,470(5) 2,438 * John J. Turk, Jr. 2,110 610(5) 1,500 * Regina L. Neidiger 1,690 1,690(5) 0 0 George L. McCaffrey 2,970 2,970(5) 0 0 Michael P. McCaffrey 2,970 2,970(5) 0 0 Joseph H. Kiser 739,688 50,000(6) 639,688 15.8% Neidiger/Tucker/Bruner, Inc. 16,100(8) 16,100(7) 0(8) 0(8)
* Less than one percent (1) The number of Shares beneficially owned consists of (i) Shares issuable upon conversion of Debentures and exercise of Warrants purchased from the Company pursuant to the Securities Purchase Agreement (as defined below), and (ii) Shares issuable upon such conversion and exercise upon the exercise of options to purchase additional Debentures and Warrants in an amount up to 50% of the amount of the Debentures and Warrants already purchased (the "Options") for a period of 150 days from March 4, 1997. (2) For the last 30 days of the 150 day option period, exercise of the Options is subject to the prior sale by NTB of the Debentures and Warrants issuable upon exercise of the Options. (3) The Options are transferable among the holders of such Options. (4) The Debentures are convertible into shares of Common Stock at the lower of (i) $9.50 per share or (ii) 84% of the average closing bid price of the Company's Common Stock on Nasdaq for the 10 trading days preceding the conversion notice date. The number of shares underlying the Debentures (including the Debentures to be received upon exercise of the Options) that are being registered herein was calculated using 84% of the closing bid price of a share of the Company's Common Stock on April 7, 1997, or $6.825. (5) Shares issuable upon exercise of Agent's Warrants (as defined below) paid to NTB as part of its compensation for acting as placement agent for the private offering and subsequently assigned by NTB to the individuals named. (6) Includes options to purchase 218,750 shares and 247,863 shares beneficially owned by Mr. Kiser as the result of certain trust arrangements. (7) If all of the Options are exercised, NTB or its assigns will receive an additional 16,100 Agent's Warrants. (8) Excludes any shares that may be owned by NTB from time to time in its capacity as a market maker for the Common Stock on Nasdaq. - -------------------------- Joseph H. Kiser is the Chairman of the Board and the Chief Scientific Officer of the Company. Neidiger, Tucker, Bruner, Inc. ("NTB"), a registered broker-dealer, acted as the Company's underwriter in its initial public offering in 1994 and recently acted as Selling Agent in a private offering of securities of the Company which is described below. Prior to the private offering and other than NTB and Joseph H. Kiser, the Company has had no relationship with the Selling Shareholders. On March 4, 1997, Millenco LP, Newark Sales, Sales Link, Rita Folger, Carla Stuart, Ace Foundation, Julie Nordlicht, Mark Nordlicht, Broadway Partners, Robert Cohen, Ellen Cohen, Lenore Katz and Jeff Rubin (collectively, the "Purchasers") entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with the Company which provided for the sale by the Company to the Purchasers of up to $7,500,000 in subordinated debentures convertible into shares of Common Stock (the "Debentures") and 750,000 warrants to purchase shares of the Common Stock (the "Warrants"). To date, $5,000,000 of Debentures and 500,000 warrants have been sold. The Purchasers have the option for a period of 150 days from the date of the Agreement to purchase up to an additional 50% of the amount of their original purchases of Debentures and Warrants (the "Options"). For the last 30 days of the 150 day period, NTB may sell the Debentures and Warrants underlying any unexercised portion of the Options to third parties. Subject to the restrictions discussed below, the Debentures are convertible into Common Stock at the option of the holder at the lower of (i) $9.50 per share, or (ii) 84% of the average closing bid price on Nasdaq for the ten trading days prior to the date that the Company receives a notice of conversion. Debentures bear interest at the rate of 7% per annum until the first to occur of four years from the date of issuance or conversion. If the conversion price of a Debenture for which conversion is requested is $8 per share or less on the applicable conversion date, the Company has the option to decline to convert the Debenture and instead redeem the Debenture by payment of 116% of the principal amount plus accrued interest. Repayment of the principal and interest of the Debentures is subordinated to the Company's secured debt in favor of banks, savings and loan associations, institutions or other asset-based lenders, in an amount up to $25,000,000, irrespective of whether such debt is currently owed or is incurred in the future. Subject to the restrictions described below, Warrants may be exercised by the holders for three years at an exercise price of $9.50. Warrants may not be redeemed by the Company. Under the Securities Purchase Agreement, the Purchasers were entitled to demand registration of the Common Stock issuable upon conversion of the Debentures and exercise of the Warrants under the Securities Purchase Agreement and have exercised their rights for the Shares being registered herein. The Company will seek such shareholder approval at the next annual meeting of the Company's shareholders scheduled for June 20, 1997. Until shareholder approval of the Securities Purchase Agreement and the transactions thereunder is obtained (i) the Debentures are convertible into a maximum aggregate of 765,367 shares of Common Stock on a first- converted basis, and (ii) the Warrants are not exercisable. If shareholder approval of the transaction has not been obtained by March 4, 1998, or if this Registration Statement is not declared effective by that time, any Debentures or portions thereof which have not been converted to Common Stock shall be redeemed by the Company for cash equal to 115% of the principal amount of the Debenture plus accrued interest. Mr. Kiser is registering for sale 50,000 of the 104,095 Shares he acquired upon his exercise of certain nonqualified stock options on July 24, 1996. Mr. Kiser plans to sell all or a portion of the registered Shares to recover the exercise price and the taxes paid upon exercise of these stock options. The Company has agreed to let Mr. Kiser "piggyback" his Shares on the registration of the shares underlying the Debentures and the Warrants because he was unable to sell enough shares in the market in 1996 to pay these costs of exercise. For acting as the Selling Agent for the placement of the Debentures and the Warrants pursuant to the Securities Purchase Agreement, NTB received a commission of 5% of the amount sold in the offering and 28,900 Agent's Warrants as additional compensation. NTB will receive an additional 16,200 Agent's Warrants if the Options are exercised. The Agent's Warrants have the same terms as the Warrants except that (i) the exercise price is the same as the conversion price of the Debentures (rather than the exercise price of the Warrants), (ii) the Agent's Warrants have a term of five years (rather than the three-year term of the Warrants), and (iii) the Agent's Warrants carry unlimited piggyback registration rights (rather than the demand registration rights of the Warrants and the Debentures). The Shares underlying the Agent's Warrants (including any additional Agent's Warrants issuable upon exercise of Options) are being registered hereunder pursuant to the exercise of such piggyback registration rights. PLAN OF DISTRIBUTION All of the Shares offered hereby are being sold by the Selling Shareholders. The Shares will be offered by the Selling Shareholders from time to time (i) at market prices prevailing on the Nasdaq National Market System at the time of offer and sale, at prices related to such prevailing market prices, (ii) in negotiated transactions, or (iii) a combination of such methods of sale. The Selling Shareholders may effect such transactions by offering and selling the Shares directly to or through securities broker-dealers, and such broker-dealers may receive compensation in the form of discounts, concessions, or commissions from the Selling Shareholders and/or the purchasers of the Shares for whom such broker-dealers may act as agent or to whom the Selling Shareholders may sell as principal, or both (which compensation as to a particular broker- dealer might be in excess of customary commissions). The Selling Shareholders and any broker-dealers who act in connection with the sale of the Shares hereunder may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act of 1933 (the "Securities Act") and any commissions received by them and profit on any resale of the Shares as principal might be deemed to be underwriting discounts and commissions under the Securities Act. The Company has agreed to indemnify the Selling Shareholders against certain liabilities, including liabilities under the Securities Act as underwriters or otherwise. The Company has advised the Selling Shareholders that they and any securities broker-dealers or others who may be deemed to be statutory underwriters will be subject to the Prospectus delivery requirements under the Securities Act. The Company has also advised the Selling Shareholders that, in the event of a "distribution" of the Shares, the Selling Shareholders, any "affiliated purchasers," and any broker-dealer or other person who participates in such distribution may be subject to Rule 10b-6 under the Securities Exchange Act of 1934 (the "Exchange Act") until his or its participation in that distribution is completed. A "distribution" is defined in Rule 10b-6(c)(5) as an offering of securities "that is distinguished from ordinary trading transactions by the magnitude of the offering and the presence of special selling efforts and selling methods." Rule 10b-6 makes it unlawful for any person who is participating in a distribution to bid for or purchase stock of the same class as is the subject of the distribution. The Company has also advised the Selling Shareholders that Rule 10b-7 under the Exchange Act prohibits any "stabilizing bid" or "stabilizing purchase" for the purposes of pegging, fixing or stabilizing the price of the Company's Common Stock in connection with this offering. While Mr. Kiser received the 50,000 Shares offered by him in this offering in a transaction registered under the Securities Act, in the absence of this registration statement he, like all executive officers, Directors and other "affiliates" of the Company, would be able to sell his Shares only subject to the limitations of Rule 144, promulgated under the Securities Act ("Rule 144"). In general, under Rule 144 as currently in effect, an "affiliate" of the Company or a person who has beneficially owned shares which are "restricted securities" as defined in Rule 144 for at least one year, is entitled to sell within any three-month period a number of shares that does not exceed the greater of: (i) one percent (1%) of the then outstanding shares of Common Stock of the Company, or (ii) the average weekly trading volume of the Common Stock during the four calendar weeks preceding a sale by such person. Sales under Rule 144 are also subject to certain manner of sale provisions, notice requirements and the availability of current public information about the Company. Under Rule 144, however, a person who is not, and for the three months prior to the sale of such shares has not been, an affiliate of the Company is free to sell shares which are not "restricted securities," or "restricted securities" which have been held for at least two years, without regard to the limitations contained in Rule 144. Mr. Kiser's sales of the 50,000 Shares registered hereunder will not be subject to the foregoing restrictions. Under Section 16 of the Securities Exchange Act of 1934, Mr. Kiser and any other executive officer, Directors, and 10% or greater shareholders of the Company will be liable to the Company for any profit realized from any purchase and sale (or any sale and purchase) of Common Stock within a period of less than six months. TRANSFER AGENT AND REGISTRAR The Transfer Agent and Registrar for the shares of Common Stock is American Securities Transfer & Trust, Inc., 1825 Lawrence Street, #444, Denver, Colorado, 80202. LEGAL MATTERS The validity of the securities to be offered hereby will be passed upon for the Company by Gorsuch Kirgis L.L.C., Denver, Colorado, counsel for the Company. EXPERTS The financial statements of Vari-L Company, Inc. as of December 31, 1996 and 1995 and for the years then ended have been incorporated by reference herein and in the registration statement in reliance upon the report of Haugen, Springer & Co., independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. INDEMNIFICATION OF DIRECTORS The Securities Purchase Agreement provides that the Company and its officers, Directors, and controlling shareholders are indemnified against losses arising out of any untrue statement of a material fact or any omission to state a material fact necessary to make the statements in the registration statement or prospectus, in light of the circumstances under which they were made, not misleading, to the extent that such untrue statement or omission is contained in any information or affidavit a Selling Shareholder furnished to the Company. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Estimates of fees and expenses incurred or to be incurred in connection with the issuance and distribution of securities being registered are as follows:
Securities and Exchange Commission Filing Fee $ 5,007 State Securities Laws (Blue Sky) Fees and Expenses 200 Printing and Mailing Costs and Fees 1,000 Legal Fees and Costs 25,00 Accounting Fees and Costs 2,500 Miscellaneous 1,293 ------- TOTAL $35,000
All fees and expenses are estimated except for the filing fee paid to the Commission. The Selling Shareholders have agreed to pay all commissions and other compensation to any securities broker-dealers through whom they sell any of the Shares. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The only statute, bylaw, contract or arrangement under which any controlling person, director or officer of the Company is insured or indemnified in any matter against liability which he may incur in his capacity as such, is as follows: Paragraph 2 of Article X of the Restated Articles of Incorporation with Amendments of the Company includes the following provision: The Board of Directors of the Corporation shall have every power and duty of indemnification of directors, officers, employees and agents, without limitation, provided by the laws of the State of Colorado. Section 7-109-101 of the Colorado Business Corporation Act provides that each corporation shall have the following powers using the following definitions: "As used in this article: (a) "Corporation" includes any domestic or foreign entity that is a predecessor of a corporation by reason of a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction. (b) "Director" means an individual who is or was a director of a corporation or an individual who, while a director of a corporation, is or was serving at the corporation's request as a director, officer, partner, trustee, employee, fiduciary, or agent of another domestic or foreign corporation or other person or of an employee benefit plan. A director is considered to be serving an employee benefit plan at the corporation's request if his or her duties of the corporation also impose duties on, or otherwise involve services by, the director to the plan or to participants in or beneficiaries of the plan. "Director" includes, unless the context requires otherwise, the estate or personal representative of a director. (c) "Expenses" includes counsel fees. (d) "Liability" means the obligation incurred with respect to a proceeding to pay a judgment, settlement, penalty, fine, including an excise tax assessed with respect to an employee benefit plan, or reasonable expenses. (e) "Official capacity" means, when used with respect to a director, the office of director in a corporation and, when used with respect to a person other than a director as contemplated in section 7-109-107, the office in a corporation held by the officer or the employment, fiduciary, or agency relationship undertaken by the employee, fiduciary, or agent on behalf of the corporation. "Official capacity" does not include service for any other domestic or foreign corporation or other person or employee benefit plan. (f) "Party" includes a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding. (g) "Proceeding" means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal. 7-109-102. AUTHORITY TO INDEMNIFY DIRECTORS. (1) Except as provided in subsection (4) of this section, a corporation may indemnify a person made a party to a proceeding because the person is or was a director against liability incurred in the proceeding if: (a) The person conducted himself or herself in good faith; and (b) The person reasonably believed: (I) In the case of conduct in an official capacity with the corporation, that his or her conduct was in the corporation's best interests; and (II) In all other cases, that his or her conduct was at least not opposed to the corporation's best interests; and (c) In the case of any criminal proceeding, the person had no reasonable cause to believe his or her conduct was unlawful. (2) A director's conduct with respect to an employee benefit plan for a purpose the director reasonably believed of be in the interests of the participants in or beneficiaries of the plan is conduct that satisfies the requirement of subparagraph (II) of paragraph (b) of subsection (1) of this section. A director's conduct with respect to an employee benefit plan for a purpose that the director did not reasonably believe to be in the interests of the participants in or beneficiaries of the plan shall be deemed not to satisfy the requirements of paragraph (a) of subsection (1) of this section. (3) The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this section. (4) A corporation may not indemnify a director under this section. (a) In connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or (b) In connection with any other proceeding charging that the director derived an improper personal benefit, whether or not involving action in an official capacity, in which proceeding the director was adjudged liable on the basis that he or she derived an improper personal benefit. (5) Indemnification permitted under this section in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding. 7-109-103. MANDATORY INDEMNIFICATION OF DIRECTORS. Unless limited by its articles of incorporation, a corporation shall indemnify a person who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the person was a party because the person is or was a director, against reasonable expenses incurred by him or her in connection with the proceeding. 