10-K

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2002

Commission File No. 0-23866

VARI-L COMPANY, INC.

(Name of Issuer in its Charter)

Colorado
(State or other jurisdiction of incorporation) 06-0679347
(I.R.S. Employer Identification No.)

4895 Peoria Street
Denver, Colorado 80239
(303) 371-1560
(Address and Telephone Number of Principal Executive Offices)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Title of Class
Common Stock, $.01 Par Value

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.       Yes No

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K contained in this form, and no disclosure will be contained, to the best of issuer’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    

At September 30, 2002, 7,264,205 shares of Common Stock were outstanding. The aggregate market value of the Common Stock held by non-affiliates on September 30, 2002 was $3,922,671 based on the OTCBB closing price of $0.54 per share on that date.

TABLE OF CONTENTS

PART I
	Item 1. Business
	Item 2. Description of Property
	Item 3. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 4A. Executive Officers of the Registrant
PART II
	Item 5. Market for Common Equity and Related Stockholder Matters.
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7A. Quantitative and Qualitative Disclosures about Market Risk
	Item 8. Financial Statements
	Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
PART III
	Item 10. Directors and Executive Officers of the Registrant
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
	Item 13. Certain Relationships and Related Transactions
	Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
SIGNATURES
Financial Statements
EXHIBIT INDEX
EX-3.2 Amended and Restated Bylaws
EX-4.7 Amendment No. 1 to Rights Agreement
EX-10.15 Agreement with Asvan Technology, LLC
EX-10.16 Amendment to Credit & Security Agreement
EX-10.17 Form of Indemnity Agreement
EX-10.18 Employment Agreement - Charles R Bland
EX-10.19 Employment Agreement - Russell M Crouch
EX-10.20 Employment Agreement - Richard Dutkiewicz
EX-10.21 Employment Agreement - Ernest C Hafersat
EX-10.22 Employment Agreement - Janice E Hyland
EX-10.23 Employment Agreement - Matthew D Pope
EX-10.24 Employment Agreement - Larry M Romero
EX-10.25 Employment Agreement-Timothy Schamberger
EX-10.26 Employment Agreement - Daniel J Wilmot
EX-10.27 Engagement Letter-Green, Manning & Bunch
EX-10.29 Indemnity Agreement - Charles R Bland
EX-10.30 Indemnity Agreement-Richard P. Dutkiewicz
EX-10.31 Memorandum of Understanding
EX-10.32 Loan Agreement - Sirenza Microdevices Inc
EX-10.33 Security Agreement - Sirenza Microdevices
EX-10.34 Exclusivity & Right of First Refusal Agmt
EX-10.35 Resale Registration Rights Agreement
EX-23 Consent of KPMG LLP

PART I

Item 1. Business

Introduction

We design, manufacture and market a wide variety of radio frequency and microwave components and devices for use in wireless communications. Our products are used in many different commercial and military/aerospace applications, including wireless telecommunications networks, wireless base stations, wireless point-to-point radio systems, wireless point-to-multi-point radio systems, wireless local area networks, satellite payload, test equipment (instrumentation) and ground communications, radar systems, weapons guidance systems and advanced telemetry systems. We operate as a single business segment.

Our corporate headquarters are currently located at 4895 Peoria Street, Denver, Colorado 80239, and the telephone number is (303) 371-1560. Our website address is www.vari-l.com. We also conduct certain portions of our operations in three other buildings within a three-mile radius of our headquarters. The three facilities have more than 25,000 square feet of manufacturing space.

Impact of Industry Condition on our Liquidity and Related Actions

The continuing weakness in the wireless telecommunications industry has caused our customers to continually revise their estimates of demand for our products downward. These downward adjustments have required us to provide revised financial projections to our lender, Wells Fargo Business Credit, Inc. (“Wells Fargo”). In early May 2002, we determined that additional equity capital or subordinated debt would be necessary to provide sufficient liquidity through this period of weakened sales. At that time, we commenced efforts to identify potential investors and solicit their interest in a financing transaction.

In late May 2002, as a result of declining revenues, we determined that we were not in compliance with the minimum tangible net worth covenant of our loan agreement with Wells Fargo, which constitutes an event of default. We met with Wells Fargo and identified our plan to find additional sources of financing sufficient to potentially cure the default. In subsequent meetings with Wells Fargo, we identified various alternatives to our default and potential solutions to the default for the near term. In early July 2002, we received notice from Wells Fargo confirming that an event of default had occurred. Wells Fargo implemented the default rate of interest on our outstanding loans, but took no other actions at that time.

For the period from May 2002 to August 2002, we received several indications of interest in an acquisition of all or substantially all of our assets or a potential private equity infusion. As a result, we decided to engage the investment-banking firm of Green, Manning & Bunch, LTD (“GMB”) to act as our financial advisor to assist in evaluating our strategic alternatives, including a financing transaction or the sale of all or part of the Company. We worked with GMB to identify potential financing sources and potential acquirers and held discussions with a number of parties about these potential transactions in August 2002. Potential acquirers were advised that the Company would require substantial bridge financing pending completion of any acquisition in order to repay the Wells Fargo credit line and to meet our working capital needs pending completion of any acquisition transaction.

On September 26, 2002, we entered into a forbearance agreement with Wells Fargo that is in effect until November 15, 2002. The forbearance agreement, which is explained in detail in Item 7 “Liquidity and Capital Resources — Credit Facility,” provides us with access to our revolving line of credit for our immediate cash flow needs.

On October 7, 2002, we entered into an agreement for a $5.3 million senior secured bridge loan facility (“Loan Facility”) with Sirenza Microdevices, Inc. (“Sirenza”). As a condition to the Loan Facility, we signed an Exclusivity and Right of First Refusal Agreement (“Exclusivity Agreement”) with Sirenza. The Loan Facility is effective for the period October 7, 2002 to September 25, 2003, is secured by

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substantially all of our assets, and has an annual interest rate of 25%. The Loan Facility provides for an initial loan of approximately $1.4 million to be drawn down immediately to pay off our obligations to Wells Fargo, and an additional $3.9 million credit facility which may be drawn down in accordance with an agreed schedule. The initial $1.4 million loan is convertible upon certain occurrences at Sirenza’s option into shares of common stock representing 19.9% of our then outstanding fully-diluted shares of common stock. The Loan Facility provides for a prepayment fee of $1 million in the event we undertake a change of control transaction with a party other than Sirenza. In addition, the Exclusivity Agreement limits our ability to solicit or negotiate transactions with other potential acquirers or financing sources, and grants Sirenza a right of first refusal if a third party submits an acquisition proposal. The Loan Facility and Exclusivity Agreement are discussed more fully in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

As described in Item 3. “Legal Proceedings,” we are a party to a securities class action. One of the key conditions to the financing transaction with Sirenza was a settlement of the securities class action brought upon behalf of certain shareholders (“the Class”). Throughout fiscal 2002, we have been in negotiations with the Class to reach a settlement that was fair and equitable to both our current and former shareholders. On October 3, 2002, we signed a memorandum of understanding (“MOU”) to settle the securities class action. The MOU, which is subject to final approval by the United States District Court for the District of Colorado, requires us to:

• issue 2.0 million shares of our common stock;

• pay $250,000 to the Class by December 15, 2002;

• transfer our claims against Joseph H. Kiser, David G. Sherman, Jon C. Clark and Derek L. Bailey to the Class, except that we will retain our claims related to the lawsuit filed against David Sherman, Joseph Kiser, Joan Sherman, the Kathryn Sherman Trust and J.C. Enterprises; and,

• assign the proceeds or other damages to the Class from the directors and officers insurance policies with Reliance Insurance Company in the policy amount of $5.0 million and Agricultural Excess and Surplus Insurance Company in the policy amount of $2.5 million.

The MOU will be submitted to the court and provides for a dismissal of all actions against us, our current and former members of our board of directors who have never been included in the lawsuit, and our current and former officers except for Messrs. Bailey, Clark, Kiser and Sherman. The elements of the MOU are described more fully in Item 3. “Legal Proceedings.”

Accounting Restatement and Related Issues

In late 1999, the Securities and Exchange Commission (the “SEC”) commenced an investigation into our accounting and reporting practices for the periods prior to and including 1999. The investigation ultimately led to the withdrawal of audit reports issued by our previous auditors for the 1997, 1998 and 1999 financial statements. In September 2001 we agreed to a settlement with the SEC under which a federal district court issued an injunction against future violations of reporting, proxy and anti-fraud provisions by us, but did not require us to pay any civil penalties or money damages. See “Legal Proceedings.”

As a result of the withdrawal of audit reports for the 1997, 1998 and 1999 financial statements, we no longer met the requirements for listing on NASDAQ. Beginning September 11, 2000, our securities were quoted on the other OTC market. In May 2002, an application for listing was filed with the Over the Counter Bulletin Board system (the “OTCBB”). On June 26, 2002, the application was accepted and our common stock began trading on the OTCBB under the stock symbol “VARL.”

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Acquisition of Asvan Technology, LLC

In January 2002, we acquired certain assets of Asvan Technology, LLC. The purchase price was $100,000 in cash and a two year promissory note in the amount of $175,000 secured by a letter of credit and provides for certain additional payments based upon certain sales by the Company of Yttrium Iron Garnet (“YIG”) based products. The note has principal and interest payable in equal monthly installments at an annual rate of 10%. The assets acquired include YIG based technology, which enables improved performance in wireless components and systems. The YIG-based technology forms the basis of a new line of advanced products that addresses a wide range of new and existing wireless, military and instrumentation applications.

Industry Background

Although the industry is currently experiencing a slowdown, we believe that, in the long term, worldwide demand for integrated voice, data and video communications services will increase. The volume of high-speed data traffic across global communications networks has grown as the public internet and private business intranets have become essential for daily communications and electronic commerce. The number of people using the internet to buy and sell goods and services is also expected to continue to grow. Servicing the increasing demand for higher bandwidth content and applications requires cost-effective and high-speed connections, which are often unavailable or inadequate over existing wire-based networks. For many users, wireless communications provide an advantageous access solution for high-speed internet and multimedia services. This is underscored by the increasing number of wireless subscribers worldwide.

Despite this growth in customer demand, expenditures for capital infrastructure equipment by service providers began to decline rapidly during the later half of calendar year 2001. This severe market downturn has had a negative impact on all of our wireless product lines, and it appears that these unfavorable wireless market conditions may continue at least through calendar year 2002.

The demand for Radio Frequency (“RF”) components for the military systems and defense applications has been a consistent portion of our sales. These components are used in radar application, smart bombs, missiles and military communications. These applications are expected to remain in demand with the increased readiness stance adopted by the US Government after the events of September 11, 2001. Many of these applications are seeking cost effective solutions and a mix of commercial and “mil standard” design and manufacturing techniques to meet the reliability, cost and rapid deployment needs now demanded of the US military. We are positioned to apply both design and manufacturing techniques to meet those demands.

Overview

Our products are primarily used as parts or components of other manufacturers’ wireless communications products or equipment. Wireless communication is the transmission of voice or data signals through the air, without a physical connection, such as a metal wire or fiber-optic cable. Information transmitted through wireless communications equipment is transmitted by electromagnetic waves, also known as signals. Electromagnetic waves vary in length, frequency, and intensity. The range of electromagnetic waves is called the spectrum which encompasses audio near the low end and light toward the higher end. In between is the radio spectrum used in most wireless communications. RF refers to the lower frequencies in the spectrum while “microwave” refers to higher frequencies.

For more than 49 years, we have supplied wireless communications products to the military/aerospace industry. In 1993, we expanded our engineering, manufacturing and sales efforts to address the growing demand for commercial wireless communications products. In 2002, we expanded our current product line by introducing wideband voltage-controlled oscillators, stripline couplers and YIG-based technology.

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Currently, our principal commercial customers are original equipment manufacturers (“OEMs”) and contract manufacturers that design and build electronic products and equipment such as cellular base stations, point to point radios, pagers and radar systems. In recent years, the trend in the electronics industry has been for many OEMs to use contract manufacturers to build all or a potion of their end products. However, OEMs often control the decision as to which component designs best meet their needs. Accordingly, we consider OEMs to be customers for our products even if they purchase our products through contract manufacturers. These contact manufacturers include Solectron, Flextronics and Sanmina-SCI. Our commercial product lines are marketed to OEMs including Motorola, Ericsson, Lucent, Nokia, Microwave Data Systems, Agere, Hughes Network Systems, GE Medical and Siemens. We sell our military/aerospace product lines to companies such as Raytheon, Lockheed Martin, Northrup Grumman and Textron. We have been recognized by our customers through the years for our ability to develop, manufacture and deliver highly reliable, innovative products.

Our product lines fall into two major categories: products which produce electromagnetic signals, which we refer to as signal source components, and products which receive or process electromagnetic signals, or passive components. Sales of our products are generated through a combination of manufacturers’ representatives and our own direct sales force team, and are supplemented by advertising in trade magazines, participating in trade shows and on our website. Most of our products are customized according to our customers’ specifications, but we also produce some standard products. We publish product specifications and capabilities in trade magazines, on our website and in our own catalog. We also design and manufacture custom products in response to specific customer requirements. The majority of our sales are in parts that are customized to meet the performance requirements of specific customers.

Products

We have three primary product lines:

• Commercial Signal Sources

• High-Reliability Signal Sources

• Military Signal Processing Components

Our product strategy is to offer standardized design platforms which can be efficiently manufactured in mass production but, at the same time, can also be customized for the needs of each customer.

Most of our revenue comes from sales of signal source components namely, voltage-controlled oscillators (“VCOs”) and phase locked loop synthesizers (“PLLs”). These signal source components are designed to produce a high quality signal that can be used over a range of radio frequencies. We hold six patents related to signal source design and technology.

Commercial Signal Source Components

Our signal source products are designed to permit high-volume, lower cost manufacturing. We have also developed manufacturing techniques that allow parts to be very closely spaced when assembled without sacrificing quality or capacity. This allows a component to be smaller in size or to deliver improved performance in the same size component. We produce these products in surface-mount packages compatible with the high-speed assembly techniques used in the industry and typically delivered to the customers on tape and reel.