7-109-104. ADVANCE OF EXPENSES TO DIRECTORS. (1) A corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if: (a) The director furnishes to the corporation a written affirmation of the director's good faith belief that he or she has met the standard of conduct described in section 7-109-102; (b) The director furnishes to the corporation a written undertaking, executed personally or on the director's behalf, to repay the advance if it is ultimately determined that he or she did not meet the standard of conduct; and (c) A determination is made that the facts then known to those making the determination would not preclude indemnification under this article. (2) The undertaking required by paragraph (b) of subsection (1) of this section shall be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment. (3) Determinations and authorizations of payments under this section shall be made in the manner specified in section 7-109-106. 7-109-105. COURT-ORDERED INDEMNIFICATION OF DIRECTORS. (1) Unless otherwise provided in the articles of incorporation, a director who is or was a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court, after giving any notice the court considers necessary, may order indemnification in the following manner: (a) If it determines that the director is entitled to mandatory indemnification under section 7-109-103, the court shall order indemnification, in which case the court shall also order the corporation to pay the director's reasonable expenses incurred to obtain court-ordered indemnification. (b) If it determines that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director met the standard of conduct set forth in section 7-109102(1) or was adjudged liable in the circumstances described in section 7-109-102(4), the court may order such indemnification as the court deems proper; except that the indemnification with respect to any proceeding in which liability shall have been adjudged in the circumstances described in section 7-109-102(4) is limited to reasonable expenses incurred in connection with the proceeding and reasonable expenses incurred to obtain court-ordered indemnification. 7-109-106. DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION OF DIRECTOR. (1) A corporation may not indemnify a director under Section 7-109-102 unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the standard of conduct set forth in section 7-109-102. A corporation shall not advance expenses to a director under section 7-109-104 unless authorized in the specific case after the written affirmation and undertaking required by section 7-109-104(1)(a) and (1)(b) are received and the determination required by section 7-109104(1)(c) has been made. (2) The determinations required by subsection (1) of this section shall be made: (a) By the board of directors by a majority vote of those present at a meeting at which a quorum is present, and only those directors not parties to the proceeding shall be counted in satisfying the quorum; or (b) If a quorum cannot be obtained, by a majority vote of a committee of the board of directors designated by the board of directors, which committee shall consist of two or more directors not parties to the proceeding; except that the directors who are parties to the proceeding may participate in the designation of directors for the committee. (3) If a quorum cannot be obtained as contemplated in paragraph (a) of this subsection (2) of this section, and a committee cannot be established under paragraph (b) of subsection (2) of this section, or, even if a quorum is obtained or a committee is designated, if a majority of the directors constituting such quorum or such committee so directs, the determination required to be made by subsection (1) of this section shall be made: (a) By independent legal counsel selected by a vote of the board of directors or the committee in the manner specified in paragraph (a) or (b) of subsection (2) of this section or, if a quorum of the full board cannot be obtained and a committee cannot be established, by independent legal counsel selected by a majority vote of the full board of directors; or (b) By the shareholders. (4) Authorization of indemnification and advance of expenses shall be made in the same manner as the determination that indemnification or advance of expenses is permissible; except that, if the determination that indemnification or advance of expenses is permissible is made by independent legal counsel, authorization of indemnification and advance of expenses shall be made by the body that selected such counsel. 7-109-107. INDEMNIFICATION OF OFFICERS, EMPLOYEES, FIDUCIARIES, AND AGENTS. (1) Unless otherwise provided in the articles of incorporation; (a) An officer is entitled to mandatory indemnification under section 7-109-103, and is entitled to apply for court-ordered indemnification under section 7-109-105, in each case to the same extent as a director; (b) A corporation may indemnify and advance expenses to an officer, employee, fiduciary, or agent who is not a director to a greater extent, if not inconsistent with public policy, and if provided for by its bylaws, general or specific action of its board of directors or shareholders, or contract. 7-109-108. INSURANCE. A corporation may purchase and maintain insurance on behalf of a person who is or was a director, officer, employee, fiduciary, or agent of the corporation, or who, while a director, officer, employee, fiduciary, or agent of the corporation, is or was servicing at the request of the corporation as a director, officer, partner, trustee, employee, fiduciary, or agent of another domestic or foreign corporation or other person or of an employee benefit plan, against liability asserted against or incurred by the person in that capacity or arising from his or her status as a director, officer, employee, fiduciary, or agent, whether or not the corporation would have power to indemnify the person against the same liability under section 7-109-102, 7-109-103, or 7-109-107. Any such insurance may be procured from any insurance company designated by the board of directors, whether such insurance company is formed under the laws of this state or any other jurisdiction of the United States or elsewhere, including any insurance company in which the corporation has an equity or any other interest through stock ownership or otherwise. 7-109-109. LIMITATION OF INDEMNIFICATION OF DIRECTORS. (1) A provision treating a corporation's indemnification of, or advance of expenses to, directors that is contained in its articles of incorporation or bylaws, in a resolution of its shareholders or board of directors, or in a contract, except an insurance policy, or otherwise, is valid only to the extent the provision is not inconsistent with sections 7-109-101 to 7-109-108. If the articles of incorporation limit indemnification or advance of expenses, indemnification and advance of expenses are valid only to the extent not inconsistent with the articles of incorporation. (2) Sections 7-109-101 to 7-109-108 do not limit a corporation's power to pay or reimburse expenses incurred by a director in connection with an appearance as a witness in a proceeding at a time when he or she has not been made a named defendant or respondent in the proceeding. 7-109-110. NOTICE TO SHAREHOLDERS OF INDEMNIFICATION OF DIRECTOR. If a corporation indemnifies or advances expenses to a director under this article in connection with a proceeding by or in the right of the corporation, the corporation shall give written notice of the indemnification or advance to the shareholders with or before the notice of the next shareholders' meeting. If the next shareholder action is taken without a meeting at the instigation of the board of directors, such notice shall be given to the shareholders at or before the time the first shareholder signs a writing consenting to such action. Section 7-108-402(2) of the Colorado Revised Statutes states as follows: No officer or director shall be personally liable for any injury to person or property arising out of a tort committed by an employee unless such officer or director was personally involved in the situation giving rise to the litigation or unless such officer or director committed a criminal offense. The protection afforded in this section shall not restrict other common law protections and rights that an officer or director may have. This section shall not restrict the corporation's right to eliminate or limit the personal liability of a director to the corporation or to its shareholders for monetary damages for breach of fiduciary duty as a director. Paragraph 3 of Article X of the Restated Articles of Incorporation with Amendments of the Company includes the following provision: The personal liability of any of the Corporation's directors to the Corporation or to its shareholders for monetary damages for breach of a fiduciary duty as a director is eliminated, except that this provision shall not eliminate the liability of the director to the Corporation or to its shareholders for monetary damages (a) for any breach of the director's duty of loyalty to the Corporation or its shareholders; (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (c) for acts specified in Section 7-5-114 of the Colorado Corporation Code; or (d) for any transaction from which the director derived an improper personal benefit. The Securities Purchase Agreement provides that the Company and its officers, directors, and controlling shareholders are indemnified against losses arising out of any untrue statement of a material fact or any omission to state a material fact necessary to make the statements in the registration statement or prospectus, in light of the circumstances under which they were made, not misleading, to the extent that such untrue statement or omission is contained in any information or affidavit a Selling Shareholder furnished to the Company. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable. ITEM 16. EXHIBITS. Exhibit No. Description 3.1a Restated Articles of Incorporation, as Amended, filed as Exhibit 4.1 to the Registrant's Form S-8 Registration Statement (No. 33-88666) and incorporated herein by reference 3.1b Articles of Amendment to the Articles of Incorporation filed as Exhibit 3.1b to Registrant's Form 10-KSB for the year ended December 31, 1996 and incorporated herein by reference 3.2 Restated Bylaws of the Company as adopted by its Board of Directors on November 4, 1992 filed as Exhibit 3.2 to the Registrant's Form SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by reference 4.1 Specimen Certificate for $.01 par value Common Stock of the Company filed as Exhibit 4.3 to the Registrant's Form SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by reference 4.2 Specimen Certificate for Warrant to Purchase Common Stock of the Company filed as Exhibit 4.4 to the Registrant's Form SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by reference 4.3 Rights Agreement with American Securities Transfer, Inc. dated March 15, 1996 filed as Exhibit 4.2 to Registrant's Form 8-A/A Registration Statement (No. 0-23866) and incorporated herein by reference 4.4 Specimen Certificate for Right to Purchase $.01 par value Common Stock of the Company filed as Exhibit 4.3 to Registrant's Form 8-A/A Registration Statement (No. 0- 23866) and incorporated herein by reference 4.5 Securities Purchase Agreement between the Registrant and certain purchasers dated March 4, 1997 4.6 Form of Convertible Subordinated Debenture issued to the Purchasers under the Securities Purchase Agreement dated March 4, 1997 4.7 Form of Warrant to Purchase Common Stock issued to the Purchasers under the Securities Purchase Agreement dated March 4, 1997 4.8 Form of Warrant to Purchase Common Stock issued to Neidiger, Tucker, Bruner, Inc. pursuant to the Securities Purchase Agreement dated March 4, 1997 5 Opinion of Gorsuch Kirgis L.L.C. 23.1 Consent of Haugen, Springer & Co. 23.2 Consent of Gorsuch Kirgis L.L.C. contained in its opinion filed as Exhibit 5 ITEM 17. UNDERTAKINGS. The undersigned Company hereby undertakes with respect to the securities being offered and sold in this offering: (1) File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to: (a) Include any prospectus required by Section 10(a)(3) of the Securities Act; (b) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (c) Include any additional or changed material information on the plan of distribution; provided, however, that small business issuers do not need to give the statements in paragraphs (1)(a) and (1)(b) if the registration statement is on Form S-3 or Form S-8, and the information required in a post- effective amendment is incorporated by reference from the periodic reports filed by the small business issuer pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934. (2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time shall be deemed to be the initial bona fide offering. (3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. SIGNATURES In accordance with the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, State of Colorado, on April 11, 1997. VARI-L COMPANY, INC. By: /s/ DAVID G. SHERMAN David G. Sherman, President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated: /s/ JOSEPH H. KISER Date: April 11, 1997 Joseph H. Kiser, Chairman of the Board, Principal Executive Officer, Chief Scientific Officer /s/ DAVID G. SHERMAN Date: April 11, 1997 David G. Sherman, President, Chief Executive Officer, Chief Financial Officer, Principal Financial and Accounting Officer and Director /s/JON L. CLARK Date: April 11, 1997 Jon L. Clark, Vice President of Finance and Principal Accounting Officer /s/ SARAH L. BOOHER Date: April 11, 1997 Sarah L. Booher, Director /s/ DAVID A. LISOWSKI Date: April 11, 1997 David A. Lisowski, Director EXHIBIT INDEX
Exhibit No. Description Method of Filing 4.5 Securities Purchase Agreement between the Registrant and certain purchasers dated March 4, 1997 Filed herewith electronically 4.6 Form of Convertible Subordinated Debenture issued to the Purchasers under the Securities Purchase Agreement dated March 4, 1997 Filed herewith electronically 4.7 Form of Warrant to Purchase Common Stock issued to the Purchasers under the Securities Purchase Agreement dated March 4, 1997 Filed herewith electronically 4.8 Form of Warrant to Purchase Common Stock issued to Neidiger/Tucker/Bruner, Inc. pursuant to the Securities Purchase Agreement dated March 4, 1997 Filed herewith electronically 5 Opinion of Gorsuch Kirgis L.L.C. Filed herewith electronically 23.1 Consent of Haugen, Springer & Co. Filed herewith electronically 23.2 Consent of Gorsuch Kirgis L.L.C. contained in its opinion filed as Exhibit 5
EX-4.5 2 SECURITIES PURCHASE AGREEMENT SECURITIES PURCHASE AGREEMENT SECURITIES PURCHASE AGREEMENT (this "Agreement") dated as of March 4, 1997, by and among VARI-L COMPANY, INC., a Colorado corporation (the "Company"), and the entities and individuals listed on Schedule 1 hereto (the "Purchasers"). WHEREAS, the Company is in need of working capital; and WHEREAS, pursuant to this Agreement, the Purchasers wish to provide such capital by purchasing convertible subordinated debentures (the "Debentures") and three-year, non-redeemable warrants (the "Warrants") to purchase the Company's $.01 par value common stock (the "Common Stock") to be issued by the Company in Units, each consisting of a $100,000 Debenture and 10,000 Warrants (the "Units"); and WHEREAS, the Company will sell a total of up to 75 Units, consisting of an aggregate of $7,500,000 in Debentures and 750,000 Warrants; and WHEREAS, because all of the Purchasers are "accredited investors" as defined by Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the "Act"), the transaction will be exempt from registration under the Act. NOW, THEREFORE, in consideration of the aforesaid and the mutual promises hereinafter made, the parties hereto agree as follows: 1. PURCHASE OF SECURITIES 1.01 SALE OF UNITS. a. Subject to the terms and conditions hereof, on the First Closing Date (as hereinafter defined) the Company agrees to issue and sell, and each Purchaser set forth on Schedule 1 to this Agreement agrees to purchase, the number of Units set forth opposite such Purchaser's name on Schedule 1. A total of 50 Units will be purchased on the First Closing Date, consisting of an aggregate of $5,000,000 in Debentures and 500,000 Warrants. For a period of one hundred twenty (120) days after the First Closing Date or sixty (60) days after the date of the shareholder approval referred to in Sections 1.02b. and c. is obtained, whichever is later (the "Exclusive Option Period"), each Purchaser has an exclusive option to purchase (an "Option") that number of additional Units equal to 50% of the number of Units purchased by that Purchaser on the First Closing Date. For a period of thirty (30) days after the end of the Exclusive Option Period (the "Nonexclusive Option Period"), the Options shall remain in force but shall be subject to the Company's prior sale of any or all of the additional Units. Prior to such shareholder approval, the Company may, in its discretion, decline to permit the exercise of any Options. If sales of Units by the Company occur in the Nonexclusive Option Period, each Purchaser's Option shall be for that Purchaser's pro rata share of the number of additional Units that remain, provided, however, that nothing herein shall be construed to limit or prohibit the transfer of Options by or among Purchasers during the Exclusive Option Period or the Nonexclusive Option Period subject only to compliance with applicable securities laws. b. The Company and the Purchasers agree that, unless the Company obtains assurances from Nasdaq Stock Market, Inc. satisfactory to counsel for the Company and the Purchasers, respectively, that this Agreement comports with Nasdaq Rule 4460(i)(1)(D) (the "Rule") notwithstanding the failure to obtain prior shareholder approval, the Company shall submit the sale of the Units pursuant to the terms described herein (the "Transaction") to its shareholders for approval (or the portions of the Transaction requiring such approval) at the Company's next annual shareholders' meeting and will use its best efforts to obtain shareholder approval at such meeting. Within ten (10) days after the date hereof, the Company will provide written assurances to Purchasers that the shares of the Common Stock beneficially owned by David G. Sherman, Joseph H. Kiser, and Sarah Booher, who own of record, or control, not less than 634,251 shares, will be voted in favor of such shareholder approval. c. Until shareholder approval of the Transaction (or the portion thereof requiring approval) has been obtained, the Debentures issued hereunder will be convertible into a maximum aggregate of 765,367 shares of Common Stock on a first-converted basis. If shareholder approval of the Transaction (or the portion thereof requiring approval) has not been obtained by one year after the date hereof, or (at Purchaser's option) if the Registration Statement referred to in Section 6 below is not declared effective by the Securities and Exchange Commission by the first anniversary date of the date hereof, any Debentures, or portions thereof, which have not then been converted, shall be redeemed by the Company three (3) business days after such one-year anniversary for cash equal to 115% of the principal amount plus accrued interest (the "Non-approval Redemption Amount"). d. The Warrants issued hereunder shall not be exercisable until (i) there has been obtained evidence or assurances satisfactory to counsel for the Company and the Purchasers, respectively, that, if such Warrants are immediately exercisable in accordance with their terms, this Agreement comports with the Rule notwithstanding the failure to obtain prior shareholder approval, or (ii) shareholder approval of the Transaction is obtained. 1.02 CLOSING DATE; DELIVERY. The closing of the issuance and sale of the initial 50 Units hereunder will be held at the offices of Gorsuch Kirgis, L.L.C. on March 4, 1997 or at such other time and place as to which the Company and the Purchasers may agree (the "First Closing Date"). On the First Closing Date, the Purchasers will deliver by wire transfer in immediately available funds the purchase price and the Company will issue and deliver the Debentures and Warrants to the Purchasers as set forth in Schedule 1. The closing of the issuance and sale of Units upon the exercise of each Option will be held at the offices of Gorsuch Kirgis, L.L.C. no later than three (3) business days after such exercise. 1.03 PAYMENT OF COMMISSION. The Company has agreed, pursuant to a letter agreement dated November 27, 1996, as amended on March 4, 1997, to pay to Neidiger, Tucker, Bruner, Inc. ("NTB") a commission for the sale of all Units sold hereunder in the amount of five percent (5%) of the principal amount of the Debentures sold hereunder. The Company has also agreed to pay a three percent (3%) finder's fee to Mueller Trading Company on the initial $5,000,000 of Debentures to be purchased on the First Closing Date and on additional Units purchased pursuant to the exercise of Options. No finder's fee shall be paid for the sale of additional Units by the Company or NTB which are not made pursuant to the exercise of Options or for the exercise of Warrants. Neither the Company nor the Purchasers have agreed to pay, or to cause the other to pay, any commissions, finders fee or compensation on account of the Transaction other than as recited herein. 1.04 DESCRIPTION OF DEBENTURES. Subject to the provisions of Section 1.01, all or any portion of the principal and accrued interest of each Debenture is convertible into Common Stock at the election of the holder thereof into the number of shares of Common Stock equal to the lower of (i) the unpaid principal amount of the Debenture plus accrued interest divided by $9.50 per share, or (ii) 84% of the average closing bid price of the Company's Common Stock on the Nasdaq National Market (or such other stock exchange, quotation service or over the counter market on which the Company's Common Stock may be traded) for the ten (10) trading days prior to the date that a written request to convert is received by the Company at its principal offices or by its transfer agent (the "Conversion Date"). Each Debenture shall bear interest at the rate of 7% per annum until the first to occur of four years from the date of the Debenture (the "Maturity Date") or until the Conversion Date, provided, however, that if the Common Stock into which the Debentures are convertible is not registered with the Commission pursuant to Section 6.01 hereof within 120 days of the First Closing Date, the Debenture will bear interest at the rate of 15% from the 120th day until the first to occur of the Maturity Date or the Conversion Date. If the price per share at which any Debenture is to be converted on the applicable Conversion Date is less than $8 per share, the Company has the right to decline to permit such conversion and instead redeem the Debenture by payment of 116% of the principal amount of such Debenture, together with accrued interest (the "116% Redemption Amount"). Repayment of the principal of and interest on the Debentures is expressly subordinated to the Company's secured debt in favor of banks, savings and loan associations, institutions or other asset-based lenders, in an amount up to $25,000,000, irrespective of whether such debt is currently owed or is incurred in the future. Holders of Debentures have registration rights with respect to the Common Stock issuable upon conversion of the Debentures as set forth in Section 6.01. The form of Debenture is attached hereto as Exhibit A. Notwithstanding the failure of any Debenture to recite any of the terms of this Agreement applicable to such Debenture, all of such terms shall be binding upon and inure to the benefit of all Holders of Debentures. 1.05 DESCRIPTION OF WARRANTS. Subject to the provisions of Section 1.01d. requiring shareholder or Nasdaq approval prior to exercise thereof, Warrants may be exercised by the registered holders thereof for a period of three years from the date hereof at an exercise price of $9.50 per share. Warrants may not be redeemed by the Company. Holders of Warrants have registration rights with respect to the Common Stock issuable upon exercise of the Warrant as set forth in Section 6.01. The form of warrant is attached hereto as Exhibit B. Notwithstanding the failure of any Warrant to recite any of the terms of this Agreement applicable to such Warrants, all of such terms shall be binding upon and inure to the benefit of all Holders of Warrants. 1.06 ANTIDILUTION PROVISIONS. The Debentures and the Warrants are subject to customary antidilution provisions as set forth in such instruments. 2. REPRESENTATIONS AND WARRANTIES OF PURCHASERS. Each Purchaser hereby represents and warrants as to himself, herself or itself as follows: 2.01 Purchaser is acquiring the Debentures and Warrants for investment only and not with a view to or for resale or distribution of any part thereof, and with no present intention of selling, granting participation in, or otherwise distributing the same except pursuant to the registration rights granted by Section 6 hereof. 2.02 Purchaser is an "accredited investor" as defined in Rule 501(a) of Regulation D of the Securities Act of 1933, as amended (the "Act") and has executed an Accredited Investor Statement in the form attached hereto as Exhibit C. Purchaser has such knowledge and experience in business and financial matters as to be capable of evaluating the risks and merits of an investment in the Debentures and Warrants and has sufficient financial resources to bear the economic risks thereof (including possible complete loss of such investment) for an indefinite period of time. Purchaser has full and free access to the Company's books, financial statements, records, contracts, documents and other information concerning the Company and has been afforded an opportunity to ask questions of the Company's officers, employees, agents, accountants and representatives concerning the Company's business, operations, financial condition, assets, liabilities and other relevant matters, and has been given all such information as has been requested, in order to evaluate the merits and risks of the investment in the Debentures and Warrants. Upon request, Purchaser will provide the Company with access to Purchaser's tax, financial and other records as are reasonably necessary under the circumstances to confirm that Purchaser is an accredited investor within the meaning of Rule 501(a) of Regulation D of the Act. 2.03 a. The Debentures and Warrants are "restricted securities" within the meaning of Rule 144 under the Act; b. The Debentures and Warrants are not being registered with the Securities and Exchange Commission at this time and therefore must be held until they are subsequently registered under the Act and any applicable state or foreign securities laws (pursuant to Section 6 hereof or otherwise) unless an exemption from registration is available; provided, however, that Purchasers have the registration rights set forth in Section 6 for the shares of Common Stock issuable upon conversion of the Debentures and exercise of the Warrants. c. the exemption from registration under Rule 144 will not be available for two years from the date of acquisition of the Debentures and Warrants (unless it is amended, as has been previously proposed, to shorten such period to one year), and even then may not be available unless (A) a public trading market still exists for the Common Stock at that time, (B) adequate information concerning the Company is then publicly available, and (C) the sale complies with the other terms and conditions of Rule 144. 2.04 Each Purchaser acknowledges and agrees that it shall have no right to convert any Debentures or exercise any Warrants to purchase the Common Stock of the Company so long as and to the extent that at the time of such conversion or exercise, such conversion or exercise would cause the Purchaser then to be the "beneficial owner" of five percent (5%) or more of the Company's then outstanding common stock. For the purpose hereof, the term "beneficial owner" shall have the meaning ascribed to it in Section 13(d) of the Securities Exchange Act of 1934. The legal opinion of counsel to each Purchaser, in form and substance satisfactory to the Company, shall prevail in all matters relating to the amount of such Purchaser's beneficial ownership. 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 3.01 ORGANIZATION AND GOOD STANDING. The Company is a corporation, duly organized, validly existing, and in good standing under the laws of the State of Colorado and has all requisite corporate power and authority to own and lease its properties and conduct its business as it is now being conducted. The Company is not required to be qualified to do business as a foreign corporation in any jurisdiction in which it is not qualified and where a failure to be qualified would have a material adverse effect on the Company. 3.02 CAPITALIZATION STRUCTURE. a. As of the date of this Agreement, the Company's authorized capital stock consists of 50,000,000 shares of Common Stock, $.01 par value, of which 3,826,840 shares are issued and outstanding. The rights, preferences and privileges of the capital stock are as set forth in the Articles of Incorporation and Bylaws of the Company. As of the date of this Agreement, all issued and outstanding shares of Common Stock are duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights and there is no outstanding subscription, option, warrant, call, right, agreement, commitment, understanding, or arrangement relating to the issuance, sale, delivery, transfer or redemption of the Company's capital stock other than, in the case of Common Stock, in each case as of March 4, 1997, up to 800,000 shares issuable to employees of the Company pursuant to the Company's Employee Stock Purchase Plan, and 3,000,000 shares issuable upon the exercise of stock options granted pursuant to the Company's Tandem Stock Option and Stock Appreciation Rights Plan and 100,000 issuable pursuant to the Company's Stock Grant Plan. b. The Company has reserved 765,367 shares of authorized but unissued Common Stock for the conversion of Debentures and the exercise of Warrants hereunder and, upon shareholder approval of the Transaction, will reserve such additional shares of authorized but unissued Shares of Common Stock as are necessary to effect the conversion and exercise of all Debentures and Warrants, respectively, issued hereunder. All of the shares of the Company's Common Stock issuable upon conversion of the Debentures and exercise of the Warrants have been duly authorized by all necessary corporate action and will be when issued in accordance with the terms of the Debentures and Warrants, validly issued, fully paid and nonassessable and free of preemptive rights, other than those restrictions imposed by the Company's Articles of Incorporation and Bylaws. 3.03 AUTHORITY; NO CONFLICT; REQUIRED FILINGS. a. The Company has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company and constitutes the valid and binding obligation of the Company, enforceable in accordance with its terms. b. The execution and delivery of this Agreement by the Company and the consummation of the transactions contemplated by this Agreement will not (i) conflict with or result in any violation or breach of any provision of the Articles of Incorporation or Bylaws of the Company; (ii) result in any violation or breach of, or constitute a default or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any benefit under any of the terms, conditions or provisions of any note, bond, mortgage,indenture, lease contract or other agreement, instrument or obligation to which the Company is a party or by which it or any of its properties or assets may be bound; or (iii) conflict with or violate any permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company or any of its properties or assets, except in the case of (ii) and (iii) for any such violation, breaches, defaults, termination, cancellation, accelerations, or conflicts which would not, in the aggregate, have or result in a material adverse effect on the Company or impair the ability of the Company to consummate the transactions contemplated by this Agreement and except for the Nasdaq National Market Listing Agreement between the Company and Nasdaq to the extent that such agreement requires shareholder approval of all or a portion of this Transaction. c. Other than Nasdaq approval, no consent, approval, order or authorization of, or registration, declaration or filing with, any governmental entity, is required by or with respect to the Company in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. 3.04 SEC FILINGS; FINANCIAL STATEMENTS. a. The Company has timely filed and made available to Purchasers all forms, reports and documents required to be filed by the Company with the Commission since December 31, 1995, (collectively, the "Vari-L SEC Reports"). The Vari-L SEC Reports (i) at the time filed, complied in all material respects with the applicable requirements of the Securities Act and the Exchange Act, as the case may be, and (ii) did not at the time they were filed (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated in such Vari-L SEC Reports or necessary in order to make the statements in such Vari-L SEC Reports, in the light of the circumstances under which they were made, not misleading. b. Each of the financial statements (including, in each case, any related notes) contained in the Vari-L SEC Reports, including any Vari-L SEC Reports filed after the date of this Agreement until the First and Second Closing Dates, complied or will comply, as of their respective dates, in all material respects with all applicable accounting requirements and the published rules and regulations of the Commission with respect thereto, was or will be prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods involved and fairly presented or will present the consolidated financial position of the Company as at the respective dates and the results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments which were not or are not expected to be material in amount. 3.05 LITIGATION. Except as described in the Vari-L SEC Reports, there is no action, suit or proceeding, claim, arbitration or investigation pending or, to the best of the Company's knowledge, threatened against the Company which would, in the aggregate, have a material adverse effect on the Company or impair the ability of the Company to consummate the transactions contemplated by this Agreement. 3.06 BROKERS AND FINDERS. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or an behalf of the Company except for the commissions described in Section 1.03. 3.07 AVAILABILITY OF S-3 REGISTRATION STATEMENT. The Company is eligible to use an S-3 Registration Statement to effect the registration rights granted pursuant to Section 6. 4. [This Section intentionally omitted.] 