Over the last seven years, most of our revenues have come from sales of our commercial narrowband VCOs. However we are beginning to see a shift in the wireless industry from VCOs to PLLs resulting in steadily increasing sales of our PLLs. The PLL assemblies consist of our VCOs integrated with other components and have a higher average selling price than our VCOs. Our VCOs and PLLs are higher

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performance products. Accordingly, they are used in high-performance cellular base stations and other demanding applications where signal quality is especially important. For example, low phase noise is an extremely desirable quality in a wireless signal because it usually means better signal quality and greater transmission range or higher data rates. Lower phase noise is one of the key features of our VCOs, PLLs and other signal source products. Through our research and development efforts, we continue to work to improve our products’ performance, including our low noise designs.

As part of our continuing research and development efforts to provide advanced solutions to our customers, we introduced a new wide-band family of VCOs in February 2002. For many years we have been a leader in developing VCOs for the narrowband market so a move into the wideband market was a natural progression. Our wideband VCOs are used in satellite, cable and military applications where demand is highest for low phase noise, combined with wide bandwidth and cost effective products.

Our customers constantly demand even smaller sizes for the same or even higher performance products. Responding to this demand with competitively priced products is one of our biggest challenges.

High-Reliability Signal Source Components

Our high reliability, or hi-rel, signal source components perform the same function as the commercial signal source components. Our hi-rel signal source components, however, are constructed using different assembly techniques because they are designed to operate in different operating environments. These components are designed for wideband applications (i.e., applications involving a wider range of signal frequencies) and are constructed in hermetically sealed packages for use over extended temperature ranges and in adverse environments. Hi-rel products are typically specified for both military/aerospace and high-end industrial applications. These components are designed for use in either “through-hole” or “surface-mount” packages, depending on customer requirements. These products generally sell for a substantial premium over our commercial products due to the additional labor and material content required. In recent years we have seen an increasing demand where commercial products are used in military applications. If this trend continues, it could have an adverse effect on this product line.

Military Signal Processing Components

Our military signal processing components are primarily used in military and aerospace applications. Among these products are power dividers and combiners used for directing RF and microwave signals, solid state switches used to change the routing of RF and microwave signals, and transformers used to convert signals between different impedances. We also produce mixers, which are used to convert the frequency of RF and microwave signals to baseband signals. The production of custom-designed components usually entails the modification of existing products to meet the specific performance criteria of our customer, but may, in certain instances, require the design of an entirely new product.

Other Products

In January 2002, we acquired certain assets of Asvan Technology, LLC. The assets acquired include YIG- based technology, which enables improved performance in wireless components and systems. The YIG-based technology forms the basis of a new line of advanced products that addresses a wide range of new and existing wireless applications. The acquisition is consistent with our strategy to diversify our product mix with the addition of next generation wireless technologies that are complementary to our existing signal source product lines. We believe the YIG technology can effectively be applied to military, test equipment (instrumentation) and telecommunications applications.

In March 2002, we further expanded our product mix with the introduction of a line of 3-dB hybrid couplers. 3-dB hybrid couplers are critical components used to build high-power amplifiers, vector modulators and antenna systems.

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We also offer other passive components (couplers, transformers and power dividers) that are used in a variety of fiber-optic applications, including cable television and point-to-point data transmission networks. These are used in specific wideband, high performance niche applications. However, these products do not account for a significant percentage of total revenue for the year ended June 30, 2002.

Manufacturing

We currently manufacture most of our products in our own facilities in Denver, Colorado. All of our products are completed and tested at our manufacturing facilities in Denver, Colorado, although we are actively considering increasing our use of overseas contract manufacturers to reduce our production costs. Our 3dB hybrid couplers are manufactured by a contract manufacturer who specializes in the unique production process required by this product. Final testing and marking is performed at our facilities in Denver, Colorado.

We use automated and semi-automated equipment to manufacture our commercial signal source components. This equipment includes “pick and place” machines, automated test stations, soldering robots, laser marking equipment and tape and reel equipment. The automated equipment improves product consistency and quality and reduces labor cost. We have three automated “pick and place” assembly lines which have been upgraded to meet higher demand. In 1998 and 1999, we automated other aspects of our manufacturing process and upgraded our “pick and place” capacity to meet increased demand. In 2000 and 2001, we continued to add additional manufacturing capacity, and we now have production capacity of more than twelve million parts per year. During fiscal year 2002, we automated other operations in the production process, thereby increasing quality and repeatability while lowering direct labor costs and cycle times.

We utilize a modular approach to our commercial manufacturing, allowing the equipment to be used for several different products. This approach reduces the set-up time needed to change products, allowing us to respond quickly to customers’ demands.

Manufacturing of our other products is accomplished using hand-assembly techniques and some automated testing. The order fulfillment cycle for these products varies widely, from one to fifty-two weeks from the time the customer places an order. The volume of products produced is also smaller, with typical production lots of less than 100 pieces. Some of these components are assembled in our class 10,000 “clean room,” or by utilizing laminar flow benches.

Suppliers

We currently have a number of suppliers of raw material and components for our products. In some cases, we utilize a single source of supply for raw materials and components. We are continuously attempting to identify alternative suppliers to minimize the risks of depending on a single supplier and reduce cost. Our ability to use otherwise qualified alternative suppliers is sometimes limited, however, by the fact that some of our customers reserve the right to approve which suppliers we use in manufacturing their products.

In the past, we sometimes increased our inventory of certain parts used in our products to reduce the risk of part shortages. However, this strategy exposed us to the countervailing risk of accumulating excess inventory. Additionally, changes in market demand for our products, combined with changes in product design can result in excess inventory parts.

Our hi-rel signal source and military signal processing product lines use custom and unique materials. During the late 1990’s, demand in the military/aerospace marketplace declined. As a result, some of our suppliers exited the business and others adopted minimum lot buy policies. In some cases, we have found new suppliers to replace them. In other cases, we have elected to purchase portions of the excess

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inventory of those vendors who exited the business for use in our future products or we have re-designed the product to accommodate substitute parts.

Sales and Marketing

Originally, our primary business was to engineer, manufacture and market high-performance, high-reliability, RF and microwave signal source and signal processing components used in military/aerospace applications, such as missile guidance systems, advanced navigational systems and advanced radar systems. In 1993, we expanded our market focus to include the commercial market. We did so to lessen our susceptibility to cyclical trends in defense spending and to seek a share of the growing market for commercial wireless communications products. As a result of this shift, our business became less dependent on U.S. military spending and more dependent on the commercial telecommunications market. During the past year, demand for our core products sold to the telecommunications equipment providers has fallen dramatically. We have focused our new product development on products such as our YIG-based technology and our 3-dB hybrid couplers, which are not as dependant on the demand for wireless telecommunications equipment. Our success remains heavily dependent, however, on our ability to deliver technological innovations of our own and in response to other requests from a variety of wireless customers.

Various aspects of our business are affected by governmental actions or policies. For example, the delays and other problems encountered, in the U.S. and elsewhere, in the authorization and allocation of new wireless frequencies in the last decade made it difficult to forecast demand for many of our products. Also, in some cases, the export of our products to certain countries may be restricted by the U.S. government for military or political reasons. These governmental actions are beyond our control, yet may significantly affect demand for our products.

Our commercial signal source product line accounted for 73%, 84% and 85% of revenue for the years ended June 30, 2002 and 2001 and the six months ended June 30, 2000, respectively.

The following table summarizes our net sales by product line (in thousands of dollars):

	Fiscal		Fiscal		Twelve
	Year		Year		Months
	Ended		Ended		Ended
	June 30,		June 30,		June 30,
	2002		2001		2000
Commercial Signal Source Components	$	15,615		34,899		25,079
Hi-Rel Signal Source Components		3,651		2,808		2,621
Military Signal Processing Components		1,848		1,318		1,366
Other Products		234		2,352		1,531
	$	21,348		41,377		30,597

We sell our products primarily through manufacturers’ representatives who promote and solicit orders for our products on a commission basis in exclusive marketing territories. We select our manufacturers’ representatives on the basis of technical and marketing expertise, reputation within the industry, and financial stability. Our goal is to engage manufacturers’ representatives who also represent other manufacturers with products complementary to, rather than competitive with, our products. We typically engage 14 to 16 manufacturers’ representative firms in the U.S.

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We also have 20 manufacturers’ representatives covering 18 foreign countries. In addition, we have a direct-sales force team lead by the following principal positions:

• Vice President of Sales & Marketing

• Directors of Strategic Accounts(2)

• Regional Sales Manager — East

• Regional Sales Manager — West

• Regional Sales Manager — International

• Manager of Military Accounts

This team oversees and mentors our manufacturer representative network and also directly promotes our products through technical seminars and field visits to customers. Additionally, we use other methods to directly promote our products, including our website, advertising in trade journals, authoring technical articles for publication in trade journals and participating in trade show product seminars and exhibitions.

Backlog

In our business, it is common practice for our large OEM customers (Ericsson, Motorola, Nokia, Microwave Data Systems and Siemens) to negotiate pricing with us in advance based on their estimated annual purchase volumes. Then, on a weekly basis, they place firm orders approximately two to six weeks prior to shipment. Our policy is to report as backlog only firm orders for our products as represented by a purchase order. While we believe that the orders currently in our backlog are firm, ongoing changes and uncertainties in the wireless communications industry have resulted in delays or cancellations from our customers. In some cases, we bill customers for cancellation charges while in other cases, we are not able to bill or collect cancellation charges. This practice has resulted in both significant one-time benefits, as well as material and adverse effects. Therefore, we do not believe that our backlog is necessarily an accurate indicator of future sales. At June 30, 2002 and 2001, our backlog of undelivered orders was $2,523,000 and $6,249,000, respectively.

Customers

Our principal customers are OEMs and contract manufacturers of communications equipment in either the commercial or military/aerospace marketplace. Many of our customers are large international and domestic companies with worldwide operations or prime contractors for military/aerospace work. We believe we have a strong reputation with these and other customers for high-performance products and solutions.

Our key customers include ACAL Electronics, Agere, Hughes Network Systems, Ericsson, Motorola, Netro, Nokia, Microwave Data Systems, Siemens and Solectron in the commercial market, and Harris, Boeing (formerly Hughes), Lockheed Martin, Textron, Northrop Grumman, Raytheon and Saab Ericsson in the military/aerospace market.

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The following represents the sales revenues from our largest customers as a percentage of our total sales:

	Fiscal year			Fiscal year			Six months
	ended			ended			ended
	June 30,			June 30,			June 30,
	2002			2001			2000
Nokia		18	%		15	%		14	%
Motorola		17	%		13	%		20	%
ACAL Electronics (includes Siemens)		13	%		25	%		14	%
Solectron (contract manufacturer for Motorola and others)		8	%		—			—

Our customers have historically purchased products from us as needed, rather than through long-term supply contracts. We do, however, enter into long-term purchase agreements with some of our larger customers that establish preferred vendor status for us and, in most cases, indicate estimated purchase quantities over the term of the agreement.

Competition

The market for virtually all of our products is extremely competitive. Many of our competitors, including divisions of major corporations, have significantly greater resources than those currently available to us. Additionally, some of our customers compete with us by manufacturing certain components themselves, rather than purchasing them from us. Some multi-national manufacturing firms also have the ability to manufacture competitive products in larger production runs than us.

We believe that our surface-mount products for commercial applications compete with other manufacturers’ products on the basis of their unique features, price and performance. We believe that our products manufactured for military/aerospace applications, including our signal processing components and high rel VCOs, compete on the basis of quality and performance. These products are typically high-performance, high-reliability components which are required to meet high quality system standards. Increasingly, these customers are willing to consider commercial alternatives to our military products.

We consider Mini-Circuits, M/A-COM, Matsushita, ALPs, Temex and Z-Com to be our largest competitors in the commercial signal source components market. Additionally, we believe Merrimac Industries is our largest competitor in the military signal processing components market. Remec/Magnum is our primary competitor in the Hi-Rel signal source components market and Anaren Microwave is our primary competitor in the coupler market. We intend to continue to compete in these markets on the strength of our product performance and our ongoing commitment to technological innovation.

Research and Development

We are focusing our research and development efforts in the following areas:

• Application engineering,

• Improvement of the Commercial Signal Source product line, and

• Development of new product lines.

Our research and development team focuses on developing both new base technologies and design methodologies for existing base technologies. The application and design engineering team uses these efforts and modifies and/or extends them to meet specific customer needs.

We have an ongoing product improvement program designed to maintain or extend the technology gap between us and our competitors. To this end, we are dedicating resources to the improvement of the

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phase noise performance of our commercial product lines. Additionally, we are employing research and development resources in order to release the YIG product to production.

Our research and development expenses for the year ended June 30, 2002 were $2.7 million compared to $4.0 million for the year ended June 30, 2001 and $5.6 million for the twelve months ended June 30, 2000.

Patents

Consistent with other companies in our business, we rely on nondisclosure and noncompete agreements and trade secret laws to protect our confidential and proprietary information. Due to the rapid rate of technological change in the market, we believe that the ability to innovate is of greater importance in our business than the availability of patents and proprietary rights protection. Barriers to competitor entry for non-patented technology include the time and expense to design and manufacture components and the difficulty of marketing to our customers who have already designed our components into their equipment.

We currently have nine active U.S. Patents, of which six patents relate to signal source products. Our current design methodologies utilize three of these patents. To the best of our knowledge, there are no asserted claims by other parties against these patents or our other proprietary technologies.

Government Regulation

In certain instances, we are required to obtain both Department of Commerce and Department of State export licenses before filling foreign orders. The Bureau of Export Administration has listed certain criteria whereby some of our products are regulated for export for reasons of national security, missile technology, and regional stability, principally with regard to military/aerospace applications. Any foreign sales of our products requiring export licenses must comply with these regulations.

Employees

Excluding contract/agency personnel, we had 202 employees as of June 30, 2002. None of our employees are covered by a collective bargaining agreement and we have not experienced any work stoppages. We believe that management has a good relationship with our employees and that employee morale is good at all levels.

To date, we have been able to attract the engineering, technical and other personnel required by our business. Several of our management and professional employees have advanced degrees. Such experienced professionals are in demand, and we must compete for their services with other organizations which may be able to offer more favorable salary and benefits. Historically, our turnover among technical and professional employees has been very low.