5. COVENANTS OF THE COMPANY 5.01 The Company covenants and agrees that, so long as any Debentures or Warrants shall be outstanding: a. Maintenance of Office. The Company will maintain an office or agency in such place in the United States of America as the Company may designate in writing to the registered holders of Debentures and Warrants, where the Debentures and Warrants may be presented for registration or transfer and for exchange as their terms may provide, where notices and demands to or upon the Company in respect of the Debentures and Warrants may be served. b. Corporate Existence. The Company will do or cause to be done all things necessary and lawful to preserve and keep in full force and effect its corporate existence, rights and franchises. c. Maintenance of Property. The Company will at all times maintain and keep, or cause to be maintained and kept, in good repair, working order and condition all significant properties of the Company used in the conduct of the business of the Company. d. Notice of Default. If any one or more events which constitute a default under either the Debentures or Warrants in accordance with their terms, or if the holder of any Debentures or Warrants shall demand payment or take any other action permitted upon the occurrence of any such default, the Company shall, immediately after it becomes aware that any such event has occurred or that such demand has been made or that any such action has been taken, give notice to all holders of the Debentures and Warrants, specifying the nature of such event or of such demand or action, as the case may be. 5.02 ADDITIONAL REGULATION D OR REGULATION S OFFERINGS. The Company agrees that it shall not, without the approval of all of the holders of Debentures and Warrants issued hereunder, (a) make an unregistered offering of shares of its Common Stock or of securities convertible into such Common Stock, pursuant to Regulation D under the Act or otherwise, pursuant to which registration rights are granted to the purchasers in such an offering, or (b) make an offering of securities pursuant to Regulation S under the Act, in either case until the earlier of (i) two years from the First Closing Date, or (ii) at such time as there are less than an aggregate of $2,000,000 in Debentures or Common Stock issued upon conversion of Debentures held by the Purchasers. 5.03 NOTICE OF CONVERSION OF DEBENTURES OR EXERCISE OF WARRANTS; PAYMENT FOR LATE DELIVERY OF SHARES OR LATE REDEMPTIONS. a. If the Holder of a Debenture or a Warrant delivers to the principal office of the Company to the attention of Darce Hume, Controller (a) a copy of the Conversion Notice or Notice of Exercise, respectively, by telecopy (telecopy number 303/373-3870) and (b) within two business days thereafter, the Debenture and original Conversion Notice or the Warrant Price and the original Notice of Exercise, and the Company fails to deliver to the Holder the Certificate representing the shares of Common Stock due upon such conversion or exercise within ten (10) business days (the "Ten-Day Period") after the Debenture and original Conversion Notice are received by the Company, the Company will pay the Holder the late payment described in Section 5.03d. below the amount of which payment shall begin to accrue on the first day after the expiration of the Ten-Day Period; or b. in the alternative (but not in addition), if the Holder delivers (a) a copy of the Conversion Notice or Notice of Exercise, respectively, by separate telecopies to each of Darce Hume, Controller (303/373-3870), David G. Sherman, President, and Jon L. Clark, Treasurer at the Company (303/373-3868), and to Gorsuch Kirgis, L.L.C., attention: S. Lee Terry, Jr. (303/298-0215), and (b) within two (2) business days thereafter, the original Conversion Notice and the Debenture or the original Notice of Exercise and the Warrant Price, and the Company fails to deliver the Certificate within five (5) business days (the "Five-Day Period") after receiving the original Conversion Notice and Debenture or the Original Notice of Exercise and the Warrant Price, the Company will pay the Holder the amount described in (d) below which amount shall begin to accrue on the first day after the expiration of the Five-Day Period; provided, however, that if the Company has given notice of redemption of a Debenture, as provided in Section 1.03 of the Debentures, the Company shall not be obligated to pay the amount for late delivery described in these Sections 5.03a. or b. c. If payment by the Company of any 116% Redemption Amount or the Non-approval Redemption Amount is not made within the period provided for such payment, the Company shall pay to the Holder the late payment set forth in Section 5.03d. below which amount shall begin to accrue on the first day after the expiration of such the period. d. The late payment shall be $1,000 per day for each $100,000 in Debentures converted or redeemed or each 10,000 Warrants exercised )proportionately adjusted for greater or lesser amounts) for the first of five (5) days and $500 per day thereafter continuing until the stock certificate or payment (as the case may be) is delivered to Holder. e. The late payment provided by this Section 5.03 shall be in addition to, and not in lieu of, the rights or remedies of the Purchasers or the Holders under the Debentures, the Warrants or this Agreement or which are otherwise available under law. 6. REGISTRATION RIGHTS 6.01 DEMAND REGISTRATION RIGHTS. a. Right to Demand Registration. If, at any time beginning thirty (30) days after the First Closing Date until the third anniversary of the date hereof, any Purchaser holding Debentures or Warrants issued hereunder makes a written request (the "Request Notice") to the Company for registration under the Act of all or part of the Common Stock issuable upon conversion of a Debenture or upon exercise of a Warrant which is issued hereunder, (irrespective of whether such Common Stock is issued or is issuable on the conversion of Debentures or the exercise of Warrants sold on the First Closing Date or thereafter and irrespective of whether the shareholder approval or Nasdaq approval required by Section 1.01 hereof has yet been obtained) (such Common Stock is hereinafter sometimes referred to as "Registrable Securities"), the Company shall thereupon file a registration statement covering all of the Registrable Securities with the Commission within thirty (30) days after the Company receives the Request Notice and shall use its best efforts have such registration statement declared effective by the Commission (a "Registration") within sixty (60) days after receipt of the Request Notice. Within ten (10) days after receipt of such request, the Company will serve written notice (the "Notice") of such registration request to all Purchasers who hold Debentures or Warrants issued hereunder, and the Company will include in such registration all Registrable Securities of such Purchasers except for those for which the Company has received written requests not to be included therein ("Nonregistration Notices"). If, by reason of a decline in market price or otherwise, the shares covered by the Registration Statement are at any time less than the Registrable Securities, the Company agrees to subsequently file an additional registration statement to cover all Registrable Securities not included in the first registration statement except for those submitting Nonregistration Notices. All Purchasers requesting nonregistration of their Registrable Securities pursuant to this Section 6.01 will specify the aggregate number of Registrable Securities not to be registered. All Purchasers permitting the registration of any of their Registrable Securities (the "Selling Holders") shall, prior to the filing of the Registration Statement, deliver a notice to the Company confirming their desire for such registration (the "Request Notice") which notice will also specify the intended methods of disposition thereof. Each Purchaser shall be entitled so to request or participate in a request for one Registration initiated under this Section 6.01(a) filed with and declared effective by the Commission, the expenses of which shall be borne by the Company in accordance with this Agreement, provided, however, that if a Purchaser elects not to participate in a Registration, such Purchaser shall have no further rights to participate in or request a Registration. b. Selection of Underwriter(s). The Purchaser(s) giving a Request Notice with respect to a proposed Demand Registration pursuant to this Section 6.01 shall have sole discretion to select the underwriter(s), if any, to manage the sale of Registrable Securities pursuant to such Registration under this Section 6.01. c. Effective Registration Statement. A Registration requested pursuant to this Section 6.01 will be deemed to have been effected as soon as it has become effective; provided, however that if the offering of Registrable Securities pursuant to such registration is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court within 135 days after it has become effective, such Registration will be deemed not to have been effected; provided, however, that the Company shall have a period of up to sixty (60) days to cause the rescission of such stop order or injunction before the higher interest rate called for by Section 1.04 hereof shall take effect. If any such stop order or injunction is rescinded, the effective periods required by this Agreement shall continue upon such rescission and be extended by the number of days by which such stop order reduced the effective period. 6.02 REGISTRATION PROCEDURES. It shall be a condition precedent to the obligations of the Company and any underwriter(s) to take any action pursuant to this Section 6 that the Selling Holders in any Registration shall furnish to the Company such information regarding them, the Registrable Securities held by them, the intended method of disposition of such Registrable Securities, and such agreements regarding indemnification, disposition of such securities and the other matters referred to in this Section 6 as the Company shall reasonably request. With respect to any Registration pursuant to this Section 6, the Company shall, as expeditiously as practicable: a. Prepare a Form S-3 registration statement, (or the Company if is not eligible to use a Form S-3, then another appropriate form prescribed by the Commission) and file it with the Commission within thirty (30) days after the Company receives a Request Notice and any necessary amendments thereto covering the Registrable Securities of the Selling Holders and use its best efforts to cause such registration statement to become effective within sixty (60) days after receipt of the Request Notice; b. Prepare and file with the Commission such amendments and post-effective amendments to such registration statement and any documents required to be incorporated by reference therein as may be necessary to keep the registration statement effective for a period of three (3) years (or such shorter period which will terminate when there are no longer any Warrants outstanding hereunder or when all Registrable Securities covered by such registration statement have been sold or withdrawn, but not prior to the expiration of the time period referred to in Section 4(3) of the Act and Rule 174 thereunder, if applicable) and cause the prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act (or any successor rule); c. Furnish to such Selling Holder, without charge, at least one conformed copy of the registration statement and any post-effective amendment thereto, upon request, and a reasonable number of copies of the final prospectus and any preliminary prospectus(es) and any amendments or supplements thereto, and any exhibits or documents incorporated therein by reference; d. Immediately notify such Selling Holder, at any time when a prospectus relating thereto is required to be delivered under the Act, when the Company becomes aware of any event which causes the prospectus to contain any untrue statement of material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made not misleading and, as promptly as practicable thereafter, prepare and file and furnish a supplement or amendment to such prospectus correcting same; e. Use its best efforts to cause all securities included in such registration statement to be listed, by the date of the first sale of securities pursuant to such registration statement, on the NASDAQ National Market System; f. Make generally available to Selling Holders an earnings statement satisfying the provisions of Section 11(a) of the Act no later than 90 days after the end of the 12-month period beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the registration statement, which statement shall cover said 12- month period; g. Make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of the registration statement at the earliest possible moment; h. As promptly as practicable after filing with the Commission of any subsequently filed document which is incorporated by reference into a registration statement (such as a Form 10-Q), deliver a reasonable number of copies of such document to such Selling Holder; i. Prior to the date on which the registration statement is declared effective, use its best efforts to register or qualify the securities covered by the registration statement for offer and sale under the securities or blue sky laws of each state of the United States as such Selling Holder or underwriter(s), may reasonably request and 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 to do any and all other acts or things necessary or advisable to enable the disposition in all such jurisdictions of the Registrable Securities covered by the applicable registration statement; j. Enter into such customary agreements (including an underwriting agreement in customary form) and take such other actions customarily taken by registrants as sellers of a majority of such Registrable Securities or the underwriter(s), if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities; k. Obtain a "cold comfort" letter or letters from the Company's independent public accountants in customary form as may reasonably be requested; l. Make available for inspection by any Selling Holder holding Registrable Securities covered by such registration statement, by any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by any such Selling Holder or any such underwriter, all pertinent financial and other records, pertinent corporate documents and properties of the Company, and supply all information reasonably requested by any such Selling Holder, underwriter, attorney, accountant or agent in connection with such registration statement; m. Cooperate with such Selling Holder and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing the Shares to be sold under the registration statement, and enable such securities to be in such denominations and registered in such names as the Selling Holder or the underwriter(s), if any, may request; and n. Use its best efforts to cause the Shares covered by the registration statement to be registered with or approved by such other governmental agencies or authorities within the United States, including, without limitation, the National Association of Securities Dealers, Inc., as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Registrable Securities. The Selling Holders, upon receipt of any notice from the Company of any event of the kind described in paragraph (d) of this Section 6.02, will forthwith discontinue disposition of the Shares until the Selling Holders' receipt of the copies of the supplemented or amended prospectus contemplated by paragraph (d) of this Section 6.02 or until they are advised in writing (the "Advice") by the Company that the use of the prospectus may be resumed, and have received copies of any additional or supplemental filings which are incorporated by reference in the prospectus. In the event the Company shall give any such notice, the time periods mentioned in paragraph (b) of this Section 6.02 shall be extended by the number of days during the period from and including any date of the giving of such notice to and including the date when each seller of securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by paragraph (d) of this Section 6.02 hereof or the Advice. 6.03 BLACKOUT PERIODS. (i) At any time when a registration statement effected pursuant to Section 6.01 relating to Registrable Securities is effective, upon written notice from the Company to the Selling Holders that either: a. after the registration statement covering the Registrable Securities has been effective for a period of at least one hundred twenty (120 days), the Company has determined to engage in a publicly registered offering of its Common Stock and has been advised in writing (with a copy to the Selling Holders) by a nationally recognized independent investment banking firm selected by the Company that, in such firm's opinion, the Selling Holders' sale of Registrable Securities pursuant to the registration statement would adversely affect such immediately planned Company Offering (a "Transaction Blackout"), provided, however, that there may not be more than one Transaction Blackout in any 365 day period; or b. the Company determines in the good faith judgment of legal counsel to the Company that the cessation of the Selling Holders' sale of Registrable Securities pursuant to the registration statement is mandated by law (an "Information Blackout"), the Selling Holders shall suspend sales of Registrable Securities pursuant to such registration statement until the earlier of: a. in the case of a Transaction Blackout, the earliest of (A) thirty (30) days after the beginning of such Transaction Blackout, (b) the termination of any "blackout" period required by the underwriters to be applicable to the Selling Holders, if any, in connection with such Company offering, (C) promptly after abandonment of such Company offering or (D) sixty (60) days after the date of the Company's written notice of a Transaction Blackout, or (ii) in the case of an Information Blackout, the earlier of (A) the date upon which the cessation of such sales would, in the opinion of the Company's legal counsel, no longer be mandated by law, or (iii) thirty (30) days after the beginning of such Information Blackout; or b. such time as the Company notifies the Selling Holders that sales pursuant to such registration statement may be resumed (the number of days from such suspension of sales of the Selling Holders until the day when such sales may be resumed hereunder is hereinafter called a "Sales Blackout Period); provided that the Company may not impose a Transaction Blackout during (a) any underwritten public offering, (b) the 120 day period immediately following the date on which a registration statement effected pursuant to Section 6.01 first became effective or (c) the 365 day period immediately following the expiration of any Transaction Blackout. (ii) if there is a Transaction Blackout or an Information Blackout, the time periods set forth in Section 6.02(b) shall be extended for a number of days equal to the number of days in the Sales Blackout Period. 6.04 REGISTRATION EXPENSES. In the case of any Registration, the Company shall bear all of the costs and expenses of such Registration (including, without limitation, the expenses of preparing any registration statement, Commission and state "blue sky" filing, registration and qualification fees, the cost of providing any legal opinion or "cold comfort" letters reasonably requested by the Selling Holders and printing costs); provided, however, that the Company shall not be responsible for legal fees or expense of counsel for any of the Selling Holders, or for any underwriter's discounts or commissions that are attributable to the Registrable Securities of a Selling Holder. 6.05 INDEMNIFICATION AND CONTRIBUTION. a. Indemnification by the Company. The Company agrees to indemnify and hold harmless each Selling Holder, its officers, directors and agents and each person who controls (within the meaning of the Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act")) such Selling Holder, including, without limitation, any general partner or manager of any thereof, against all losses,claims, damages, liabilities and expenses arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any registration statement, prospectus or preliminary prospectus in which such Selling Holder is participating or in any document incorporated by reference therein or any omission or alleged omission to state therein a material fact necessary to make the statement therein (in the case of the prospectus or any preliminary prospectus, in light of the circumstances under which they were made) not misleading, except insofar as the same are caused by, based upon or contained in any information with respect to such Selling Holder furnished in writing to the Company by such Selling Holder expressly for use therein; provided, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Selling Holder from whom the person asserting such loss, claim, damage or liability purchased the securities if it is determined that it was the responsibility of such Selling Holder to provide such person with a current copy of the prospectus and such current copy of the prospectus would have cured such loss, claim, damage or liability. The Company will also indemnify underwriters (as such term is defined in the Act), their officers and directors and each person who controls such persons (within the meaning of the Act) to the same extent as provided above with respect to the indemnification of the Selling Holders. b. Indemnification by the Selling Holders. In connection with any Registration in which a Selling Holder is participating, such Selling Holder will furnish to the Company in writing such information and affidavits with respect to such Selling Holder as the Company reasonably requests for use in connection with any registration statement or prospectus and agrees to indemnify and hold harmless the Company, its directors, officers and agents and each person who controls (within the meaning of the Act and the Exchange Act) the Company against any losses, claims, damages, liabilities and expenses arising out of or based upon any untrue statement of a material fact or any omission to state a material fact necessary to make the statements in the registration statement or prospectus or preliminary prospectus (in the case of the prospectus or preliminary prospectus, in light of the circumstances under which they were made) not misleading, to the extent, but only to the extent, that such untrue statement or omission is contained in any information or affidavit such Selling Holder furnished in writing to the Company by such Selling Holder expressly for use therein; provided, however, that the amount recoverable by the Company from any Selling Holder under this indemnification provision shall not exceed the amount of net proceeds received by the Selling Holder from the sale of Registrable Securities hereunder; and provided, further, that the indemnity agreement contained in this Section 6.05 shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action arising pursuant to a registration under Section 6 if such settlement is effected without the consent of the Selling Holder (which consent shall not be unreasonably withheld). Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any of the prospective sellers, or any of their respective affiliates, directors, officers or controlling persons and shall survive the transfer of such securities by such seller. c. Conduct of Indemnification Proceedings. Any person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) unless in such indemnified party's reasonable judgment a conflict of interest may exist between such indemnified and indemnifying party, permit the indemnifying party to assume the defense of such claim, jointly with any other indemnifying party similarly notified to the extent it may elect, with counsel reasonably satisfactory to the indemnified party. The failure to so notify the indemnifying party shall relieve the indemnifying party from any liability hereunder with respect to the action to the extent that such failure materially prejudices the indemnifying party; provided, however, that any such failure shall not relieve the indemnifying party from any other liability which it may have to any other party. Whether or not such defense is assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld). No indemnifying party will 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 of such claim or litigation. An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will 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, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the reasonable fees and expenses of such additional counsel or counsels. d. Contribution. If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) of this Section 6.05 is unavailable to an indemnified party as contemplated by the preceding paragraphs (a) and (b) of this Section 6.05 for any reason, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by the indemnified party and the indemnifying party, but also the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. Notwithstanding the foregoing, if the indemnifying party is a Selling Holder, any contribution pursuant to this Section 6.05(d) shall be several and not joint, and shall be limited to the amount of net proceeds received by such Selling Holder from the sale of Registrable Securities hereunder. e. Other Indemnification. Indemnification similar to that specified in the preceding subdivisions of this Section 6.05 (with appropriate modifications) shall be given by the Company and each seller of Registrable Securities with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Act. 6.06 EXCHANGE ACT REPORTS. The Company agrees that at all times after it has filed a registration statement pursuant to the requirements of the Act relating to any class of equity securities of the Company, it will use its best efforts to file in a timely manner all reports required to be filed by it pursuant to the Exchange Act to the extent the Company is required to file such reports. Upon request of a Selling Holder, the Company will furnish the requesting Selling Holder with such information as may be necessary to enable such Selling Holder to effect sales pursuant to Rule 144A. Notwithstanding the foregoing, the Company may deregister any class of its equity securities under Section 12 of the Exchange Act or suspend its duty to file reports with respect to any class of its securities pursuant to Section 15(d) of the Exchange Act if it is then permitted to do so pursuant to the Exchange Act and rules and regulations thereunder. 6.70 PARTICIPATION IN REGISTRATIONS. No Selling Holder may participate in any Registration hereunder unless such Selling Holder (a) agrees to sell the Selling Holder's securities on the basis provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements, and (b) completes and executes all questionnaires, powers of attorney, underwriting agreements and other documents customarily required under the terms of such underwriting arrangements. 6.08 REMEDIES. Each Selling Holder shall have the right and remedy to have the provisions of Section 6.01 specifically enforced by any court having jurisdiction in the event that the Company breaches such provisions, and the Company shall reimburse such Selling Holder for the reasonable costs of the expenses for counsel for such Purchaser incurred in connection with such proceeding. 7. MISCELLANEOUS 7.01 NOTICES. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile or similar writing) and shall be given to such party at its address or facsimile number set forth on the signature pages hereof or such other address or facsimile number as such party may hereafter specify in writing to the Secretary of the Company for the purpose by notice to the party sending such communication. Each such notice, request or other communication shall be effective (i) if given by facsimile, when such message is transmitted to the number set forth on such signature pages or such other number as a party may specify in writing to the Secretary of the Company or (ii) if given by any other means, the earlier of (x) when delivered by hand to the address set forth on such signature pages or such other address as a party may specify in writing to the Secretary of the Company or (y) five business days after the mailing of such notice by certified mail. If more than one Purchaser specified the same address for such notices, then a single notice to such address shall be deemed to be notice to all Purchasers at that address. 7.02 BINDING EFFECT; BENEFITS. This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein provided, however, that nothing herein shall be construed to preclude the assignment by Purchasers hereunder of their respective Options or, in connection with their resale of Warrants, Debentures or Units purchased hereunder, of the rights attendant thereto, including but not limited to the registration rights for Registrable Securities, subject only to compliance with applicable securities laws. This Agreement constitutes the entire agreement and understanding, and supersedes and terminates all prior agreements and understandings, both oral and written, between the parties hereto relating to the subject matter hereof. 7.03 WAIVER. Any party hereto may, without binding any other party, by written notice to another party (a) extend the time for the performance of any of the obligations or other actions of such other party under this Agreement; (b) waive compliance with any of the conditions or covenants of such other party contained in this Agreement; and (c) waive or modify performance of any of the obligations of such other party under this Agreement. Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained herein. Neither the waiver by any party hereto of a breach of any provision hereof or any preceding or succeeding breach nor the failure by any party to exercise any right or privilege hereunder shall be deemed a waiver of such party's rights or privileges hereunder nor shall it be deemed a waiver of such party's rights to exercise the same at any subsequent time or times hereunder. 7.04 AMENDMENT. This Agreement may be amended, modified or supplemented only by a written instrument executed by all of the parties hereto (including Transferees of Purchasers). 7.05 ASSIGNABILITY. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by either the Company or any Purchaser except as otherwise contemplated hereunder and except that the rights of Purchasers may be assigned as provided herein. 7.06 TERMINATION. The right of any Purchaser to Demand Registration hereunder will terminate at such time as there are no longer Registerable Securities held by that Purchaser. 7.07 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF COLORADO WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. 7.08 PRONOUNS. Whenever the context may require any pronoun used herein shall include the corresponding masculine, feminine or neuter forms. 7.09 ATTORNEYS FEES. In the event of a dispute concerning the provisions of this Agreement which results in litigation, arbitration or other dispute resolution proceedings, the parties agree that the legal fees and other expenses of the prevailing party shall be borne by the other, non-prevailing parties to the dispute. 7.10 SECTION AND OTHER HEADINGS. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. 7.11 COUNTERPARTS. This Agreement may be executed in any number of counterparts or separate number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument. 7.12 NO JOINT AND SEVERAL LIABILITY AMONG PURCHASERS. The obligations, representations and warranties of the Purchasers hereunder are made by each Purchaser as to himself, herself or itself only. There shall be no joint and several liability among the Purchasers. IN WITNESS WHEREOF, the Company and each Purchaser has executed this Agreement as of the day and year first above written. ATTEST: VARI-L COMPANY, INC. /s/Jon L. Clark By:/s/David G. Sherman Jon L. Clark, Vice President David G. Sherman, President of Finance and Treasurer Notices: 11101 East 51st Ave. Denver, CO 80239 Facsimile: 303/371-0845 PURCHASERS: Millenco LP Newark Sales Sales Link Rita Folger Carla Stuart Ace Foundation Julie Nordlicht Mark Nordlicht Broadway Partners Robert Cohen Ellen Cohen Lenore Katz Jeff Rubin LIST OF SCHEDULES AND EXHIBITS Schedule 1 Purchasers - First Closing Date Exhibit A Form of Convertible Subordinated Debenture Exhibit B Form of Warrant Exhibit C Form of Accredited Investor Statement EX-4.6 3 DEBENTURE THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THESE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION THEREFROM. VARI-L COMPANY, INC. CONVERTIBLE SUBORDINATED DEBENTURE Debenture No. March 4, 1997 FOR VALUE RECEIVED, the undersigned, Vari-L Company, Inc., a Colorado corporation (the "Company"), does hereby promise to pay to the order of ("Holder"), at the Company's principal business office, or at such other place as Holder may hereafter designate in writing, the principal sum of $ (the "Principal") and interest thereon at the rate of 7% per annum from the date hereof until the first to occur of (i) the date on which the Principal and accrued interest of this Debenture is converted into shares of the Company's $.01 par value common stock ("Common Stock") as provided in Section 1 below (the "Conversion Date"), or (ii) four years from the date hereof (the "Maturity Date") at which time the Principal and all accrued interest thereon shall be due and payable; provided, however, that if the Common Stock into which this Debenture is convertible is not registered with the Securities and Exchange Commission (pursuant to the Securities Purchase Agreement dated March 4, 1997 between the Company and certain purchasers (the "Securities Purchase Agreement")) on or before 120 days from the date hereof, interest shall accrue from the 120th day of the date hereof at the rate of 15% per annum until the first to occur of (i) such registration being effective, (ii) the Conversion Date, or (iii) the Maturity Date. Accrued interest shall be due on the Conversion Date or the Maturity Date, whichever occurs first. 1. CONVERSION. 1.01 CONVERSION BY HOLDER. a. Subject to the limitations provided in the Securities Purchase Agreement, all or any portion of the Principal and accrued and unpaid interest thereon may be converted (a "Conversion") at any time, at the election of the Holder, into the number of shares of the Company's $.01 par value common stock ("Common Stock") equal to the Principal, plus any interest then accrued, divided by the lower of (i) $9.50 per share, or (ii) 84% of the average closing bid price of the Company's Common Stock on the Nasdaq National Market (or such other stock exchange, quotation service or over the counter market on which the Common Stock may be traded) for the ten (10) trading days prior to the Conversion (the "Conversion Price"). b. To effect a Conversion of this Debenture into shares of Common Stock, the Holder shall deliver by telecopy or otherwise, a written request to convert this Debenture into Common Stock ("Conversion Notice") in the form attached hereto as Exhibit A to the Company at its principal office to the attention of Darce Hume, Controller, and Holder shall deliver to Darce Hume at the Company as soon as practicable thereafter, the original Conversion Notice and this Debenture. At its expense, the Company shall within three (3) business days of its receipt of the original Conversion Notice and this Debenture, issue and deliver to Holder at the Company's principal office, or at such other place designated by the Holder, a certificate ("Certificate") evidencing the issuance of such Common Stock to which the Holder is entitled upon such Conversion, together with any cash amounts payable in lieu of the issuance of a fraction of a share of Common Stock as described in Section 1.02 of this Debenture. c. Provided that Holder delivers the original Conversion Notice and this Debenture within two (2) business days of the initial delivery of the Conversion Notice to the Company by telecopy or otherwise, as provided in d above, Conversion shall be deemed to be effective on the date of such initial delivery of the Conversion Notice. Otherwise, Conversion shall be deemed to be effective on the date the Company receives the original Conversion Notice and this Debenture. Thereafter, the Holder shall be treated for all purposes as the record holder of such securities as of the date of conversion. Under certain circumstances, the Company shall be obligated to make a late payment to Holder as set forth in Section 5.03 of the Securities Purchase Agreement. 