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Financial Information about Geographic Regions

We attribute sales to customers based on the country to which the products are shipped. Net sales by country are as follows:

					Six months
	Year ended		Year ended		ended
	June 30,		June 30,		June 30,
	2002		2001		2000
	(in thousands of dollars)
United States	$	8,985		15,596		7,464
China		3,800		1,532		—
Finland		2,995		4,110		1,297
England		1,349		5,393		3,938
Sweden		1,321		1,527		481
Germany		1,147		4,731		1,142
Italy		462		4,788		1,143
Canada		109		1,540		567
Other		1,180		2,160		1,126
Net Sales	$	21,348		41,377		17,158

Item 2. Description of Property

We currently lease four buildings.

• We lease a 31,000 square foot building in Denver, Colorado that is our principal executive office. This facility houses our administrative, sales and engineering functions as well as a pilot plant for pre-production and prototype development. The lease expires on August 31, 2013. The current lease rate on this building is $41,204 per month. We believe that the lease rate for this facility is approximately 70% higher than the fair market value lease rate of comparable facilities within the area.

• We lease a 13,500 square foot building in Denver, Colorado that is our main commercial products manufacturing facility. We lease this facility from a partnership that includes our former Chief Scientific Officer as the general partner. This lease expires on October 31, 2005 and the current lease rate is $10,801 per month. We believe that the lease rate for this facility is approximately double the fair market value lease rates for comparable facilities within the area. We are currently engaged in litigation with our landlord of this facility. See Item 3 — “Legal Proceedings.”

• We lease a 20,600 square foot building in Denver, Colorado that is our military/aerospace products manufacturing facility. This lease expires on June 30, 2003, and we are reviewing our facility needs to determine if we should renew this lease. The current lease rate is $10,920 per month.

• We lease a 6,000 square foot warehouse facility in Denver, Colorado that is used as a machine shop and for storage of inventory, supplies, excess machinery and equipment, and corporate records. The lease expires on July 14, 2003 and the lease payment is $3,125 per month.

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Item 3. Legal Proceedings

Securities and Exchange Commission Investigation

In December 1999, the Company learned that the SEC was conducting an investigation to determine whether there were violations of the federal securities laws by the Company or any of its officers, directors, or employees. The Commission’s investigation was focused primarily on the Company’s prior financial reporting and its accounting practices and procedures. In September 2001, the Company agreed to a settlement with the SEC under which the Company, without admitting or denying that it violated any laws, consented to the entry of an injunction prohibiting future violations by the Company of certain periodic reporting, record keeping, internal controls, proxy solicitation and antifraud provisions of the Securities Exchange Act of 1934. On November 9, 2001, the Company’s settlement with the Securities and Exchange Commission was approved by the United States District Court for the District of Colorado.

Private Securities Class Action

A number of private shareholder class actions alleging violations of federal securities laws were filed against the Company and certain of its former officers in the United States District Court for the District of Colorado beginning in June 2000. Those actions have since been consolidated and an amended consolidated complaint has been filed by the class representatives. On November 21, 2001, the Company filed a motion to dismiss all claims against the Company in the consolidated private securities class action, Rasner v. Vari-L Company, Inc., Civ. No. 00-S-1181, D. Colo. The Company’s motion argues that the amended consolidated complaint alleges wrongdoing by former corporate employees in furtherance of their personal interests, as opposed to corporate interests, which does not state a claim for securities fraud against the Company. The class action representatives have filed their response to the Company’s motion to dismiss and the Company has filed a reply to that response but the court has not yet ruled on the motion.

On October 3, 2002, the Company and the class action representatives reached an agreement in principle for the settlement of the litigation and executed a memorandum of understanding (the “MOU”), subject to court approval. The MOU outlines the general terms of the proposed settlement and is intended to be used as a basis for drafting a Stipulation of Settlement. The MOU requires the Company to pay $250,000 in cash and issue 2.0 million shares of the Company’s common stock. The number of shares issuable pursuant to the MOU is subject to certain anti dilution adjustments in the event the Company sells its common stock or securities convertible into its common stock below certain threshold prices. The Company has calculated the value of shares to be issued based upon the closing price of the Company’s common stock on the date in which all substantive aspects with respect to the MOU were agreed upon. At June 30, 2002, the Company recorded $1.45 million representing the approximate cost to settle this litigation. This amount has been included in expenses of accounting restatements and related matters in the statements of operations.

The Company is also required to transfer its claims against Joseph H. Kiser, David G. Sherman, Jon C. Clark and Derek L. Bailey to the plaintiffs. However, the Company will retain the claims from the lawsuit filed in the District Court for the City and County of Denver as a result of the Special Litigation Committee investigation, against David G. Sherman, Joseph H. Kiser, Joan Sherman, the Kathryn Sherman Trust and J.C. Enterprises. The Company will also assign to the Plaintiffs any right it might have to proceeds or other damages from the Directors and Officers insurance policies with Reliance Insurance Company and Agricultural Excess and Surplus Insurance Company. There can be no assurance that the court will accept our proposal. Moreover, irrespective of the outcome with respect to the Company, the individual defendants may assert claims against the Company for advancement or indemnification of their attorneys fees and other costs of defense, which claims may be material.

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Shareholder Derivative Suit

On August 4, 2000, a shareholder derivative action was filed, purportedly on behalf of the Company, in District Court, City and County of Denver against the same officers named in the class action as well as the members of the Company’s board of directors at the time. The Company was also named as a nominal defendant. The derivative complaint alleged many of the same facts as in the federal securities class action, claiming that those facts demonstrate that the individual defendants breached their fiduciary duties to the Company and the shareholders. The action was dismissed without prejudice in April 2001 but an amended complaint was filed by the same plaintiff in September 2001.

On October 9, 2001, the Company filed a motion to dismiss the amended shareholder derivative action, on various grounds, including the failure to make the required demands, the failure to commence a new action rather than trying to revive the previously dismissed case, and the availability of new management and a new independent Board member to evaluate the merits, and the timing, of any claims which could be brought by the Company against the individual defendants. Substantially all of the individually named defendants subsequently joined in the Company’s motion.

On April 4, 2002, the court granted the plaintiff’s motion for a stay of the shareholders derivative action against certain of the Company’s former officers and directors pending the results of the investigation by the Special Litigation Committee of the Board of Directors (the “SLC”) of the claims raised in that action. On June 28, 2002, the Company filed a motion to dismiss or in the alternative a motion for summary judgment based on the findings of the SLC, which recommended dismissal of the action without prejudice. On August 21, 2002, the court granted the Company’s motion and dismissed the amended action without prejudice.

Insurance Claims

Reliance Insurance Company (“Reliance”) is the issuer of the $5 million primary directors and officers’ liability insurance policy in effect for the period of time covered by the securities class action and the derivative action. In January 2002, the Reliance liquidator notified claimants concerning the procedures by which insureds and other claimants may file claims against the Reliance estate. The Company intends to file a claim against the Reliance estate, however, all rights under the claim have been assigned to the plaintiffs pursuant to the MOU.

Declaratory Judgment Action by Excess Insurer

On June 5, 2001, Agricultural Excess and Surplus Insurance Company (“AESIC”), which had issued to the Company a $2.5 million excess directors and officers liability insurance policy for the period of time covered by the shareholder and class action litigation referenced above, filed suit in United States District Court for the District of Colorado asking the court to find that it is not obligated to provide coverage, or in the alternative, seeking permission to rescind its policy.

A settlement conference was held in February 2002 before the U.S. Magistrate assigned to this declaratory judgment action brought by the Company’s excess liability directors and officers liability insurance carrier. Representatives of the excess insurer, the Company, the individual defendants in the securities class action, and the plaintiffs in the securities class action attended the conference. While meaningful discussions were held at that conference, no settlement was reached and no further settlement conference has been scheduled.

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Company Action against Former Officers

On December 5, 2001, the Company formed the SLC. The SLC is comprised of two outside directors who joined the Company’s Board subsequent to the time of certain alleged wrongdoings as discussed below.

On December 20, 2001, the SLC retained independent counsel to advise the SLC in its investigation of the allegations of wrongdoing during prior periods by former employees, as well as current and former members of the Company’s Board of Directors. Additionally, the SLC suspended the advancement of certain legal fees and expenses being paid on behalf of former officers of the Company.

On March 19, 2002, the Company filed a lawsuit in the District Court, City and County of Denver, against Mr. David Sherman, Mr. Joseph Kiser, individuals, and J.C. Enterprises, a Colorado general partnership. Mr. Sherman is the former president of the Company and Mr. Kiser is the former Chairman of the Company’s Board of Directors and Chief Scientific Officer. Additionally, Mr. Kiser is the General Partner of J.C. Enterprises. On April 2, 2002, the Company filed an Amended Complaint and Jury Demand. On May 17, 2002, the Company filed a Second Amended Complaint and Jury Demand and added Ms. Joan Sherman, an individual, and the Kathryn Sherman Trust, a Colorado trust, as defendants. In its lawsuit, the Company seeks to rescind certain employment and consulting agreements between the Company and Messrs. Kiser and Sherman, and to rescind certain stock and stock option grants made to them, on the basis that such agreements were entered into, and such stock option grants were made, based upon mistaken or misrepresented information regarding the Company’s true financial performance. The Company also seeks to recover the compensation and bonuses paid to them as a result of such mistaken or misrepresented information. In addition, the Company seeks to recover excessive rent it paid pursuant to a lease agreement between the Company and J.C. Enterprises in reliance on misrepresented information provided by Messrs. Kiser and Sherman. The Company added Ms. Sherman and the Kathryn Sherman Trust to this action because they may possess assets from Mr. Sherman that Vari-L is entitled to recover.

On April 30, 2002, Mr. Kiser filed a motion to dismiss our lawsuit in its entirety. On June 13, 2002, the motion to dismiss was denied.

On May 30, 2002, David Sherman filed a counter-claim against the Company alleging that the Company breached its obligation to him by suspending payment of consulting fees under the Termination and Consulting Agreement. On July 8, 2002, Joseph Kiser filed counter-claims against the Company, Charles R. Bland, Richard P. Dutkiewicz, Gil J. Van Lunsen and David M. Risley. Mr. Bland is our President and Chief Executive Officer. Mr. Dutkiewicz is our Vice President of Finance and Chief Financial Officer. Messrs. Risley and Van Lunsen are on our Board of Directors and are members of the SLC. The counter-claim alleges claims for: (i) violation of the Colorado Wage Act against all counter-claim defendants; (ii) breach of contract relating to Mr. Kiser’s employment agreement with the Company against the Company only; (iii) breach of contract relating to the Company’s promise to fulfill the obligations of Mr. Kiser’s employment agreement against the Company only; (iv) breach of contract relating to the indemnification agreements with the Company against the Company only; (v) promissory estoppel relating to Mr. Kiser’s retirement from the Company against the Company only; (vi) intentional interference with Mr. Kiser’s employment agreement with the Company against Mr. Bland only; and (vii) negligent misrepresentation relating to Mr. Kiser’s plans for retirement against Mr. Bland only.

A trial date of February 24, 2003 has been set and the parties are about to commence discovery.

Mr. Kiser’s employment contract requires him to perform any directive of the Company’s Board of Directors. Subsequent to March 19, 2002, Mr. Kiser has not performed any services for the Company. The Company believes that its claim to rescind Mr. Kiser’s employment contract based

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upon mistaken or misrepresented information regarding the Company’s true financial performance is based upon a valid principle of law. Since March 19, 2002, the Company has suspended all payments required by Mr. Kiser’s employment contract. The Company has recorded approximately $203,000 of liabilities representing the present value of post-employment health care obligations and a one time separation bonus to be paid to Mr. Kiser upon termination of contract payments.

In the event that Mr. Kiser prevails in requiring us to comply with the terms of the employment contract, we could be obligated to total future payments of approximately $1,400,000 payable over ten years. If we are successful in our claims against Mr. Kiser, we could be awarded as much as $5,600,000 plus attorneys’ fees. Additionally, we would reverse all previously recorded liabilities associated with this matter.

If Mr. Kiser prevails on his breach of contract action related to the indemnification agreements he had with the Company, the Company could be liable for attorney fees and costs incurred in the various actions as well as for future covered attorney’s fees, the present amount of which is unknown.

Under Mr. Sherman’s termination and consulting agreement, the Company agreed to engage Mr. Sherman as a consultant for the period August 1, 2000 through July 31, 2001. As a consultant he was to receive compensation of $195,000 as consulting fees along with certain other benefits. Due to his failure to submit certain documentation for travel expenses in which amounts were advanced, the Audit Committee suspended payment of the consulting fees in October 2000 and elected to terminate the agreement due to misappropriation of funds. During the quarter ended December 31, 2001, the Company recognized a $145,000 benefit from an insurance recovery for Mr. Sherman’s undocumented travel advances. If Mr. Sherman prevails on his breach of contract action, the Company could be liable for amounts under his termination and consulting agreement, attorney fees and costs incurred in the various actions as well as for future covered attorney’s fees, the present amount of which is unknown.

Patent Litigation

On August 8, 2002, Anaren Microwave, Inc. (“Anaren”) sued the Company for infringement of U.S. Patent No. 4,821,007. The Company has not been served with the complaint. The Company has been advised that a license may be available under the patent, and the Company and its counsel are investigating Anaren’s allegations.

Financial Impact of Litigation

All of these legal actions have the potential of a possible loss to the Company. The Company Action against Former Officers is a potential gain contingency for the Company. At this time, we are unable to reasonably estimate the possible future cost or net loss or gain, if any, associated with certain of these matters. Accordingly, we have not recorded any loss or gain contingencies associated with certain of these matters as of June 30, 2002. It is reasonably possible that such amounts could be material to our financial condition, results of operations or liquidity.

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Item 4. Submission of Matters to a Vote of Security Holders

None

Item 4A. Executive Officers of the Registrant

Following is a list of our executive officers, their respective ages as of June 30, 2002 and their positions within the Company:

Name	Age		Position
Charles R. Bland		54	President, Chief Executive Officer and Director
Richard P. Dutkiewicz		47	Vice President — Finance, Chief Financial Officer and Secretary
Ernest C. Hafersat		52	Vice President — Manufacturing
Timothy G. Schamberger		40	Vice President — Sales and Marketing
Daniel J. Wilmot		36	Vice President — Research and Development

Charles R. Charles R. Bland - President, Chief Executive Officer and Director. Mr. Bland, age 54, joined us in May 2001 as our President and Chief Executive Officer. On December 26, 2001, he was appointed to the Board of Directors. From June 1, 2000 until he joined us, he served as the President of Growzone, Inc., a software company focused on the horticultural industry, and from June 1999 until June 2000, he was the President of AmericasDoctors.com, an Internet health care content site. From 1998 to 1999, Mr. Bland was the Chief Operating Officer at Quark Incorporated, provider of shrink wrap and client server software for the publishing industry. For the previous 24 years, Mr. Bland worked in positions of increasing responsibility with Owens Corning Fiberglas, a world leader in high performance glass composites and building materials, with his final assignment being President, Africa/Latin American Operations. Mr. Bland received his B.S., Accounting and Finance, from Ohio State University and his MBA from the Sloan School, Massachusetts Institute of Technology.