1.02 FRACTIONAL SHARES. No fractional shares of Common Stock will be issued in connection with any Conversion hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefore in an amount determined in such reasonable manner as may be prescribed by the Board of Directors of the Company. 1.03 REDEMPTION BY THE COMPANY. a. If the Company receives a request to convert all or any portion of this Debenture and the Conversion Price is less than $8 per share (the "116% Redemption Trigger Price"), the Company shall have the right to decline to convert some or all of the Debenture or portion of a Debenture for which Conversion is attempted and instead redeem such portion by payment of 116% of the principal plus accrued and unpaid interest thereon (the "Redemption Amount"). In addition, if the Company has not obtained the shareholder or other approval required by Section 1.01 of the Securities Purchase Agreement, or (at Purchaser's option) if the registration statement referred to above has not been declared effective by the Securities and Exchange Commission by the first anniversary of the date of issuance, then the Company shall be required to redeem this Debenture or any unconverted portion thereof on the first anniversary of the date of issuance hereof for cash equal to 115% of the principal amount hereof plus accrued interest (the "Non-approval Redemption Amount") and payment of such amount shall be made within three (3) business days after first anniversary date of the date of issuance hereof. b. In order for the Company to effect redemption of this Debenture into shares of Common Stock under the first sentence of Section 1.03(a), the Company shall notify the Holder, no later than three (3) business days after the attempted Conversion, of the Company's intent to effect such redemption. At its expense, the Company shall, no later than thirty (30) days thereafter, issue and deliver to the Holder at the Company's principal office or at such other place designated by the Holder, the 116% Redemption Amount by a bank draft for immediately available funds or a check drawn on the Company's account. Interest shall continue to accrue during such thirty (30) day period. Under certain circumstances, the Company shall be obligated to make a late delivery payment to Holder as set forth in Section 5.03 of the Securities Purchase Agreement. 2. SUBORDINATION. As used herein, "Senior Debt" is any secured indebtedness of the Company, whether presently owed or incurred at any time in the future, in favor of one or more banks, savings and loan associations, institutions or other asset-based lenders in an aggregate amount, up to $25,000,000. Upon receipt by the Company of notice from a lender of Senior Debt that the Company is in default under any Senior Debt and continuing during the period of such default (unless such lender has waived the default or has agreed not to enforce any remedies with respect to such default), the indebtedness evidenced by this Debenture shall be subordinated and subject in right of payment to the prior payment in full of the Senior Debt and no payment of Principal or interest on this Debenture shall be made by the Company. Failure to make such payment while any Senior Debt is in default shall not be deemed an Event of Default under this Debenture until the Maturity Date; provided, however, that notwithstanding the occurrence of any such Event of Default on the Maturity Date, payment of Principal and accrued interest hereon shall not be paid so long as any Senior Debt remains in default and this Debenture shall remain subordinated and subject in right of payment to all Senior Debt. If this Debenture remains unpaid after the Maturity Date because it has been subordinated as provided herein, Holder shall continue to have the right to convert pursuant to Section 1 hereof until this Debenture is paid in full. The Holder of this Debenture, by the purchase and acceptance hereof, does hereby agree to and shall be bound by all the provisions contained herein relating to such subordination. 3. EVENTS OF DEFAULT. Subject to the limitation on defaults while Senior Debt is in arrears as described in Section 2 of this Debenture, if any of the following events shall occur (referred to herein as an "Event of Default") and shall be continuing: a. Default in the payment of Principal or accrued interest of the Debenture on the Maturity Date; or b. Default in the due observance or performance of any other covenant, condition or agreement on the part of the Company to be observed or performed pursuant to the terms hereof or of the covenants set forth in Section 5, 6.01 or 6.02 of the Securities Purchase Agreement and such default continues for 20 days after written notice thereof (specifying such default and making the request that the same be remedied in accordance with this Section 3), has been received by the Company and was sent by the Holder or Holders of at least 33-1/3% of the principal amount of the Debentures then outstanding (the Company to give forthwith to all other holders of Debentures at the time outstanding written notice of the receipt of such notice specifying the default referred to therein); or c. The entry of a decree or order by a court having jurisdiction in the premises adjudging the Company as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under federal bankruptcy laws or any other applicable federal estate law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or d. The institution by the Company of proceedings to be adjudicated as bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it or the filing by it of a petition or answer or consent seeking reorganization or release under federal bankruptcy laws or any other applicable federal or state law, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due or the taking of corporate action by the Company in furtherance of any such action; then, the Holder or Holders of at least 33-1/3% in aggregate principal amount of the Debentures at the time outstanding may, at its or their option, by notice to the Company, declare all the Debentures to be, and all the Debentures shall upon the Company's receipt of such notice be and become, forthwith due and payable together with interest accrued thereon without presentment, demand, protest or further notice of any kind, all of which are expressly waived by the Company to the extent permitted by law. 4. STOCK FULLY PAID; RESERVATION OF SHARES. All shares of Common Stock which may be issued upon the exercise of the rights represented by this Debenture will, upon issuance, be fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof. During the period within which the rights represented by this Debenture may be exercised, the Company will at all times have authorized, and reserved for the purpose of the issue upon exercise of the conversion rights evidenced by this Debenture, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Debenture. 5. ADJUSTMENT OF CONVERSION PRICE AND REDEMPTION TRIGGER PRICE. The number and kind of securities issuable upon conversion of this Debenture and the Conversion Price (as well as the Redemption Trigger Price) shall be subject to adjustment from time to time upon the occurrence of certain events, as follows: 5.01 RECLASSIFICATION OR MERGER. In case of any reclassification or change of outstanding securities of the shares of the Company's Common Stock issuable upon conversion of this Debenture (other than a change in par value, or from par value to no par value, or from no par value to par value) or in case of any merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is a continuing corporation and which does not result in any reclassification or change of outstanding securities issuable upon conversion of this Debenture), or in case of any sale of all or substantially all of the assets of the Company, the Company shall, as condition precedent to such transaction, execute a new Debenture or cause such successor or purchasing corporation, as the case may be, to execute a new Debenture, providing that the holder of this Debenture shall have the right to convert such new Debenture and upon such conversion to receive, in lieu of each share of Common Stock theretofore issuable upon exercise of this Debenture, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change or merger by the holder of one share of Common Stock. Such new Debenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this section 5. The provisions of this section 5 shall similarly apply to successive reclassifications, changes, mergers and sales of assets. 5.02 SUBDIVISION OR COMBINATION OF SHARES. If the Company at any time while this Debenture remains outstanding shall subdivide or combine its Common Stock, the Conversion Price and the Redemption Trigger Price shall be proportionately decreased in the case of a subdivision or increased in the case of a combination. 5.03 STOCK DIVIDENDS. If the Company at any time while this Debenture is outstanding shall pay a dividend with respect to Common Stock payable in, or make any other distribution with respect to Common Stock (except any distribution specifically provided for in the foregoing Sections 5.01 and 5.02) of, Common Stock, then the Conversion Price and the Redemption Trigger Price shall be adjusted, from and after the date of determination of shareholders entitled to receive such dividend or distribution, to that price determined by multiplying the Conversion Price or the Redemption Trigger Price, as the case may be, in effect immediately prior to such date of determination by a fraction (a) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution, and (b) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution. 6. NOTICE OF ADJUSTMENT. Whenever the Conversion Price and the Redemption Trigger Price shall be adjusted pursuant to Section 5 hereof, the Company shall make a certificate signed by its chief financial officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Conversion Price and Redemption Trigger Price after giving effect to such adjustment, and shall cause copies of such certificate to be mailed by first class mail, postage prepaid, to the Holder. 7. NOTICE OF CERTAIN ACTIONS. In the event that the Company shall propose at any time: a. to declare any dividend or distribution upon any class or series of its stock, whether in cash, property, stock or other securities, whether or not a regular cash dividend and whether or not out of earnings or earned surplus; b. to offer for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights; c. to effect any reclassification or recapitalization of its Common Stock outstanding involving a change in the Common Stock; or d. to merge or consolidate with or into any other corporation, or sell, lease or convey all or substantially all its assets or property, or to liquidate, dissolve or wind up, whether voluntary or involuntary; then in connection with each such event, this Company shall send to the Holder: e. at least 10 days prior written notice of the date on which a record shall be taken for such dividend, distribution or subscription rights (and specifying the date on which the holders of Common Stock shall be entitled thereto) or for determining rights to vote in respect of the matters referred to in paragraphs a. and b. above; f. in the case of the matters referred to in paragraphs c. and d. above, at least ten (10) days prior written notice of the date for the determination of shareholders entitled to vote thereon (and specifying the date on which the holders of Common Stock shares shall be entitled to exchange their Common Stock for securities or other property deliverable upon the occurrence of such event); and g. prompt notice of any material change in the terms of the transaction described in a. through d. above. 8. COMPLIANCE WITH SECURITIES ACT; NON-TRANSFERABILITY OF DEBENTURE; DISPOSITION OF SHARES OF COMMON STOCK. 8.01 COMPLIANCE WITH SECURITIES ACT. By acceptance hereof, Holder agrees that this Debenture and the shares of Common Stock to be issued upon conversion hereof are being acquired for investment and that it/he/she will not offer, sell or otherwise dispose of this Debenture or any shares of Common Stock to be issued upon conversion hereof except under circumstances which will not result in a violation of the Securities Act of 1933, as amended (the "Act"). In the absence of registration of the shares of Common Stock issuable upon conversion of this Debenture (including but not limited to registration pursuant to the February 28, 1997 Securities Purchase Agreement under which the Debenture was purchased from the Company), upon conversion of this Debenture, Holder shall confirm in writing, in a form attached hereto as Exhibit B, that the shares of Common Stock are being acquired for investment and not with a view toward distribution or resale. In addition, Holder shall provide such additional information regarding Holder's financial and investment background as the Company may reasonably request, to confirm that Holder qualifies as an "accredited investor" under the Act. All shares of Common Stock issued upon exercise of this Debenture (unless registered under the Act) shall be stamped or imprinted with a legend in substantially the following form: "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY AND WITHOUT REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, IF ANY, OR PURSUANT TO EXEMPTIONS THEREFROM." 9. RIGHTS OF SHAREHOLDERS. No Holder shall be entitled to vote or receive dividends or be deemed the record owner of Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Debenture or Debentures shall have been exercised and the shares purchasable upon the exercise hereof shall have become deliverable, as provided herein. 10. REGISTRATION RIGHTS. The Common Stock obtained upon conversion of this Debenture shall have the registration rights, obligations and restrictions set forth in the Securities Purchase Agreement. The term "Registrable Securities" in such Securities Purchase Agreement shall include all Common Stock obtained upon exercise of this Debenture. 11. MISCELLANEOUS. The headings in this Debenture are for purposes of convenience and reference only, and shall not be deemed to constitute a part hereof. Neither this Debenture nor any term hereof may be changed, waived, discharged or terminated orally but only by an instrument in writing signed by the Company and Holder. All notices, requests and other communications to any party hereunder shall be in writing (including telecopy or similar writing) and shall be given to such party at its address or telecopy number contained in the Company's records or such other address or telecopy number as such party may hereafter specify in writing to the Secretary of the Company for that purpose, or, if to the Company, to 11101 E. 51st Ave., Denver, CO 80239, telecopy number 303/373- 3870, attention Darce Hume, Controller. Each such notice, request or other communication shall be effective (i) if given by telecopy, when such message is transmitted to the telecopy number contained in the Company's records or such other number as a party may specify in writing to the Company at such address, or (ii) if given by any other means, the earlier of (x) when delivered by hand to the address contained in the Company's record or such other address as a party may specify in writing to the Company at such address, or (y) five business days after the mailing of such notice by certified mail. IN WITNESS WHEREOF, the Company has caused this Debenture to be executed in its name by the signature or facsimile signature of its President, or by one of its Vice Presidents, and has caused its corporate seal to be hereto affixed and attested by the signature or facsimile signature of its Treasurer and this Debenture to be dated March 4, 1997. VARI-L COMPANY, INC. ATTEST: - ------------------------------ By:------------------------------ Jon L. Clark, Vice President David G. Sherman, President of Finance and Treasurer [SEAL] EXHIBIT A NOTICE OF CONVERSION TO: VARI-L COMPANY, INC. 1. The undersigned hereby elects to convert $ , plus accrued interest thereon, of this Debenture into the number of Shares of Common Stock of Vari-L Company, Inc. into which the Debenture tendered herewith is convertible pursuant to its terms. 