Richard P. Dutkiewicz — Vice President of Finance, Chief Financial Officer and Secretary. Mr. Dutkiewicz, age 47, joined us in January 2001 as our Vice President of Finance, Chief Financial Officer and Assistant Secretary. On December 31, 2001, he was appointed Secretary of the Corporation. From 1995 to 2001, Mr. Dutkiewicz was Vice President — Finance, Chief Financial Officer, Secretary and Treasurer of Coleman Natural Products, Inc., located in Denver, Colorado, a leading supplier of branded natural beef in the United States. Mr. Dutkiewicz’ previous experience includes senior financial management positions at Tetrad Corporation, MicroLithics Corporation and various divisions of United Technologies Corporation. Mr. Dutkiewicz was an Audit Manager at KPMG LLP. Mr. Dutkiewicz also serves on the Board of Directors of CareerLab.com. He received his BBA degree from Loyola University of Chicago in 1977. He is a member of the American Institute of Certified Public Accountants, Financial Executives International and the Association for Corporate Growth.

Ernest C. Hafersat — Vice President of Manufacturing. Mr. Hafersat, age 52, became our Vice President of Manufacturing in March 2001. Prior to joining us, he served in various management capacities, including Senior Director of Engineering at Maxtor Corporation, a disk storage manufacturer, since 1994. Mr. Hafersat also served as the acting Vice President and General Manager/Senior Director of Operations, Engineering and Materials at Read-Rite Corporation, a manufacturer of magnetic recording components for the hard drive industry located in Malaysia and the Philippines from January 1998 to December 1999. His previous assignments included positions as Senior Manager of Engineering with Exabyte Corporation, a manufacturer of tape storage products; Director of Manufacturing with Optotech Inc.,

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an optical disk storage product manufacturer; Director of Manufacturing for Kennedy Corporation, a manufacturer of tape storage products; and Manager of Manufacturing/Industrial/Cost Engineering with IBM-MCA Joint Venture (Discovision), a videodisk and technology transfer manufacturing. Mr. Hafersat completed his BSIE degree at Kentucky Christian University in 1970.

Timothy G. Schamberger — Vice President, Sales and Marketing. Mr. Schamberger, age 40, became our Vice President of Sales and Marketing in May 2002. Prior to joining us, he served in various capacities including Strategic Account Manager with M/A-COM Inc., a leading wireless RF components manufacturer since 1993. Mr. Schamberger’s previous experience also includes sales management and engineering positions with Allied Signal Aerospace Corp., a manufacturer of non-nuclear systems for nuclear weapons, and Wilcox Electric, a manufacturer of ground-based navigation aid equipment. Mr. Schamberger received his BSEE from Kansas State University in 1983.

Daniel J. Wilmot — Vice President of Research and Development. Mr. Wilmot, age 36, joined us in August 1992. He served as Product Development PLL Design Engineer and Director of Advanced Product/Development Engineer in 1993 before he was appointed Vice President of Research and Development in November 1993. Prior to joining us, Mr. Wilmot was an RF Lead Engineer with Rockwell International where he worked in management, design, development, cost management and containment for PLLs and VCOs among other hybrid RF devices. Before Rockwell International, he worked at Interstate Electronics Corp. in Anaheim, California as a Radio subsystem designer for GPS applications. Mr. Wilmot received his BSEE from University of California at Santa Barbara in June 1986 and an MSEE from the California State University at Fullerton in December 1991. Mr. Wilmot also completed the AEA/Stanford Executive Institute for Management of High-Technology Companies at Stanford University, California in August 1999. Mr. Wilmot is currently pursuing his MBA at the University of Colorado.

Our Executive Officers are elected by the Board of Directors at the first meeting after each annual meeting of Shareholders and hold office until the next such meeting of Directors or their earlier resignation or removal.

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PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

Market

In May 2002, an application for listing was filed with the Over the Counter Bulletin Board system (the “OTCBB”). The application was accepted and we began trading on the OTCBB under the stock symbol “VARL.” Formerly, our common stock was traded on the Nasdaq National Market until July 7, 2000 when it was suspended by Nasdaq. During the period from July 7, 2000 through September 9, 2000 when the stock was delisted by Nasdaq, there was no active public trading market for our stock. Beginning September 11, 2000, our stock was quoted on the other OTC market until our subsequent listing with the OTCBB on June 26, 2002.

The following table sets forth the high and low prices for the common stock for the periods indicated:

	High		Low
NASDAQ National Market:
Period from July 1 to July 7, 2000	$	12.63	$	11.63
As quoted on other OTC Market
Period from September 11 to September 30, 2000	$	6.05	$	2.50
Quarter ended December 31, 2000	$	4.50	$	0.75
Quarter ended March 31, 2001	$	4.75	$	1.25
Quarter ended June 30, 2001	$	3.00	$	1.25
Quarter ended September 30, 2001	$	3.50	$	1.00
Quarter ended December 31, 2001	$	2.50	$	1.00
Quarter ended March 31, 2002	$	1.75	$	1.00
Period from April 1 to June 25, 2002	$	1.40	$	0.55
OTCBB
Period from June 26 to June 30, 2002	$	1.15	$	0.60

Holders

As of September 30, 2002, there were approximately 400 holders of record of our common stock.

Dividends

We have never declared or paid a cash dividend on our common stock. Our Board of Directors presently intends to retain any and all earnings for use in the business and, therefore, does not anticipate paying cash dividends in the foreseeable future. The declaration of cash dividends, if any, in the future would be subject to the discretion of the Board of Directors, which may consider such factors as our results of operations, financial condition, capital needs, and any contractual or other restrictions.

Equity Compensation Plan Information

The information appearing under the caption “Equity Compensation Plan Information” in Item 12 is incorporated herein by reference.

Sales of Unregistered Securities

Stock Grant Plan. During the fiscal year ended June 30, 2002, we issued 2,900 shares of our common stock with a fair market value of $4,000 to non-management members of our Board of Directors under

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our Stock Grant Plan. Although we have filed a registration statement on Form S-8 covering the shares issuable under the Stock Grant Plan, due to the fact that certain of our financial statements for the periods prior to June 30, 2000 are unaudited as discussed in Item 8, we have issued such shares in reliance on Section 4(2) under the Securities Act of 1933, as amended.

Employee Stock Purchase Plan. During the fiscal year ended June 30, 2002, we sold 76,011 shares of our common stock for a weighted average price of $1.64 per share to employees pursuant to our Employee Stock Purchase Plan. Although we have filed a registration statement on Form S-8 covering the shares issuable under the Employee Stock Purchase Plan, fact that certain of our financial statements for the periods prior to June 30, 2000 are unaudited as discussed in Item 8, we have issued such shares in reliance on Section 4(2) under the Securities Act of 1933, as amended.

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Item 6. Selected Financial Data

The selected historical financial information presented below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” which follows and our financial statements and related notes thereto beginning on page F-1. Certain fiscal year 2001 amounts have been reclassified to conform to the fiscal year 2002 presentation. Information prior to January 1, 1999 cannot be prepared without unreasonable effort and expense. The financial statements for periods prior to June 30, 2000 have not been audited.

				Fiscal			Fiscal
				Year			Year			Twelve Months
				Ended			Ended			Ended
				June 30, 2002			June 30, 2001			June 30, 2000
				(In thousands of dollars, except share and per share data)
Statement of Operations Data (1):
Net sales				$	21,348			41,377			30,597
Cost of goods sold					13,647			21,747			17,540
		Gross profit			7,701			19,630			13,057
Operating expenses:
	Selling				2,925			4,268			3,636
	General and administrative				6,418			9,664			4,436
	Research and development				2,669			4,021			5,646
	Expenses related to accounting restatements and the related shareholder litigation				1,805			2,387			469
		Total operating expenses			13,817			20,340			14,187
		Operating loss			(6,116	)		(710	)		(1,130	)
	Other income (expense):
	Interest income				48			416			460
	Interest expense				(199	)		(1,062	)		(873	)
	Other, net				12			(43	)		(35	)
			Total other income (expenses)		(139	)		(689	)		(448	)
			Net loss	$	(6,255	)		(1,399	)		(1,578	)
Loss per share				$	(0.87	)		(0.20	)		(0.25	)
Weighted average shares outstanding					7,152,342			7,083,866			6,232,964
Balance Sheet Data at Period End:
Cash and cash equivalents				$	553			2,013			11,030
Working capital					1,999			7,093			6,742
Total assets					13,394			20,454			32,571
Notes payable and current installments of long-term obligations					1,611			1,764			11,566
Long-term obligations					55			1,321			92
Total stockholders’ equity					7,739			13,829			14,685

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

The Management’s Discussion and Analysis of Financial Condition and Results of Operations contains “forward looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on a number of assumptions by us about the future, usually based on current conditions or on the broader expectations of others. These assumptions may or may not prove to be correct and, as a result, our own forward-looking statements may also be inaccurate. On the other hand, based on what we know today and what we expect in the future, we believe that the forward-looking statements we make in this report are reasonable. In most cases, when we use words like “believe,” “expect,” “estimate,” “anticipate,” “project,” “plan,” or “predict” to describe something which has not yet occurred, we are making a forward-looking statement.

We cannot list here all of the risks and uncertainties that could cause our actual future financial and operating results to differ materially from our historical experience and our present expectations or projections but we can identify many of them. For example, our future results could be affected by the overall market for various types of wireless communications products, the success of the specific products into which our products are integrated, governmental action relating to wireless communications, licensing and regulation, the accuracy of our internal projections as to the demand for certain types of technological innovation, competitors’ products and pricing, the success of new product development efforts, the timely release for production and the delivery of products under existing contracts and the ultimate outcome of pending and threatened litigation and regulatory action. It is also important to remember that forward-looking statements speak only as of the date when they are made and we do not promise that we will publicly update or revise those statements whenever conditions change or future events occur. Accordingly, we do not recommend that any person seeking to evaluate our company should place undue reliance on any forward-looking statement in this report.

The following discussion and analysis should be read in conjunction with the selected financial data in Item 6 and our financial statements and the notes thereto beginning on page F-1. The financial statements for periods prior to June 30, 2000 have not been audited. Our fiscal year end was changed to June 30 effective in 2000. Previously, our fiscal year ended on December 31. Our operations consist of a single business segment — the design, manufacture and sale of a wide variety of radio frequency and microwave components and devices mainly used in the wireless communications industry.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an on-going basis, we evaluate our estimates, including those related to revenue recognition, allowances for doubtful accounts, inventory valuation and commitments and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.

Revenue Recognition and Allowances for Doubtful Accounts

Revenues are recognized at the time of shipment to, or acceptance by, the customer provided title and risk of loss is transferred to the customer.

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. The allowance for doubtful accounts is determined based on review of the overall condition of accounts receivable balances and review of significant past due accounts. Additionally, we maintain credit insurance on certain of our foreign accounts receivable. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Inventory Valuation

We value our inventories at lower of cost or market on a part-by-part basis. Additionally, we make estimates regarding the market value of our inventory, including an assessment of excess or obsolete inventory. We determine excess and obsolete inventory based on an estimate of the future demand within a specified time horizon, generally twelve months. The estimates we use for demand are also used for near-term capacity planning and inventory purchasing and are consistent with our revenue forecasts. If our actual forecast is less than our demand forecast, we may be required to take additional excess inventory charges, which will decrease gross margin and net operating results in the future.

Commitments and Contingencies

We are party to various legal proceedings and claims, as well as various other commitments and contingencies. We have recorded a liability if it is (1) probable that an obligation has been incurred because of a transaction or event happening on or before the date of the financial statements and (2) the amount of the obligation can be reasonably estimated.

All of our legal actions have the potential of a possible loss to the Company. We believe that certain of the actions could be potential gain contingencies. However, at this time we are unable to reasonably estimate the possible future cost, net loss or gain, if any, associated with certain of our pending legal proceedings.

Results of Operations for the Fiscal Year Ended June 30, 2002 Compared with the Fiscal Year Ended June 30, 2001

Net Sales

Net sales for the year ended June 30, 2002 decreased 48.4% to $21.3 million compared with $41.4 million for the year ended June 30, 2001. This decline is primarily due to a decrease in demand for the quantity of commercial signal source products consistent with an overall slowdown in the wireless communications industry.

Revenue from commercial signal source products was $15.6 million for the year ended June 30, 2002, a 55.3% decrease from the $34.9 million for the year ended June 30, 2001. Revenue from commercial signal source products for the year ended June 30, 2001 included fees earned from a contract modification of $295,000. Revenue from all other products was $5.7 million for the year ended June 30, 2002, a 12.3% decrease from the $6.5 million for the year ended June 30, 2001. Revenue from all other products for the year ended June 30, 2001 included a significant end-of-life production run generating net sales of $809,000.

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Gross Profit

Gross profit for the year ended June 30, 2002 decreased 60.6% to $7.7 million, or 36.1% of net sales, compared with $19.6 million, or 47.4% of net sales, for the year ended June 30, 2001. The gross profit percent in any period can be affected significantly by volume and unusual items.

Fixed manufacturing overhead adversely affects gross profit at lower sales volumes. Accordingly, the reduced sales level for the year ended June 30, 2002 had the effect of lowering gross profit as a percentage of sales. Additionally, changes in market demand for our products, combined with changes in product design can result in excess inventory parts, such as printed circuit boards. On a quarterly basis, we review our inventory on hand and firm purchase commitments versus our sales forecast to determine the adequacy of the existing reserve for excess and obsolete inventory.

Included in cost of goods sold for the years ended June 30, 2002 and 2001 are charges of $564,000 and $1.4 million, respectively, for excess and obsolete inventory. Additionally, for the year ended June 30, 2002, we charged $65,000 to cost of goods sold for severance costs related to a reduction in our work force. These charges were offset by $268,000 of recoveries for previously written-off inventory.

During the quarter ended June 30, 2002, we sold inventories with a net book value of approximately $250,000 for $75,000. As a result, we recorded a charge to cost of goods sold for $175,000. Additionally, due to the continuing decline in the industry and weak demand of our commercial signal source products, we offered certain of our preferred customers’ price decreases which resulted in a $152,000 decrement in gross margin for the quarter ended June 30, 2002.

Operating Expenses

Included in operating expenses are charges for non-cash stock compensation of $44,000 and $487,000 for the years ended June 30, 2002 and 2001, respectively. The charges for stock compensation principally relate to amortization of deferred stock compensation attributable to stock options granted at less than the market price of the common stock on the date of the grant. Of the $487,000 total amount of stock compensation expense recorded for the year ended June 30, 2001, $409,000 relates to options granted in December 1999. In December 2000, these options were re-priced at $34.50 per share, the market price of the common stock at the date of the original grant. As a result, the remaining unamortized stock compensation associated with these option grants was reversed in December 2000.

In April 2002, we filed a Tender Offer (the “Offer”) with the SEC which offered employees the right to exchange all outstanding options to purchase shares of the Company’s common stock with an exercise price equal to $34.50 per share for replacement options to be granted no earlier than six months and one day from the expiration of the Offer at an exercise price equal to no less than the fair market value of the common stock on the grant date. Under the terms and subject to the conditions set forth in the Offer, 180,579 options were surrendered by eligible employees and cancelled on May 23, 2002. We will issue replacement options to purchase an aggregate of up to 180,579 shares of common stock in exchange for the options surrendered pursuant to the Offer on or around November 24, 2002.

Selling Expenses

Selling expenses for the year ended June 30, 2002 decreased 31.5% to $2.9 million, or 13.7% of net sales, compared with $4.3 million, or 10.3% of net sales, for the year ended June 30, 2001. The dollar decrease in selling expenses was primarily attributable to lower commissions paid to manufacturer’s representatives as a result of reduced sales volume and a decrease in charges for non-cash stock compensation.

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General and Administrative Expenses

General and administrative expenses for the year ended June 30, 2002 decreased 33.6% to $6.4 million, or 30.1% of net sales, compared with $9.7 million, or 23.4% of net sales, for the year ended June 30, 2001. The dollar decrease was primarily attributable to reduced spending on independent contractors for interim management and accounting services, the timing of audit fees paid in connection with the audit of our financial statements for the years ended June 30, 2001 and 2000 and a decrease in charges for non-cash stock compensation, partially offset by an increase in salaries and wages for the permanent transfer of personnel to assist in business development efforts, as well as new employees hired in 2002. Additionally, we recognized a $125,000 benefit from the recovery of a disputed amount that was written off in a previous period and a $145,000 benefit from an insurance recovery for undocumented travel advances to a former officer, offset by $20,000 for severance costs related to a reduction in our work force.

Research and Development Expenses

Research and development expenses for the year ended June 30, 2002 decreased 33.6% to $2.7 million, or 12.5% of net sales, compared with $4.0 million or 9.7% of net sales, for the year ended June 30, 2001. The dollar decrease was primarily attributable to lower salaries and benefits from the permanent transfer of personnel to assist in business development efforts, fewer employees engaged in research and development efforts, a reduction in stay bonuses and production bonuses paid to employees and a decrease in charges for non-cash stock compensation offset by $16,000 for severance costs related to a reduction in our work force.

Expenses Relating to Accounting Restatements and Related Legal Matters, Net of Recoveries

Expenses relating to the accounting restatements and related legal matters, net of recoveries for the year ended June 30, 2002 and 2001 were $1.8 million and $2.4 million, respectively.

Included in these expenses for the year ended June 30, 2002, is $1.45 million representing the approximate cost to settle the Private Securities Class Action as described in Item 3, “Legal Proceedings” offset by a benefit of $117,000 resulting from an adjustment of an estimated liability recorded in a previous period. These expenses include the cost of external counsel for services provided in connection with shareholder lawsuits and the SEC investigation, the cost of certain consultants and temporary labor hired to assist in the accounting restatements, and reimbursements to current and former employees for their legal fees and expenses. The accounting restatements were completed in February 2001, however we continue to incur costs related to shareholder litigation.

In December 1999, we learned that the SEC was conducting an investigation to determine whether there were any violations of the federal securities laws. In September 2001, we agreed to a settlement with the SEC. In December 2001, we formed the SLC. The SLC retained independent counsel to advise the Committee in its investigation of allegations of wrong doing during prior periods by former employees, as well as current and former members of our Board of Directors. For the year ended June 30, 2002, approximately $226,000 of these expenses related to fees charged by the independent counsel to the SLC.

Other Income (Expense)

Interest income decreased 88.5% to $48,000 for the year ended June 30, 2002 compared with $416,000 for the year ended June 30, 2001. The decrease was attributable to lower average cash balances available during the year for investing, along with lower interest rates on invested balances. Interest expense and other, net, decreased 83.1% to $187,000 for the year ended June 30, 2002 compared with $1.1 million for the year ended June 30, 2001. The decrease was primarily attributable to less interest expense as a result of a reduction in the outstanding debt and a decrease in the lender’s prime rate.

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Net Loss and Loss per Share

We believe that the disclosure of as adjusted net income (loss) and earnings (loss) per share, calculated based on criteria determined by management, provides useful information regarding our operations. As adjusted, net income (loss) excludes the impact of stock compensation, which is a non-cash charge, expenses relating to accounting restatements and related legal matters (which management believes are not indicative of normal operating expenses, but will continue until the litigation is resolved), and severance costs associated with the reduction in our workforce, offset by the benefit from recovery of a disputed amount, the benefit of an inventory recovery and an insurance recovery for undocumented travel advances. However, as adjusted financial information should not be considered a substitute for operating income (loss) or cash flow from operations determined in accordance with generally accepted accounting principles.

The following table reconciles the reported net income (loss) to as adjusted net income (loss) and earnings (loss) per share by each discrete element for the years ended June 30, 2002 and 2001:

		Year			Year
		Ended			Ended
		June 30, 2002			June 30, 2001
Net loss, as reported		$	(6,255,000	)	$	(1,399,000	)
	Stock compensation		44,000			487,000
	Expenses related to accounting restatements and related legal matters, net of recoveries		1,805,000			2,387,000
	Severance costs		101,000			—
	Benefit of recoveries		(538,000	)		—
As adjusted net income (loss)		$	(4,843,000	)	$	1,475,000
Loss per share, as reported — basic and diluted			(0.87	)		(0.20	)
As adjusted earnings (loss) per share — basic and diluted		$	(0.68	)	$	0.21

Results of Operations for the Fiscal Year Ended June 30, 2001 Compared with the Twelve Months Ended June 30, 2000

Net Sales

Net sales for the year ended June 30, 2001 increased 35.3% to $41.4 million compared with $30.6 million for the twelve months ended June 30, 2000. This improvement primarily reflects increased demand for commercial signal source products. Net sales from commercial signal source products was $34.9 million for the year ended June 30, 2001, a 39.0% increase from the $25.1 million for the twelve months ended June 30, 2000. The year ended June 30, 2001 included a significant end-of-life production run generating net sales of $809,000 and fees earned from contract modifications of approximately $295,000. Net sales from all other products was $6.5 million for the year ended June 30, 2001, an 18.2% increase from the $5.5 million for the twelve months ended June 30, 2000.

Gross Profit

Gross profit for the year ended June 30, 2001 increased 49.6% to $19.6 million or 47.3% of sales, compared with $13.1 million, or 42.8% of sales for the twelve months ended June 30, 2000. Included in cost of goods sold for the year ended June 30, 2001 is a charge of $1.4 million for obsolete and excess inventory, compared to $516,000 for the twelve months ended June 30, 2000. The higher gross profit margin in the 2001 period was due to improved production yields and the absorption of manufacturing

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overhead over a larger volume of sales, the benefit from the end-of-life production run and contract modification, partially offset by inventory shrinkage and scrap and the above noted provision.

Operating Expenses

Included in operating expenses are charges for non-cash stock compensation. The charges for stock compensation principally relate to amortization of deferred stock compensation attributable to stock options granted at less than the market price of the common stock on the date of the grant. Of the $487,000 total amount of stock compensation recorded for the year ended June 30, 2001, $409,000 relates to options granted in December 1999. In December 2000, these options were reformed to $34.50 per share, the market price of the common stock on the date of the original grant. As a result, the remaining unamortized stock compensation cost associated with these option grants was reversed in December 2000.

The following table summarizes stock compensation expense included in each category of operating expenses:

	Fiscal Year		Twelve Months
	Ended		Ended
	June 30,		June 30,
	2001		2000
	(in thousands of dollars)
Selling:
Non-cash stock compensation	$	78		88
Other selling expenses		4,190		3,548
Total selling expenses	$	4,268		3,636
General and administrative:
Non-cash stock compensation	$	180		204
Other general and administrative expenses		9,484		4,232
Total general and administrative expenses	$	9,664		4,436
Research and development:
Non-cash stock compensation	$	229		259
Other research and development expenses		3,792		5,387
Total research and development expenses	$	4,021		5,646

Selling Expenses

Selling expenses for the year ended June 30, 2001 increased 17.4% to $4.3 million or 10.3% of net sales, compared with $3.6 million or 11.8% of net sales for the twelve months ended June 30, 2000. Excluding non-cash stock compensation, selling expenses for the year ended June 30, 2001 increased 18.1% to $4.2 million or 10.1% of net sales compared with $3.5 million or 11.4% of net sales for the twelve months ended June 30, 2000. The increase in selling expenses was primarily attributable to higher commissions paid to manufacturers’ representatives due to higher net sales.

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General and Administrative Expenses

General and administrative expenses for the year ended June 30, 2001 increased 117.9% to $9.7 million or 23.4% of net sales, compared with $4.4 million or 14.4% of net sales for the twelve months ended June 30, 2000. Excluding non-cash stock compensation, general and administrative expenses for the year ended June 30, 2001 increased 124.1% to $9.5 million or 22.9% of net sales compared with $4.2 million or 13.7% of net sales for the twelve months ended June 30, 2000. The increase was primarily attributable to higher amounts paid to independent contractors for interim management and accounting services, stay bonuses paid to employees, higher insurance premiums, increased audit and legal fees, and severance costs associated with the retirement benefits accrued for the planned retirement of our former Chief Scientific Officer.

Research and Development Expenses

Research and development expenses for the year ended June 30, 2001 decreased 28.8% to $4.0 million or 9.7% of net sales, compared with $5.6 million or 18.3% of net sales for the twelve months ended June 30, 2000. Excluding non-cash compensation, research and development expenses for the year ended June 30, 2001 decreased 29.6% to $3.8 million or 9.2% of net sales, compared with $5.4 million or 17.6% of net sales for the twelve months ended June 30, 2000. The decrease was primarily attributable to the temporary transfer of research and development personnel to assist in manufacturing cost reduction efforts.

Expenses Relating to Accounting Restatements and the Related Shareholder Litigation

Expenses relating to the accounting restatements and the related shareholder litigation for the year ended June 30, 2001, were $2.4 million compared with $469,000 for the twelve months ended June 30, 2000. These expenses include the cost of external counsel for services provided in connection with shareholder lawsuits and the Securities and Exchange Commission investigation, the cost of certain consultants and temporary labor hired to assist in the accounting restatements, and reimbursements to current and former employees for their cost of counsel.

Total Other Income (Expense)

Interest income decreased 9.6% to $416,000 for the year ended June 30, 2001 compared with $460,000 for the twelve months ended June 30, 2000. The decrease was attributable to lower average cash balances available in the year for investing. Interest expense and other, net increased 21.1% to $1.1 million for the year ended June 30, 2001 compared with $908,000 for the twelve months ended June 30, 2000. The increase was primarily attributable to interest and fees associated with forbearance agreements and higher interest rates on our former credit facility.

Net Loss and Loss Per Share

The net loss for the year ended June 30, 2001 was $1.4 million, or $0.20 per share, compared with a net loss of $1.6 million, or $0.25 per share, in the comparable period in 2000. Excluding the impact of stock compensation (which is a non-cash charge to earnings) and expenses relating to accounting restatements and related shareholder litigation (which management believes are not indicative of continuing operating expenses), net income for the year ended June 30, 2001 would have been $1.5 million, or $0.21 per share, compared with a loss of $558,000, or $0.09 per share, in the 2000 period.

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Factors Affecting Our Future Results

In addition to the factors discussed elsewhere in this Form 10-K, the following are important factors which could cause actual results or events to differ materially from those contained in any forward looking statements made by or on behalf of the Company. If we are adversely affected by such risks, then the trading price of our common stock could decline, and you could lose all or part of your investment.

We may require additional sources of cash to meet our capital and operational requirements. As a result, we may face uncertainty in obtaining sources of capital on satisfactory terms.

Our liquidity and cash flows from our operations may be insufficient to meet our capital and operating requirements. Although Sirenza has agreed to provide a bridge financing facility to us, their obligation to do so is subject to our compliance with financial and other covenants and other conditions set forth in our loan agreement with Sirenza. If we do not meet those requirements, we may be unable to draw down additional amounts and Sirenza may be able to declare the loan to be in default and demand repayment of outstanding amounts. Furthermore, unanticipated changes in our business, financial condition or results of operations may cause our capital requirements to exceed the amounts available under the Sirenza bridge loan facility. There is no assurance that additional financing would be available from Sirenza or any other source. Given the current market price for our common stock and the state of the capital markets generally, we do not expect that we would be able to raise funds through the issuance of our capital stock. Our ability to seek other sources of capital is limited by virtue of the terms of the Exclusivity and Right of First Refusal Agreement entered into in connection with the bridge loan. Our capital requirements depend on numerous factors beyond our control. If adequate funds are not available or not available on acceptable terms, we may be unable to continue operations, develop, enhance and market products, retain qualified personnel, take advantage of future opportunities, or respond to competitive pressures, any of which could have a material adverse effect on our business, operating results, financial condition or liquidity. There can be no assurance that any means of raising capital will be available, or if available, that it will be acceptable on terms or in sufficient amounts to meet our needs.

We may not be able to successfully negotiate the sale of our business.