2. Please issue a certificate of certificates in the name of the undersigned or in such other names as is specified below --------------------------------------------- (Name) --------------------------------------------- --------------------------------------------- (Address) 3. [For use only in the absence of an effective registration statement covering the Shares] The undersigned represents that the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares. In support thereof, the undersigned has executed an Investment Representation Statement attached hereto as Exhibit B. ---------------------------- (Signature) - --------------- (Date) EXHIBIT B INVESTMENT REPRESENTATION STATEMENT PURCHASER : COMPANY : VARI-L COMPANY, INC. SECURITY : COMMON STOCK AMOUNT : DATE : In connection with the purchase of the above-listed securities (the "Securities"), I, the Purchaser, represent to the Company the following: (a) I am aware of the Company's business affairs and financial condition, and have acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. I am purchasing these Securities for my own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933 ("Securities Act"). (b) I understand that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of my investment intent as expressed herein. In this connection, I understand that, in the view of the Securities and Exchange Commission ("SEC"), the statutory basis for such exemption may be unavailable if my representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future. (c) I further understand that the Securities must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. Moreover, I understand that the Company is under no obligation to register the Securities except as set forth in the Securities Purchase Agreement. In addition, I understand that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company. (d) I am aware of the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public resale of "restricted securities" acquired, directly or indirectly, from the issuer thereof (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of certain conditions. (e) I further understand that at the time I wish to sell the Securities there may be no public market upon which to make such a sale. (f) I further understand that in the event all of the requirements of Rule 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the SEC has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Signature of Purchaser: ------------------------------ Date: ------------------------ EX-4.7 4 WARRANT THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAW. THESE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION THEREFROM. THIS WARRANT MAY NOT BE EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS TO THE REASONABLE SATISFACTION OF THE COMPANY AND LEGAL COUNSEL FOR THE COMPANY. Void after 5:00 P.M., Right to Purchase Shares of Denver, Colorado Time, the Common Stock of Vari-L on March 4, 2001. Company, Inc. Warrant No. VARI-L COMPANY, INC. STOCK PURCHASE WARRANT VARI-L COMPANY, INC., a Colorado corporation (the "Company"), hereby certifies that for value received, , or assigns ("Holder"), is entitled to purchase, subject to the terms and conditions hereinafter set forth, an aggregate of fully paid and nonassessable shares ("Shares") of the Common Stock of the Company ("Common Stock"), at a price of $9.50 per share. The number of Shares to be received upon the exercise of this Warrant and the price to be paid for a Share may be adjusted from time to time as hereinafter set forth. The exercise price of a Share in effect at any time and as adjusted from time to time is hereinafter referred to as the "Warrant Price." 1. TERM. Subject to the limitations provided in the Securities Purchase Agreement dated March 4, 1997 by and among the Company and certain purchasers (the "Securities Purchase Agreement"), the purchase right represented by this Warrant is exercisable, in whole or in part, at any time and from time to time from the date hereof through March 4, 2001. The Company shall have no obligation to furnish any further notice of the expiration date of this Warrant to Holder before expiration date. 2. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT. (a) Subject to paragraph 1 hereof, Holder may exercise the purchase right represented by this Warrant, in whole or in part, by delivering to the principal office of the Company to the attention of Darce Hume, Controller, by telecopy or otherwise, a notice of exercise ("Exercise Notice") in the form attached hereto as Exhibit A, duly executed, and within a reasonable time after such delivery, by delivering to Darce Hume at the Company the original Exercise Notice, this Warrant, and payment to the Company, by check, of an amount equal to the then applicable Warrant Price per share multiplied by the number of Shares then being purchased. At its expense, the Company shall within three (3) business days after its receipt of the original Exercise Notice, this Warrant and payment, issue and deliver to the Holder at the Company's principal office, or at such other place designated by Holder, a certificate evidencing the issuance of those Shares to which Holder is entitled pursuant to the terms hereunder. If this Warrant is not fully exercised, a new Warrant representing the portion of the Shares with respect to which this Warrant shall not have been exercised shall be issued to Holder within thirty (30) days. (b) Provided that Holder delivers the original Conversion Notice, this Warrant and payment within two (2) business days of the initial delivery of the Exercise Notice to the Company by telecopy or otherwise, exercise shall be deemed to be effective on the date the Exercise Notice is first received by the Company by telecopy or otherwise, as described in (a) above. Otherwise, exercise shall be effective on the date the Company receives the original Exercise Notice, this Warrant and payments. Upon the effective date of exercise, the Holder shall be deemed to be the holder of record of the Shares, notwithstanding that the certificate representing the Shares shall not then be actually delivered to such Holder or that such Shares are not then set forth on the stock transfer books of the Company. The Company shall be obligated to make late payment to Holder under the circumstances set forth in Section 5.03 of the Securities Purchase Agreement. 3. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof. During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of the issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. 4. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and kind of securities purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows: (a) Reclassification or Merger. In case of any reclassification or change of outstanding securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or in case of any merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is a continuing corporation and which does not result in any reclassification or change of outstanding securities issuable upon exercise of this Warrant), or in case of any sale of all or substantially all of the assets of the Company, the Company shall, as condition precedent to such transaction, execute a new Warrant or cause such successor or purchasing corporation, as the case may be, to execute a new Warrant, providing that Holder shall have the right to exercise such new Warrant and upon such exercise to receive, in lieu of each share of the Company's Common Stock theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change or merger by the holder of one share of the Company's Common Stock. Such new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this paragraph 4. The provisions of this subparagraph (a) shall similarly apply to successive reclassifications, changes, mergers and sales of assets. (b) Subdivision or Combination of Shares. If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its Common Stock, the Warrant Price shall be proportionately decreased in the case of a subdivision or increased in the case of a combination. (c) Stock Dividends. If the Company at any time while this Warrant is outstanding and unexpired shall pay a dividend with respect to Common Stock payable in, or make any other distribution with respect to Common Stock (except any distribution specifically provided for in the foregoing subparagraphs (a) and (b)) of, Common Stock, then the Warrant Price shall be adjusted, from and after the date of determination of shareholders entitled to receive such dividend or distribution, to that price determined by multiplying the Warrant Price in effect immediately prior to such date of determination by a fraction (a) the numerator of which shall be the total number of shares of Common outstanding immediately prior to such dividend or distribution, and (b) the denominator of which shall be the total number of shares of Common outstanding immediately after such dividend or distribution. (d) Adjustment of Number of Shares. Upon each adjustment in the Warrant Price, the number of Shares of Common Stock purchasable hereunder shall be adjusted, to the nearest whole share, to the product obtained by multiplying the number of Shares purchasable immediately prior to such adjustment in the Warrant Price by a fraction, the numerator of which shall be the Warrant Price immediately prior to such adjustment and the denominator of which shall be the Warrant Price immediately thereafter. 5. NOTICE OF ADJUSTMENTS. Whenever any Warrant Price shall be adjusted pursuant to paragraph 4 hereof, the Company shall make a certificate signed by its chief financial officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Warrant Price or Prices after giving effect to such adjustment, and shall cause copies of such certificate to be mailed by first class mail, postage prepaid, to Holder. 6. NOTICE OF CERTAIN ACTIONS. In the event that the Company shall propose at any time: (i) to declare any dividend or distribution upon any class or series of its stock, whether in cash, property, stock or other securities, whether or not a regular cash dividend and whether or not out of earnings or earned surplus; (ii) to offer for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights; (iii) to effect any reclassification or recapitalization of its Common Stock outstanding involving a change in the Common Stock; or (iv) to merge or consolidate with or into any other corporation, or sell, lease or convey all or substantially all its assets or property, or to liquidate, dissolve or wind up, whether voluntary or involuntary; then in connection with each such event, the Company shall send to Holder: (1) at least 10 days prior written notice of the date on which a record shall be taken for such dividend, distribution or subscription rights (and specifying the date on which the holders of Common Stock shall be entitled thereto) or for determining rights to vote in respect of the matters referred to in (i) and (ii) above; (2) in the case of the matters referred to in (iii) and (iv) above, at least 10 days prior written notice of the date for the determination of shareholders entitled to vote thereon (and specifying the date on which the holders of Common Stock shares shall be entitled to exchange their Common Stock for securities or other property deliverable upon the occurrence of such event); and (3) prompt notice of any material change in the terms of the transaction described in (i) through (iv) above. 7. FRACTIONAL SHARES. No fractional shares of Common will be issued in connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefore in an amount determined in such reasonable manner as may be prescribed by the board of directors of the Company. 8. COMPLIANCE WITH SECURITIES ACT; NON-TRANSFERABILITY OF WARRANT; DISPOSITION OF SHARES OF COMMON. (a) Compliance with Securities Act. By acceptance hereof, Holder agrees that this Warrant and the shares of Common Stock to be issued upon exercise hereof are being acquired for investment and that he will not offer, sell or otherwise dispose of this Warrant or the Shares except under circumstances which will not result in a violation of the Securities Act of 1933, as amended (the "Act"). In the absence of registration of the Shares (including but not limited to registration pursuant to the Securities Purchase Agreement under which the Warrant was purchased from the Company), upon exercise of this Warrant, Holder shall confirm in writing, in the form attached hereto as Exhibit B, that the shares of Common Stock so purchased are being acquired for investment and not with a view toward distribution or resale. In addition, Holder shall provide such additional information regarding Holder's financial and investment background as the Company may reasonably request. All shares of Common Stock issued upon exercise of this Warrant (unless registered under the Act) shall be stamped or imprinted with a legend in substantially the following form: "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY AND WITHOUT REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, IF ANY, OR PURSUANT TO EXEMPTIONS THEREFROM." 9. RIGHTS OF SHAREHOLDERS. Holder shall not be entitled to vote or receive dividends and shall not be deemed the holder of Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose. Nothing contained herein shall be construed to confer upon Holder, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall have become deliverable, as provided herein. 10. REGISTRATION RIGHTS. The Shares obtained upon exercise of this Warrant shall have the registration rights, obligations and restrictions set forth in the Securities Purchase Agreement. The term "Registrable Securities" in such Securities Purchase Agreement shall include the Common Stock obtained upon exercise of this Warrant. 11. GOVERNING LAW. The terms and conditions of this Warrant shall be governed by and construed in accordance with Colorado law. 12. MISCELLANEOUS. The headings in this Warrant are for purposes of convenience and reference only, and shall not be deemed to constitute a part hereof. Neither this Warrant nor any term hereof may be changed, waived, discharged or terminated orally but only by an instrument in writing signed by the Company and the registered holder hereof. All notices, requests and other communications to any party hereunder shall be in writing (including telecopy or similar writing) and shall be given to such party at its address or telecopy number contained in the Company's records or such other address or telecopy number as such party may hereafter specify in writing to the Company at such address for that purpose, or, if to the Company, to 11101 E. 51st Ave., Denver, CO 80239, telecopy number 303/373-3870, attention Darce Hume, Controller. Each such notice, request or other communication shall be effective (i) if given by telecopy, when such message is transmitted to the telecopy number contained in the Company's records or such other number as a party may specify in writing to the Company at such address, or (ii) if given by any other means, the earlier of (x) when delivered by hand to the address contained in the Company's record or such other address as a party may specify in writing to the Company at such address or (y) five business days after the mailing of such notice by certified mail. IN WITNESS WHEREOF, the Company has caused this Warrant to be executed in its name by the signature or facsimile signature of its President, or by one of its Vice Presidents, and has caused its corporate seal to be hereto affixed and attested by the signature or facsimile signature of its Treasurer and this Warrant to be dated March 4, 1997. VARI-L COMPANY, INC. ATTEST: - ------------------------------ By:------------------------------ Jon L. Clark, Vice President David G. Sherman, President of Finance and Treasurer [SEAL] EXHIBIT A NOTICE OF EXERCISE TO: VARI-L COMPANY, INC. 1. The undersigned hereby elects to purchase shares of Common Stock of Vari-L Company, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full, together with all applicable transfer taxes, if any. 2. Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other names as is specified below: --------------------------------------------- (Name) --------------------------------------------- --------------------------------------------- (Address) 3. [For use only in the absence of an effective registration statement covering the Shares] The undersigned represents that the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares. In support thereof, the undersigned has executed an Investment Representation Statement attached hereto as Exhibit B. ------------------------------ (Signature) - --------------- (Date) EXHIBIT B INVESTMENT REPRESENTATION STATEMENT PURCHASER : COMPANY : VARI-L COMPANY, INC. SECURITY : COMMON STOCK AMOUNT : DATE : In connection with the purchase of the above-listed securities (the "Securities"), I, the Purchaser, represent to the Company the following: (a) I am aware of the Company's business affairs and financial condition, and have acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. I am purchasing these Securities for my own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933 ("Securities Act"). (b) I understand that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of my investment intent as expressed herein. In this connection, I understand that, in the view of the Securities and Exchange Commission ("SEC"), the statutory basis for such exemption may be unavailable if my representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future. (c) I further understand that the Securities must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. Moreover, I understand that the Company is under no obligation to register the Securities except as set forth in the Securities Purchase Agreement. In addition, I understand that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company. (d) I am aware of the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public resale of "restricted securities" acquired, directly or indirectly, from the issuer thereof (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of certain conditions. (e) I further understand that at the time I wish to sell the Securities there may be no public market upon which to make such a sale. (f) I further understand that in the event all of the requirements of Rule 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the SEC has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. (g) The exercise price of the Warrant is less than 10% of my net worth excluding home, home furnishings and automobiles. Signature of Purchaser: ------------------------------ Date: ------------------------ EX-4.8 5 AGENT'S WARRANT THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAW. THESE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION THEREFROM. THIS WARRANT MAY NOT BE EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS TO THE REASONABLE SATISFACTION OF THE COMPANY AND LEGAL COUNSEL FOR THE COMPANY. Void after 5:00 P.M., Denver, Colorado Right to Purchase Shares Time, on March 4, 2002. of the Common Stock of Vari L Company, Inc. Warrant No. VARI-L COMPANY, INC. AGENT'S STOCK PURCHASE WARRANT VARI-L COMPANY, INC., a Colorado corporation (the "Company"), hereby certifies that for value received, , or assigns ("Holder"), is entitled to purchase, subject to the terms and conditions hereinafter set forth, an aggregate of fully paid and nonassessable shares ("Shares") of the Common Stock of the Company ("Common Stock"), at the lower of (i) $9.50 per share or (ii) 84% of the average closing bid price of the Company's Common Stock on the Nasdaq National Market (or such other stock exchange, quotation service or over the counter market on which the Common Stock may be traded) for the ten (10) trading days prior to the date of exercise. The number of Shares to be received upon the exercise of this Warrant and the price to be paid for a Share may be adjusted from time to time as hereinafter set forth. The exercise price of a Share in effect at any time and as adjusted from time to time is hereinafter referred to as the "Warrant Price." 