Although we intend to negotiate with Sirenza to sell substantially all of our assets to them, there can be no assurance that we will be successful in reaching a definitive agreement. In the event that we are able to reach an agreement with Sirenza, such agreement would most likely be subject to numerous conditions. There can be no assurance that we would be able to meet those conditions or that the sale of the assets would be consummated even if our shareholders were to approve such an agreement. If the sale of the assets to Sirenza is not consummated, we may not be able to sell our assets or our business to another buyer on terms as favorable as those provided in a definitive agreement with Sirenza, or at all. Additionally, pursuant to the terms of the Exclusivity Agreement, our ability to negotiate with other potential buyers is greatly limited.

Our future results are likely to fluctuate.

Our quarterly and annual results of operations have historically been, and will continue to be, subject to quarterly and other fluctuations due to a variety factors, including; general economic conditions; changes in pricing policies by us, our competitors or our suppliers; anticipated and unanticipated changes in unit average selling prices of our products; fluctuations in manufacturing yields, availability and cost of products from our suppliers; the timing of new product announcements and introductions by us or our competitors; changes in the mix of products sold; the cyclical nature of the telecommunications and military supplies industries; the gain or loss of significant customers; increased research and development expenses associated with new product introductions; market acceptance of new or enhanced versions of our products; seasonal customer demand; and the timing of significant orders. Results of operations could also be adversely affected by economic conditions generally or in various geographic

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areas, other conditions affecting the timing of customer orders and capital spending, a continued downturn in the wireless communications market, or order cancellations or rescheduling. Additionally, because we are continuing to increase our operating expenses for personnel and new product development in order to create more sales opportunities and increase sales levels, our results of operations will be adversely affected if such sales levels are not achieved.

We are exposed to the risks associated with the slowdown in the U.S. and world-wide economy.

Among other factors, concerns about inflation, decreased consumer confidence and spending and reduced corporate profits and capital spending have resulted in a downturn in the U.S. economy generally and in the wireless communications industry in particular. As a result of these unfavorable economic conditions, we have experienced a significant slowdown in customer orders in our commercial signal source components product line during fiscal 2002. In addition, we are experiencing corresponding decreases in revenues and average selling prices and expect continued pressure on average selling prices in the future. If the adverse economic conditions continue or worsen, restructuring of our operations may be required, and our business, financial condition and results of operations may be seriously harmed.

We are affected by a general pattern of product price decline and fluctuations, which can harm our business.

The markets for our products are characterized by rapid technological change, evolving industry standards, product obsolescence, and significant price competition and, as a result, are subject to decreases in average selling prices. We have experienced deterioration in demand for our commercial signal source products during the last fiscal year. We are unable to predict future prices for our products, but we expect that the average selling price for our products will decline. Accordingly, our ability to maintain or increase revenues will be highly dependant on our ability to increase unit sales volumes of existing products and to successfully develop, introduce and sell new products. Declining average selling prices will also adversely affect our gross margins. There can be no assurance that we will be able to increase unit sales volumes of existing products, develop, introduce and sell new products or significantly reduce our costs per unit. There also can be no assurance that even if we were able to increase unit sales volumes and sufficiently reduce our costs per unit, that we would be able to maintain or increase revenues or gross margins.

Our financial results could be adversely affected if we fail to develop, introduce, and sell new products.

Like many wireless communications companies, which frequently operate in a highly competitive, quickly changing environment marked by rapid obsolescence of existing products, our future success depends upon our ability to develop and introduce new products that customers choose to buy. The markets for our products are characterized by swift technological innovation which can leave a product line with little or no demand. If we fail to introduce new product designs in a timely manner or are unable to manufacture products according to the requirements of these designs, or if our customers do not successfully introduce new systems or products incorporating our products, or market demand for our new products does not exist as anticipated, our business, financial condition and results of operations could be seriously harmed.

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We must build products based on demand forecasts; if such forecasts are inaccurate, we may incur significant losses.

Due to the relatively long lead times in obtaining raw material parts, our ability to maintain adequate levels of inventory is primarily dependant upon us obtaining sufficient supply of raw material to meet future demand and any inability to maintain adequate inventory levels may adversely affect our relationship with our customers. In addition, we must order product and build inventory in advance of product shipment. There is a risk that because demand for our products is volatile and subject to technological and price changes, we will forecast incorrectly and produce excess or insufficient inventories of a particular product. The risk is heightened because certain of our key customers place orders with short lead times. Our customer’s ability to reschedule or cancel orders without significant penalty could adversely affect our liquidity as we may be unable to adjust our purchases from our suppliers to match such customer changes and cancellations. In the past, we have produced excess quantities of certain parts, which had a material adverse affect on our results of operations. There can be no assurance that in the future, we will not produce excess quantities of any of our products. To the extent that we produce excess or insufficient inventories of particular products, our results of operations could be adversely affected.

Increases in raw materials prices may significantly harm our results.

Our manufacturing operations require raw materials that must meet exacting standards. We generally have more than one source available for these materials, but there are only a limited number of suppliers capable of delivering certain raw materials that meet our standards. There is an ongoing risk that our suppliers may increase their prices to the point that we may not be able to maintain our gross margins. The occurrence of such price increases could have a material adverse affect on our results of operations.

The OEMs increased use of contract manufacturers creates pricing pressures that could adversely affect our results of operations.

In recent years, the trend in the electronics industry has been for many OEMs to use contract manufacturers primarily or exclusively to build their products. OEMs continue to look to outsourcing arrangements for the design and manufacture of certain products and/or components to achieve operational cost reductions. Additionally, the recent economic contraction has significantly increased the pressure on the OEMs to seek lower prices from their contract manufacturers. As a result, our customers are likely to continue to demand lower prices from us. To maintain our margins and remain profitable, we must continue to meet our customers’ design needs while reducing costs through efficient raw material procurement and process and product improvements. Our profit margins will suffer if we are unable to reduce our costs of production as sales prices decline

Losing the services of our executive officers or our other highly qualified and experienced employees could adversely affect our business.

Our success depends upon the continued contributions of our executive officers, many of whom have many years of experience and would be extremely difficult to replace. We must also attract and maintain experienced and highly skilled engineering, sales and marketing and managerial personnel. Competition for qualified personnel is intense, and we may not be successful in hiring and retaining these people. If we lose the services of our executive officers or cannot attract and retain other qualified personnel, our business could be adversely affected.

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We face additional problems and uncertainties associated with international operations that could adversely affect us.

We sell a significant portion of our products internationally and are subject to a number of risks including political and economic instability, changes in diplomatic and trade relationships, unexpected changes in regulatory requirements, delays resulting from difficulty in obtaining export licenses for certain technology, tariffs and other barriers and restrictions, and the burdens of complying with a variety of foreign laws. Our current or potential customers in Asia, for instance, may become unwilling or unable to purchase our products and our competitors in Asia may be able to become more price-competitive relative to us due to declining values of their national currencies. There can be no assurance that such factors will not adversely impact our results of operations in the future or require us to modify our current business practices.

We may fail to successfully integrate businesses that we acquire.

During fiscal 2002, we completed an acquisition of certain assets of Asvan Technologies, LLC and may acquire additional companies and/or assets in the future. If we fail to integrate these businesses successfully, or properly, our quarterly and annual results may be seriously harmed. Integrating businesses is expensive, time-consuming, and a great strain on our resources. Some specific difficulties in the integration process may include failure to successfully develop acquired in-process technology, the difficulty of integrating acquired technology or products, unanticipated expenses related to technology integration and the potential unknown liabilities associated with acquired businesses.

We may not be able to compete successfully in a highly competitive industry.

We face intense competition and many of our principle competitors and potential competitors have substantially greater financial, technical, marketing, distribution and other resources, broader product lines and longer standing relationships with customers than do we, any of which factors may place such competitors and potential competitors in a stronger competitive position.

Our customers may be unable to pay their outstanding obligations to us.

The competitive environment in which we operate requires us to provide certain credit terms to our customers. In some circumstances, the credit terms can be significant. Given the general downturn in the US and world-wide economy, we may see an increase in customer defaults. Should customers fail to meet their obligations, losses could be incurred and such losses could have an adverse effect on us.

We may face significant expenses as a result of ongoing or future litigation.

We intend to vigorously defend the Company in ongoing litigation, however, should the outcome of any of the actions be unfavorable, we may be required to pay damages and other expenses which could have a material adverse affect on our financial position or results of operations.

Liquidity and Capital Resources

As of June 30, 2002, working capital was $2.0 million including cash and cash equivalents of $553,000. Operations generated $897,000 of cash primarily attributable to the reduction of accounts receivable through collections and lower sales volumes during the year. Additionally, we continued our focus of reducing inventory levels and increasing inventory turns. The cash generated from these efforts was partially offset by the net loss, adjusted for non-cash charges, the payment of semi-annual bonuses to employees and reduced accounts payable due to lower costs and expenses attributable to lower sales volumes.

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Capital expenditures for the fiscal year ended June 30, 2002 were $953,000. We focused capital expenditures on further automation of existing production equipment and further development of our IT infrastructure.

Throughout the fiscal year ended June 30, 2002, we reduced our notes payable and long term obligations by $1.4 million.

Wells Fargo Credit Facility

On June 28, 2001, we entered into a credit agreement with Wells Fargo Business Credit, Inc. (“Wells Fargo”) (“the Credit Facility”), consisting of, among other things, a revolving loan (“Revolving Loan”) and a term loan “Term Loan”). During fiscal 2002, we have renegotiated amendments in an attempt to avoid potential default under the Credit Facility due to the continuing softness of demand of our products and within the wireless industry.

In late May 2002, we determined that we were not in compliance with our minimum tangible net worth covenant of the Credit Facility, which constitutes an event of default. In early July 2002, we received notice from Wells Fargo confirming that an event of default had occurred. Accordingly, the amounts outstanding as of June 30, 2002 have been classified as current. A default interest rate of 3% over the floating rate is currently being charged against amounts outstanding under the loan agreement. No other default remedies were sought by the lender.

On September 26, 2002, we entered into a forbearance agreement with Wells Fargo that is in effect until November 15, 2002. The forbearance agreement allows us to borrow amounts on our Revolving Loan up to the lesser of the amount available under a borrowing base formula or $2,500,000. The Credit Facility is secured by substantially all of our accounts receivable, inventories, intellectual property and equipment. The forbearance agreement also imposes certain financial covenants along with limitations on capital expenditures and investments, and restricts certain payments and distributions.

At June 30, 2002, the interest rates on the Revolving Loan and the Term Loan were 8.75% and 10.25%, respectively. We had additional borrowing availability of $1.8 million under the Revolving Loan.

For the period from May 2002 to August 2002, we received several indications of interest in an acquisition of all or substantially all of our assets or a potential private equity infusion. As a result, we decided to engage the investment-banking firm of Green, Manning & Bunch, LTD (“GMB”) to act as our financial advisor to assist in evaluating our strategic alternatives, including a financing transaction or the sale of all or part of the Company. We worked with GMB to identify potential financing sources and potential acquirers and held discussions with a number of parties on these potential transactions in August 2002. Potential acquirers were advised that the Company would require substantial bridge financing pending completion of any acquisition in order to repay the Wells Fargo credit line and to meet our working capital needs pending completion of any acquisition transaction.

Sirenza Loan Facility

On October 7, 2002, we entered into a Loan Agreement with Sirenza Microdevices, Inc. (“Sirenza”) which provides for a $5.3 million senior secured bridge loan facility (the “Loan Facility”). As a condition to the Loan Facility, we entered into an Exclusivity and Right of First Refusal Agreement (the “Exclusivity Agreement”) with Sirenza to evaluate a potential acquisition of all or substantially all of our assets.

The Loan Facility is effective for the period October 7, 2002 to September 25, 2003, is secured by substantially all of our assets and has an annual interest rate of 25%. Additionally, the Loan Facility is subject to covenants that among other things impose limitations on capital expenditures and investments, restrict certain payments and distributions and require us to maintain certain financial ratios.

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Under the terms of the Loan Facility, Sirenza has provided for funding in two tranches. The first tranche (“Tranche A “) consists of an initial term loan of approximately $1.4 million to repay amounts outstanding under the Credit Facility at Wells Fargo. The second tranche (“Tranche B”) consists of additional term loans of up to $3.9 million which may be drawn down in accordance with an agreed schedule. We expect to use the proceeds from any advances under Tranche B to fund our working capital requirements.

In the event of a change of control or execution of a definitive acquisition agreement with any party other than Sirenza, amounts outstanding under the Loan Facility are due in full within five business days. Additionally, we must pay a prepayment fee in the amount of $1,000,000 (the “Prepayment Fee”). Under the terms of the Loan Facility, we may voluntarily prepay the Tranche A and Tranche B loan provided that in the event of a change of control or execution of a definitive acquisition agreement with any party other than Sirenza within 180 days of such prepayment, we must pay the Prepayment Fee.

Additionally under the terms of the Loan Facility, at Sirenza’s option, the Tranche A loan is convertible into 19.9% of our Common Stock on a fully diluted basis at the following times: five business days prior to the maturity date of the Tranche A loan, the date Sirenza receives written notice of our intent to prepay the Tranche A loan, the date of the commencement of a tender offer by a party other than Sirenza, and the date we execute a definitive acquisition agreement with another party. The shares of common stock issuable upon conversion of the Tranche A Note are subject to certain registration rights as set forth in the Resale Registration Rights Agreement between the parties. We have amended our Rights Agreement with American Securities Transfer, Inc. to make the rights thereunder inapplicable to certain transactions with Sirenza that are approved by our board of directors, including the conversion of the Tranche A Note.

Our ability to draw down amounts under Tranche B is conditioned upon, among other things, the absence of an event of default and our representations and warranties being true and correct at the time of such draw down request. In the event we are unable to draw down amounts under Tranche B, we may be required to seek additional capital through other sources, which ability is limited by the terms of the Exclusivity Agreement described below. There can be no assurance that we would be able to procure adequate funds in such an event. If such funds are not available, we may be forced to curtail or suspend our operations.

Pursuant to the terms of the Exclusivity Agreement, we have agreed, subject to certain exceptions, not to solicit acquisition proposals from other parties or otherwise negotiate with such parties with respect to an acquisition proposal. Such exclusivity period terminates upon the earlier of March 31, 2003 or the occurrence of certain other events. Under the Exclusivity Agreement we have granted Sirenza a right of first refusal in the event that we receive any future offer to acquire us or substantially all of our assets. Such right of first refusal terminates upon the earlier of: the date that Sirenza advises us in writing that they are terminating all negotiations with us regarding a transaction or that they are no longer interested in pursuing a transaction with us, such time as the Loan Facility has terminated and no loans remain outstanding thereunder, or such time as they default on their obligations to make loans to us pursuant to the Loan Facility.

Other

On December 5, 2001, the SLC was formed to investigate allegations of wrongdoings during prior periods by former employees, as well as current and former members of our Board of Directors. The SLC is comprised of two outside directors who joined our Board of Directors subsequent to the time of certain alleged wrongdoings. On December 20, 2001, the SLC retained independent counsel to assist in its investigation.

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On March 19, 2002, under the direction of the SLC, we filed a lawsuit against Mr. David Sherman, Mr. Joseph Kiser, individuals, and J.C. Enterprises, a Colorado general partnership. Mr. Sherman is the former president of the Company and Mr. Kiser is the former Chairman of the Board of Directors and former Chief Scientific Officer. Additionally, Mr. Kiser is the General Partner of J.C. Enterprises. In the lawsuit, we seek to rescind certain employment and consulting agreements between the Company and Messrs. Kiser and Sherman, and to rescind certain stock option grants made to them, on the basis that such agreements were entered into, and such option grants were made, based upon mistaken or misrepresented information regarding the Company’s true financial performance. We also seek to recover the compensation and bonuses paid to them as a result of such mistaken or misrepresented information. Additionally, we seek to recover rent paid in excess of market prices pursuant to a lease agreement between the Company and J.C. Enterprises in reliance on misrepresented information provided by Mr. Kiser and Mr. Sherman.

On April 30, 2002, Mr. Kiser filed a motion to dismiss our lawsuit in its entirety. On June 13, 2002, the motion to dismiss was denied.

Mr. Kiser’s employment contract requires him to perform any directive of the Company’s Board of Directors. Subsequent to March 19, 2002, Mr. Kiser has not performed any services for the Company. We believe that our claim to rescind Mr. Kiser’s employment contract based upon mistaken or misrepresented information regarding the Company’s true financial performance is based upon a valid principle of law. Since March 19, 2002 we have suspended all payments required by Mr. Kiser’s employment contract. We have recorded approximately $203,000 of liabilities representing the present value of post-employment health care obligations and a one time separation bonus to be paid to Mr. Kiser upon termination of contract payments.

In the event that Mr. Kiser prevails in requiring us to comply with the terms of the employment contract, we could be obligated to total future payments of approximately $1.4 million payable over ten years. If we are successful in our claims against Mr. Kiser, we could be awarded as much as $5,600,000 plus attorneys’ fees. Additionally, we would reverse all previously recorded liabilities associated with this matter.

The jury trial date for this suit has been scheduled for February 24, 2003.

At this time, we are unable to reasonably estimate the possible future cost, net loss or net gain, if any, associated with this matter or other legal proceedings and claims for which we may be exposed to a certain amount of risk. Accordingly, we have not recorded any loss or gain contingencies associated with these matters as of June 30, 2002. It is reasonably possible that such amounts could be material to our financial condition, results of operations or liquidity.

We own various term life and whole life insurance policies in which certain former officers are named as the insured. Under these policies, we are entitled to 100% of the net death benefits. As of June 30, 2002, the aggregate death benefits receivable under these policies was approximately $6.4 million and the cash surrender value was approximately $273,000. During July 2002, we borrowed approximately $259,000 against the whole life insurance policies. We have not recorded any gain contingency associated with the aggregate death benefits receivable, however in the event of death, the net death benefit could be material to our financial condition, results of operations and liquidity.

Effect of Recently Issued Accounting Standards

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No.142, Accounting for Goodwill and Intangible Assets. SFAS No. 142 provides that an intangible asset may be amortized over its respective estimated useful life to its estimated residual value in proportion to the economic benefits consumed. The method of amortization should be systematic and rational but need not necessarily be the straight-line method. Amortization is

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not required for intangible assets which are determined to have an indefinite useful life. Useful lives of amortizable intangible assets are required to be re-evaluated each reporting period. We adopted SFAS No. 142 in January 2002. Prior to adoption, we did not have any goodwill recorded. As a result, we had no impact on our financial condition or results of operations.

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 requires an enterprise to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets. Adoption of SFAS No. 143 may result in increases in liabilities, assets, and expense recognition in financial statements. We do not anticipate a material impact on our financial condition or results of operations as a result of implementing this standard. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 supercedes SFAS No. 121, by requiring one accounting model to be used for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired, and by broadening the presentation of discontinued operations to include more disposal transactions. We do not anticipate a material impact on our financial condition or results of operations as a result of implementing this standard. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001.

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statement No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” This statement provides guidance on the classification of gains and losses from the extinguishment of debt and on the accounting for certain specified lease transactions. We do not anticipate a material impact on our financial condition or results of operations as a result of implementing this standard.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” which addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (“EITF”) Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). Generally, SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized as incurred, whereas EITF Issue No. 94-3 required such a liability to be recognized at the time that an entity committed to an exit plan. We are currently evaluating the provisions of the new rule, which is effective for exit or disposal activities that are initiated after December 31, 2002.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to certain market risks, including the effects of adverse changes in interest rates. Our exposure to changes in interest rates results from borrowings with floating interest rates. At the present time, we have no financial instruments in place to manage the impact of changes in interest rates. As of June 30, 2002, we had notes payable outstanding of $1.5 million under our Term Loan at an interest rate of 10.25%. No amounts were outstanding under our Revolving Loan. Additionally, in connection with the acquisition of certain assets of Asvan Technology, LLC, we had $139,000 outstanding on a two-year promissory note at an interest rate of 10.00%. We estimate that a 10% upward movement in interest rates would have impacted our results of operations by less than $200,000 for the year ended June 30, 2002.

Item 8. Financial Statements

The financial statements begin on page F-1. Financial statements prior to January 1, 1999 cannot be prepared without unreasonable effort and expense.

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The financial statements for periods prior to June 30, 2000 have not been audited. We have been informed by our independent auditors that they could not express unqualified audit opinions for periods prior to June 30, 2000, based on their determination that the internal controls over inventory accounting and management systems prior to June 30, 2000 were not sufficiently reliable to enable them to audit the inventory quantities, and that they are unable to apply alternative auditing procedures to the inventory balances for periods prior to June 30, 2000.

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

Incorporated by reference is the information contained in Item 4 of our prior Forms 8-K filed on July 12, 2000, July 20, 2000 and September 15, 2000, respectively.

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PART III

Item 10. Directors and Executive Officers of the Registrant

Board of Directors

Sarah L. Booher — Director. Ms. Booher, age 60, was elected a Director on January 18, 1994. She has been a managing partner of Good Earth Farm, a horse-breeding farm, since 1992. Ms. Booher was the Executive Director of the Park Ridge Foundation, a nonprofit health care foundation located in Rochester, New York, from February 15, 1988 until September 1, 1996. She remained as a consultant to the Foundation until August 30, 1997. After September 1, 1996, she became Vice President of PMA Associates of Genesee Valley, Inc., a nonprofit strategic planning corporation in Livonia, New York, where she remains as a consultant and Secretary/Treasurer. She has also been a fund-raising consultant for the Cordelia A. Greene Library in Castile, New York, and the Hope Hall School of Rochester, New York, since 1998. During 1996 and 1997, Ms. Booher served as President of the Genesee Valley New York Chapter of the National Society of Fundraising Executives, a nonprofit organization, where she also served on the Board of Directors from 1986 to 1997. She received a BA degree from the University of Colorado in 1964.

Robert C. Dixon — Director. Mr. Dixon, age 70, was elected a Director on January 11, 2002. Mr. Dixon currently serves on the Boards of Sunwest, a telephone company in Colorado Springs, and Ditrans Corp., in Irvine, California, where he is Chairman. Mr. Dixon has more than 46 years of experience as a senior scientist and development engineer with some of the world’s leading defense, communications and electronics organizations. He was a Founder and Chief Scientist of Omnipoint Corporation, a cellular service provider that was recently purchased by VoiceStream. Other assignments have included Chief Scientist at Hughes Aircraft, Senior Research Engineer at Northrop Corporation, Senior Staff Engineer at Magnavox Research Labs, Staff Engineer at TRW, and Senior Staff Engineer at Hoffman Electronics. He was also President and Founder of Spectrack Systems Inc., Division Manager of the Spectrack Division of R&D Associates, and Chief Scientist and Founder of Spread Spectrum Sciences Inc. Mr. Dixon has served as a consultant to more than 100 companies and to the U.S. government. Additionally, he taught at UCLA and George Washington University and has served as co-editor of a special issue of IEEE Transactions (Institute of Electrical and Electronics Engineers) and on the editorial board of IEEE Proceedings. Mr. Dixon is licensed by the Federal Communications Commission, is a Licensed Professional Engineer, and is a Fellow of the IEEE.

David A. Lisowski — Director. Mr. Lisowski, age 49, was elected a Director on June 26, 1996. Mr. Lisowski is the President and a Director of the Denver Wholesale Florist Company, a national wholesale florist, for which he has been the General Manager and Chief Executive Officer since 1993. He was employed by Central Bank of Denver, N.A., a commercial bank in Colorado, and various affiliated banks from 1972 to 1992. His employment with Central Bank included serving as Senior Vice President of Commercial Lending in Southern Colorado as well as various other positions. Mr. Lisowski attended Metropolitan State College where he received a BS degree in Finance in 1988.

Anthony B. Petrelli — Acting Chairman of the Board and Director. Mr. Petrelli, age 49, was elected a Director on October 17, 1997 and became Acting Chairman of the Board of Directors on July 3, 2001. Mr. Petrelli has served as Senior Vice President of Investment Banking Services at Neidiger, Tucker, Bruner, Inc., an investment banking firm and registered broker-dealer in Denver, Colorado, since May of 1987. He formerly served as a Director of Guardian Acceptance Corp., a consumer finance company in Denver, Colorado, for which he served as President from September 1996 until December 1997. Mr. Petrelli received a BS degree in Business in 1974 and an MBA in 1979 from the University of Colorado.

David M. Risley — Director. Mr. Risley, age 58, was elected a Director on November 27, 2001. He currently serves as Senior Vice President and Chief Financial Officer of La-Z-Boy Inc., a $2.2 billion furniture manufacturer. Prior to joining La-Z-Boy, he was Vice President of Finance and Chief Financial

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Officer with Aeroquip Vickers, Inc., a manufacturing firm serving the industrial, aerospace and automotive markets with power and motion control devices, fluid connectors and composite components. He also had served as Vice President and Controller of Heizer Corporation, a venture capital and business development firm and in various positions with TransUnion Corporation, a diversified conglomerate. He began his career as a Certified Public Accountant with Arthur Young & Company (now Ernest & Young LLP). He holds a BBA in Accounting from the University of Iowa and an MBA in Finance from Loyola University of Chicago.

Gil J. Van Lunsen — Director. Mr. Van Lunsen, age 60, was elected a Director on June 1, 2001. He recently retired from KPMG following 32 years of service. Nine years after joining KPMG in 1968 as an assistant accountant, he became partner and subsequently was promoted to partner in charge of national accounting and audit training. In 1994, he was appointed managing partner of the Tulsa, Oklahoma office, a position he held until his retirement in 2000. Mr. Van Lunsen was recently appointed Chairman of the Audit Committee of Hillcrest Healthcare Systems, a Tulsa, Oklahoma-based hospital system. He is also a member of the Ethics Compliance Committee of Tyson Foods. He received his BSBA in Accounting and Finance from the University of Denver in 1968 and is a Certified Public Accountant.

Charles R. Bland — President, Chief Executive Officer and Director. Mr. Bland, age 54, joined us in May of 2001 as our President and Chief Executive Officer. On December 26, 2001, he was appointed to the Board of Directors. From June 1, 2000 until he joined us, he served as the President of Growzone, Inc., a software company focused on the horticultural industry, and from June 1999 until June 2000, he was the President of AmericasDoctors.com, an Internet health care content site. From 1998 to 1999, Mr. Bland was the Chief Operating Officer at Quark Incorporated, provider of shrink wrap and client server software for the publishing industry. For the previous 24 years, Mr. Bland worked in positions of increasing responsibility with Owens Corning Fiberglas, a world leader in high performance glass composites and building materials, with his final assignment being President, Africa/Latin American Operations. Mr. Bland received his B.S., Accounting and Finance, from Ohio State University and his MBA from the Sloan School, Massachusetts Institute of Technology.

The information regarding our executive officers required by this Item is included in Item 4A hereof.