1. TERM. Subject to the limitations provided in the Securities Purchase Agreement dated March 4, 1997 by and among the Company and certain purchasers (the "Securities Purchase Agreement"), the purchase right represented by this Warrant is exercisable, in whole or in part, at any time and from time to time from the date hereof through March 4, 2002. The Company shall have no obligation to furnish any further notice of the expiration date of this Warrant to Holder before expiration date. 2. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT. (a) Subject to paragraph 1 hereof, Holder may exercise the purchase right represented by this Warrant, in whole or in part, by delivering to the principal office of the Company to the attention of Darce Hume, Controller, by telecopy or otherwise, a notice of exercise ("Exercise Notice") in the form attached hereto as Exhibit A, duly executed, and within a reasonable time after such delivery, by delivering to Darce Hume at the Company the original Exercise Notice, this Warrant, and payment to the Company, by check, of an amount equal to the then applicable Warrant Price per share multiplied by the number of Shares then being purchased. At its expense, the Company shall within three (3) business days after its receipt of the original Exercise Notice, this Warrant and payment, issue and deliver to the Holder at the Company's principal office, or at such other place designated by Holder, a certificate evidencing the issuance of those Shares to which Holder is entitled pursuant to the terms hereunder. If this Warrant is not fully exercised, a new Warrant representing the portion of the Shares with respect to which this Warrant shall not have been exercised shall be issued to Holder within thirty (30) days. (b) Provided that Holder delivers the original Conversion Notice, this Warrant and payment within two (2) business days of the initial delivery of the Exercise Notice to the Company by telecopy or otherwise, exercise shall be deemed to be effective on the date the Exercise Notice is first received by the Company by telecopy or otherwise, as described in (a) above. Otherwise, exercise shall be effective on the date the Company receives the original Exercise Notice, this Warrant and payments. Upon the effective date of exercise, the Holder shall be deemed to be the holder of record of the Shares, notwithstanding that the certificate representing the Shares shall not then be actually delivered to such Holder or that such Shares are not then set forth on the stock transfer books of the Company. The Company shall be obligated to make late payment to Holder under the circumstances set forth in Section 5.03 of the Securities Purchase Agreement. 3. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof. During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of the issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. 4. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and kind of securities purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows: (a) RECLASSIFICATION OR MERGER. In case of any reclassification or change of outstanding securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or in case of any merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is a continuing corporation and which does not result in any reclassification or change of outstanding securities issuable upon exercise of this Warrant), or in case of any sale of all or substantially all of the assets of the Company, the Company shall, as condition precedent to such transaction, execute a new Warrant or cause such successor or purchasing corporation, as the case may be, to execute a new Warrant, providing that Holder shall have the right to exercise such new Warrant and upon such exercise to receive, in lieu of each share of the Company's Common Stock theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change or merger by the holder of one share of the Company's Common Stock. Such new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this paragraph 4. The provisions of this subparagraph (a) shall similarly apply to successive reclassifications, changes, mergers and sales of assets. (b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its Common Stock, the Warrant Price shall be proportionately decreased in the case of a subdivision or increased in the case of a combination. (c) STOCK DIVIDENDS. If the Company at any time while this Warrant is outstanding and unexpired shall pay a dividend with respect to Common Stock payable in, or make any other distribution with respect to Common Stock (except any distribution specifically provided for in the foregoing subparagraphs (a) and (b)) of, Common Stock, then the Warrant Price shall be adjusted, from and after the date of determination of shareholders entitled to receive such dividend or distribution, to that price determined by multiplying the Warrant Price in effect immediately prior to such date of determination by a fraction (a) the numerator of which shall be the total number of shares of Common outstanding immediately prior to such dividend or distribution, and (b) the denominator of which shall be the total number of shares of Common outstanding immediately after such dividend or distribution. (d) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in the Warrant Price, the number of Shares of Common Stock purchasable hereunder shall be adjusted, to the nearest whole share, to the product obtained by multiplying the number of Shares purchasable immediately prior to such adjustment in the Warrant Price by a fraction, the numerator of which shall be the Warrant Price immediately prior to such adjustment and the denominator of which shall be the Warrant Price immediately thereafter. 5. NOTICE OF ADJUSTMENTS. Whenever any Warrant Price shall be adjusted pursuant to paragraph 4 hereof, the Company shall make a certificate signed by its chief financial officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Warrant Price or Prices after giving effect to such adjustment, and shall cause copies of such certificate to be mailed by first class mail, postage prepaid, to Holder. 6. NOTICE OF CERTAIN ACTIONS. In the event that the Company shall propose at any time: (i) to declare any dividend or distribution upon any class or series of its stock, whether in cash, property, stock or other securities, whether or not a regular cash dividend and whether or not out of earnings or earned surplus; (ii) to offer for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights; (iii) to effect any reclassification or recapitalization of its Common Stock outstanding involving a change in the Common Stock; or (iv) to merge or consolidate with or into any other corporation, or sell, lease or convey all or substantially all its assets or property, or to liquidate, dissolve or wind up, whether voluntary or involuntary; then in connection with each such event, the Company shall send to Holder: (1) at least 10 days prior written notice of the date on which a record shall be taken for such dividend, distribution or subscription rights (and specifying the date on which the holders of Common Stock shall be entitled thereto) or for determining rights to vote in respect of the matters referred to in (i) and (ii) above; (2) in the case of the matters referred to in (iii) and (iv) above, at least 10 days prior written notice of the date for the determination of shareholders entitled to vote thereon (and specifying the date on which the holders of Common Stock shares shall be entitled to exchange their Common Stock for securities or other property deliverable upon the occurrence of such event); and (3) prompt notice of any material change in the terms of the transaction described in (i) through (iv) above. 7. FRACTIONAL SHARES. No fractional shares of Common will be issued in connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefore in an amount determined in such reasonable manner as may be prescribed by the board of directors of the Company. 8. COMPLIANCE WITH SECURITIES ACT; NONTRANSFERABILITY OF WARRANT; DISPOSITION OF SHARES OF COMMON. (a) COMPLIANCE WITH SECURITIES ACT. By acceptance hereof, Holder agrees that this Warrant and the shares of Common Stock to be issued upon exercise hereof are being acquired for investment and that he will not offer, sell or otherwise dispose of this Warrant or the Shares except under circumstances which will not result in a violation of the Securities Act of 1933, as amended (the "Act"). In the absence of registration of the Shares, upon exercise of this Warrant, Holder shall confirm in writing, in the form attached hereto as Exhibit B, that the shares of Common Stock so purchased are being acquired for investment and not with a view toward distribution or resale. In addition, Holder shall provide such additional information regarding Holder's financial and investment background as the Company may reasonably request. All shares of Common Stock issued upon exercise of this Warrant (unless registered under the Act) shall be stamped or imprinted with a legend in substantially the following form: "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY AND WITHOUT REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, IF ANY, OR PURSUANT TO EXEMPTIONS THEREFROM." 9. RIGHTS OF SHAREHOLDERS. Holder shall not be entitled to vote or receive dividends and shall not be deemed the holder of Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose. Nothing contained herein shall be construed to confer upon Holder, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall have become deliverable, as provided herein. 10. REGISTRATION RIGHTS. The Shares obtained upon exercise of this Warrant have unlimited "piggyback" registration rights, including the right to piggyback on the demand registration rights provided by the Securities Purchase Agreement for purchasers of Debentures and Warrants thereunder. The term "Registrable Securities" in such Securities Purchase Agreement shall include the Common Stock obtained upon exercise of this Warrant. 11. GOVERNING LAW. The terms and conditions of this Warrant shall be governed by and construed in accordance with Colorado law. 12. MISCELLANEOUS. The headings in this Warrant are for purposes of convenience and reference only, and shall not be deemed to constitute a part hereof. Neither this Warrant nor any term hereof may be changed, waived, discharged or terminated orally but only by an instrument in writing signed by the Company and the registered holder hereof. All notices, requests and other communications to any party hereunder shall be in writing (including telecopy or similar writing) and shall be given to such party at its address or telecopy number contained in the Company's records or such other address or telecopy number as such party may hereafter specify in writing to the Company at such address for that purpose, or, if to the Company, to 11101 E. 51st Ave., Denver, CO 80239, telecopy number 303/373-3870, attention Darce Hume, Controller. Each such notice, request or other communication shall be effective (i) if given by telecopy, when such message is transmitted to the telecopy number contained in the Company's records or such other number as a party may specify in writing to the Company at such address, or (ii) if given by any other means, the earlier of (x) when delivered by hand to the address contained in the Company's record or such other address as a party may specify in writing to the Company at such address or (y) five business days after the mailing of such notice by certified mail. IN WITNESS WHEREOF, the Company has caused this Warrant to be executed in its name by the signature or facsimile signature of its President, or by one of its Vice Presidents, and has caused its corporate seal to be hereto affixed and attested by the signature or facsimile signature of its Treasurer and this Warrant to be dated March 4, 1997. VARI-L COMPANY, INC. ATTEST: - --------------------------- By:------------------------------------ Jon L. Clark, Vice President David G. Sherman, President of Finance and Treasurer [SEAL] EXHIBIT A NOTICE OF EXERCISE TO: VARI-L COMPANY, INC. 1. The undersigned hereby elects to purchase ---------- shares of Common Stock of Vari-L Company, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full, together with all applicable transfer taxes, if any. 2. Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other names as is specified below: ------------------------------------------------------ (Name) ------------------------------------------------------ ------------------------------------------------------ (Address) 3. [For use only in the absence of an effective registration statement covering the Shares] The undersigned represents that the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares. In support thereof, the undersigned has executed an Investment Representation Statement attached hereto as Exhibit B. ------------------------------------- (Signature) - -------------------------- (Date) EXHIBIT B INVESTMENT REPRESENTATION STATEMENT PURCHASER : COMPANY : VARI-L COMPANY, INC. SECURITY : COMMON STOCK AMOUNT : DATE : In connection with the purchase of the above-listed securities (the "Securities"), I, the Purchaser, represent to the Company the following: (a) I am aware of the Company's business affairs and financial condition, and have acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. I am purchasing these Securities for my own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933 ("Securities Act"). (b) I understand that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of my investment intent as expressed herein. In this connection, I understand that, in the view of the Securities and Exchange Commission ("SEC"), the statutory basis for such exemption may be unavailable if my representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future. (c) I further understand that the Securities must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. Moreover, I understand that the Company is under no obligation to register the Securities except as set forth in the Securities Purchase Agreement. In addition, I understand that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company. (d) I am aware of the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public resale of "restricted securities" acquired, directly or indirectly, from the issuer thereof (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of certain conditions. (e) I further understand that at the time I wish to sell the Securities there may be no public market upon which to make such a sale. (f) I further understand that in the event all of the requirements of Rule 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the SEC has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. (g) The exercise price of the Warrant is less than 10% of my net worth excluding home, home furnishings and automobiles. Signature of Purchaser: ---------------------------------------- Date: ---------------------------------- EX-5 6 OPINION GORSUCH KIRGIS L.L.C. Attorneys at Law 1401 Seventeenth Street, Suite 1100 Denver, Colorado 80202 Telephone (303) 299-8900 Fax (303) 298-0215 April 14, 1997 Vari-L Company, Inc. 11101 E. 51st Avenue Denver, Colorado 80239 Re: Vari-L Company, Inc. Registration Statement on Form S-3 Gentlemen: We are counsel to Vari-L Company, Inc., a Colorado cor- poration (the "Company"), in connection with the preparation of a Registration Statement on Form S-3 filed with the Securities and Exchange Commission on April 14, 1997 (the "Registration Statement"), relating to a proposed offering by the Selling Shareholders to the public of a maximum of 1,943,900 shares of the Company's Common Stock, $.01 par value (the "Common Stock"). In this connection, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such corporate records, certificates and written and oral statements of officers, legal counsel and accountants of the Company and of public officials, and other documents that we have considered necessary and appropriate for this opinion, and, based thereon, we advise you that, in our opinion: 1. The Company is a corporation duly organized and validly existing under the laws of the State of Colorado; and 2. The Common Stock, when sold pursuant to and in accordance with the Registration Statement, will be validly issued, fully paid and nonassessable. We hereby consent to the use of our name beneath the caption "Legal Matters" in the Prospectus forming a part of the Registration Statement and to the filing of this opinion as Exhibit 5 thereto. Very truly yours, GORSUCH KIRGIS L.L.C. /s/Gorsuch Kirgis L.L.C. EX-23.1 7 AUDITOR CONSENT EXHIBIT 23 HAUGEN, SPRINGER & CO. Certified Public Accountants 9250 East Costilla Avenue Robert S. Haugen, C.P.A. Suite 150 Charles K. Springer, C.P.A. Englewood, Colorado 80012 (303) 799-6969 FAX (303) 799-6974 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors Vari-L Company, Inc. We consent to the use of our report dated February 5, 1997, relating to the balance sheets of Vari-L Company, Inc. as of December 31, 1996 and 1995, and the related statements of income, stockholders' equity, and cash flows for the years then ended, which report appears in the December 31, 1996 Annual Report on Form 10-KSB of Vari-L Company, Inc., incorporated herein by reference. /s/Haugen, Springer & Co. HAUGEN, SPRINGER & CO. April 9, 1997 -----END PRIVACY-ENHANCED MESSAGE-----