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Item 11. Executive Compensation

The following table summarizes the compensation for the years ended June 30, 2002 and 2001, six months ended June 30, 2000 and for the year ended December 31, 1999 of our Chief Executive Officer and our Executive Officers whose salary and bonus exceeded $100,000:

											Long-Term Compensation
			Annual Compensation								Awards
								Other			Restricted			Securities
								Annual			Stock			Underlying
								Compen-			Award(s)			Options/
Name and Principal Position	Year		Salary ($)		Bonus ($)			sation($)			($)			SARs (#)
Charles R. Bland		2002		238,462		20,100			10,000	(1)		-0-			51,000
President and		2001		31,250		-0-			1,538	(2)		-0-			85,000
CEO		2000*		-0-		-0-			-0-			-0-			-0-
		1999**		-0-		-0-			-0-			-0-			-0-
Richard P. Dutkiewicz		2002		152,192		28,500			10,000	(3)		-0-			40,000
Vice President of		2001		63,462		10,000	(4)		2,692	(5)		-0-			20,000
Finance and CFO		2000*		-0-		-0-			-0-			-0-			-0-
		1999**		-0-		-0-			-0-			-0-			-0-
Ernest C. Hafersat		2002		169,731		20,000			10,000	(6)		-0-			40,000
Vice President of		2001		25,846		-0-			1,538	(7)		-0-			20,000
Manufacturing		2000*		-0-		-0-			-0-			-0-			-0-
		1999**		-0-		-0-			-0-			-0-			-0-
Joseph H. Kiser		2002		200,864		25,000			42,095	(8)		-0-			15,000
Former Chief Scientific		2001		286,786		25,010			15,190	(9)		-0-			-0-
Officer and Secretary		2000*		154,875		100,000			101,605	(10)		-0-			-0-
		1999**		295,000		75,000			152,505	(11)		37,501	(12)		100,000
Timothy G. Schamberger(13)		2002		19,038		-0-			1,154	(14)		-0-			25,000
Vice President of		2001		-0-		-0-			-0-			-0-			-0-
Sales and Marketing		2000*		-0-		-0-			-0-			-0-			-0-
		1999**		-0-		-0-			-0-			-0-			-0-
Timothy M. Micun		2002		120,692		23,048			10,000	(15)		-0-			35,000
Former Vice President		2001		99,352		47,884			3,077	(16)		-0-			30,000
of Sales and Marketing		2000*		13,385		-0-			-0-			-0-			-0-
		1999**		-0-		-0-			-0-			-0-			-0-
Daniel J. Wilmot		2002		146,077		28,723			23,249	(17)		-0-			35,000
Vice President of		2001		133,846		51,168			8,990	(18)		-0-			-0-
Advanced Technology		2000*		62,500		35,000			30,974	(19)		-0-			-0-
		1999**		125,000		54,937			12,698	(20)		-0-			22.500

*	The data presented is for the six months ended June 30, 2000.
**	The data presented is for the fiscal year ended December 31, 1999.
(1)	Includes automobile benefit of $10,000.
(2)	Includes automobile benefit of $1,538.
(3)	Includes automobile benefit of $10,000.
(4)	Includes sign-on bonus of $10,000.
(5)	Includes automobile benefit of $2,692.
(6)	Includes automobile benefit of $10,000.
(7)	Includes automobile benefit of $1,538.
(8)	Includes a gift of a car of $42,095.
(9)	Includes automobile benefit of $11,750 and insurance of 3,440.

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(10)	Includes tax reimbursement of $84,501, automobile benefit of $5,875, insurance of $9,229 and an IRA contribution of $2,000.
(11)	Includes tax reimbursement of $84,501, automobile benefit of $11,750, insurance of $17,421, accrued vacation earned but not taken of $11,342, tax preparation fees of $2,790 and an IRA contribution of $2,000.
(12)	Includes 6,250 shares valued at $37,501 earned in 1998, but not issued until 1999. These shares were subsequently sold by the holders.
(13)	Mr. Schamberger joined us on May 13, 2002 after the resignation of Mr. Timothy M. Micun.
(14)	Includes automobile benefit of $1,154.
(15)	Includes automobile benefit of $10,000.
(16)	Includes automobile benefit of $3,077.
(17)	Includes automobile benefit of $6,923 and tuition reimbursement of $16,326.
(18)	Includes automobile benefit of $8,990.
(19)	Includes tax reimbursement of $24,301, automobile benefit of $4,375, insurance of $298 and an IRA contribution of $2,000.
(20)	Includes tax reimbursement of $719, automobile benefit of $8,600, miscellaneous of $778, insurance of $601, and an IRA contribution of $2,000.

None of the named Executive Officers received additional perquisites or other personal benefits the aggregate amount of which was the lesser of either $50,000 or 10% of the total of annual salary and bonus reported for such persons.

Option/SAR Grants in Last Fiscal Year

The following table sets forth the information concerning individual grants of stock options and appreciation rights during the last fiscal year to each of the named Executive Officers:

				% of Total							Potential Realizable
	Number Of			Options							Value at Assumed Annual
	Securities			Granted to			Exercise				Rates of Stock Price
	Underlying			Employees			or Base				Appreciation For Option
	Options			in Fiscal			Price		Expiration		Term 5%($)(1) and
Name	Granted			Year			($/share)		Date		10%($)(2)
Charles R. Bland		51,000	(3)		6.3	%	$	2.00		9/17/11	$	64,147	$	162,562
Richard P. Dutkiewicz		40,000	(3)		4.9	%	$	2.00		9/17/11	$	50,312	$	127,499
Ernest C. Hafersat		40,000	(3)		4.9	%	$	2.00		9/17/11	$	50,312	$	127,499
Joseph H. Kiser		15,000	(3)		1.8	%	$	2.00		9/17/11	$	18,867	$	47,812
Timothy G. Schamberger		25,000	(3)		3.1	%	$	1.05		6/03/12	$	16,508	$	41,836
Timothy M. Micun		35,000	(3)		4.3	%	$	2.00		9/17/11	$	44,023	$	111,562
Daniel J. Wilmot		35,000	(3)		4.3	%	$	2.00		9/17/11	$	44,023	$	111,562

(1)	This column represents the potential realizable value of each grant of options, based on the assumption that the market price of shares of Common Stock underlying the options will appreciate in value from the date of the grant to the end of the option term at the annual rate of five percent.
(2)	This column represents the potential realizable value of each grant of options, based on the assumption that the market price of shares of Common Stock underlying the options will appreciate in value from the date of the grant to the end of the option term at the annual rate of ten percent.
(3)	Of this grant, all options were incentive stock options.

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Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year End Option/SAR Values

The following table sets forth information concerning each exercise of stock options during the last fiscal year by each of our Executive Officers and the fiscal year end value of unexercised options:

					Number of		Value of
					Securities		Unexercised
					Underlying		In-the-Money
	Shares				Unexercised		Options/SARs at
	Acquired on		Value Realized		Options/SARs at		Fiscal
Name	Exercise(#)		($)		Fiscal Year-End(#)		Year-End($)(1)
					Exercisable/		Exercisable/
					Unexercisable		Unexercisable
Charles R. Bland		-0-		N/A		31,450/104,550		$0/$0
Richard P. Dutkiewicz		-0-		N/A		13,000/47,000		$0/$0
Ernest C. Hafersat		-0-		N/A		12,000/48,000		$0/$0
Joseph H. Kiser		-0-		N/A		0/0		$0/$0
Timothy G. Schamberger		-0-		N/A		0/25,000		$0/$0
Timothy M. Micun		-0-		N/A		15,000/50,000		$0/$0
Daniel J. Wilmot		-0-		N/A		124,909/33,541		$0/$0

(1) Based on the fair market value of the Common Stock on August 30, 2002 of $0.66, the closing price as quoted on the OTCBB.

Directors’ Compensation

We currently have an arrangement whereby each outside Director receives $1,000 per day for attendance in person at any meeting of more than an hour of the Board of Directors or a committee thereof or a meeting with management or other Directors for Company business or affairs, including meetings held by telephone. We reimburse outside Directors for their expenses in attending meetings of the Board of Directors and its committees.

In addition, pursuant to the Company’s Tandem Stock Option and Stock Appreciation Rights Plan, outside directors receive a grant of ten-year, fully vested options to purchase 500 shares of Common Stock for each meeting of the Board of Directors or a committee thereof or a meeting with management of the Company or other Directors for Company business or affairs, attended in person, including meetings held by telephone. These options are granted and priced on the first business date of the month following the meeting. Also, the members of each Board committee receive a grant of 50 shares each of Common Stock per month from the Company’s Stock Grant Plan. These shares are issued on a quarterly basis.

Employment Agreements with Current Officers

Employment Agreement with Chief Executive Officer. Effective as of August 1, 2002, the Company entered into an employment agreement with Charles R. Bland. The agreement provides for an employment term of one year which automatically renews for an additional year on each subsequent August 1 without any further action on the part of the Company or Mr. Bland unless terminated under certain provisions of the agreement. Under the terms of the agreement, the Company will pay Mr. Bland an annual base salary as determined by the Compensation Committee of the Board of Directors. Mr. Bland is also eligible to receive annual incentive pay equal to 40% of his annual salary, which amount

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shall be based on his performance and merit and the Company’s financial success in the year to which the incentive pay corresponds. Additionally, under the terms of the agreement Mr. Bland receives an automobile allowance of $10,000 per year.

Either the Company or Mr. Bland can terminate Mr. Bland’s employment upon thirty days written notice at any time. However, in the event of an involuntary termination (which includes, without limitation, the resignation of Mr. Bland at his election not more than thirty days after a Change of Compensation, Duties or Benefits (as defined in the agreement)) during the twelve month period immediately following a change in control, the agreement provides for severance pay equal to two times Mr. Bland’s annual base salary plus two times 100% of his annual incentive pay opportunity and the continuation of his car allowance for two years. In the event of any other involuntary termination, the agreement provides for severance pay equal to one year’s worth of Mr. Bland’s annual base salary plus the same portion of Mr. Bland’s annual incentive pay opportunity for the one year following such termination as the average portion of the respective annual incentive pay opportunity paid to other executive officers of the Company during such year and the continuation of his car allowance for one year. Additionally, upon any involuntary termination, all unvested stock options and stock appreciation rights that have previously been granted to Mr. Bland will fully vest and remain exercisable for three months after such termination and to the extent that Mr. Bland or his dependents are covered under the terms of any medical and dental plans of the Company immediately prior to the termination, the Company will provide Mr. Bland and those dependents with the same or equivalent coverage until three months after any such termination of employment. In the event of voluntary termination after the completion of at least one full year of service to the Company, Mr. Bland’s severance pay would be equal to one month’s salary for every year of service completed up to a maximum of three month’s salary. In the event of Mr. Bland’s retirement, the agreement provides for severance pay equal to one month’s salary for every year of service completed to the Company up to a maximum of twelve month’s salary. In the event of Mr. Bland’s death, the agreement provides for severance pay equal to Mr. Bland’s then current annual base salary for the greater of one year or the remaining term of the agreement without additional extensions, together with any bonuses which the Board of Directors shall determine in its sole discretion to be due and payable to Mr. Bland.

Mr. Bland’s employment agreement also contains a covenant not to compete with the Company during the term of the agreement plus the greater of (a) one year or (b) the period during which severance or consulting payments are being made to Mr. Bland.

Employment Agreements with Certain other Officers. Effective as of August 1, 2002, the Company entered into individual employment agreements with each of Richard P. Dutkiewicz, Ernest C. Hafersat, Timothy G. Schamberger and Daniel J. Wilmot (the “Current Officers”). Each agreement provides for an employment term of one year which automatically renews for an additional year on each subsequent August 1 without any further action on the part of the Company or the respective Current Officer unless terminated under certain provisions of the employment agreement. Under the terms of each agreement, the Company will pay each Current Officer an annual base salary as determined by the Compensation Committee of the Board of Directors. Each Current Officer is also eligible to receive annual incentive pay equal to 35% of his annual salary, which amount shall be based on his performance and merit and the Company’s financial success in the year to which the incentive pay corresponds. Additionally, under the terms of each agreement each Current Officer receives an automobile allowance of $10,000 per year.

Either the Company or the respective Current Officer can terminate a Current Officer’s employment upon thirty days written notice at any time. However, in the event of an involuntary termination during the six month period immediately following a change in control (with involuntary termination to include a unilateral election by the Current Officer to terminate his employment agreement with the Company during such period), each agreement provides for severance pay equal to a Current Officer’s annual base salary plus 100% of his annual incentive pay opportunity and the continuation of his car allowance for one year. In the event of a Change in Duties, Compensation, or Benefits (as defined in the agreement), at

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the election by the Current Officer to terminate his employment agreement with the Company, each agreement provides for severance pay equal to six month’s worth of a Current Officer’s annual base salary plus a pro rata share of his incentive pay earned over the last six months and the continuation of his car allowance for six months. In the event of any other involuntary termination, the agreement provides for severance pay equal to six months worth of a Current Officer’s annual base salary plus a pro rata share of his incentive pay earned over the last six months and the continuation of his car allowance for six months. Additionally, upon any involuntary termination, all unvested stock options and stock appreciation rights that have previously been granted to a Current Officer will fully vest and remain exercisable for three months after such termination and to the extent that a Current Officer or his dependents are covered under the terms of any medical and dental plans of the Company immediately prior to the termination, the Company will provide such Current Officer and those dependents with the same or equivalent coverage until three months after any such termination of employment. In the event of voluntary termination after the completion of at least one full year of service to the Company, a Current Officer’s severance pay would be equal to one month’s salary for every year of service completed up to a maximum of three month’s salary. In the event of a Current Officer’s death, each agreement provides for severance pay equal to the amount that would have been payable to such Current Officer if there had been a voluntary termination on the date of such Current Officer’s death.

Each Current Officer’s employment agreement also contains a covenant not to compete with the Company during the term of the agreement plus the greater of (a) one year or (b) the period during which severance or consulting payments are being made to such Current Officer.

Employment Agreements with Former Officer

Effective June 1, 1997, the Company entered into a four-year employment agreement with Mr. Joseph H. Kiser which provides for a minimum annual base salary during Mr. Kiser’s employment with the Company of at least $295,000, and severance pay in the event of termination. In the case of involuntary termination by the Company, severance payments to Mr. Kiser are equal to the greater of (a) Mr. Kiser’s annual base salary multiplied by the remaining term of the agreement or (b) 2.99 times Mr. Kiser’s average annual compensation over the last five years. In the case of voluntary termination or retirement, Mr. Kiser will be entitled to (i) one-half of his annual base salary as severance pay, (ii) be engaged as a consultant for a period of up to five years for which he is paid a fee equal to 50 percent of his annual base salary upon termination of employment, and (iii) an annual retirement benefit equal to 25 percent of his annual base salary payable during the period he provides consulting services to the Company. All unvested stock awards and options and stock appreciation rights previously granted to Mr. Kiser will fully vest in the event of a change of control of the Company or an involuntary termination. In addition, Mr. Kiser has agreed he will not compete against the Company for the duration of the agreement plus a period of one year after termination or the expiration of his employment agreement, or the period covered by any consulting arrangement or retirement benefit, whichever is greater.

In early March 2002, Mr. Kiser was informed of the Company’s intent to terminate the employment agreement the Company had entered into with Mr. Kiser. As a result, Mr. Kiser is not currently being paid compensation under the agreement. On March 19, 2002, the Company filed a lawsuit against Mr. Kiser and another former officer. In the lawsuit, the Company seeks to terminate and rescind certain employment and consulting agreements between the Company and the former officers, and to rescind certain stock option grants made to the former officers, on the basis that such agreements were entered into, and such option grants were made, based upon mistaken or misrepresented information regarding the Company’s true financial performance. See Item 3 — “Legal Proceedings — Company Action against Former Officers.”

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Compensation Committee Interlocks

We have a Compensation Committee which, in fiscal 2002, was comprised of David A. Lisowski (Chairman), Sarah L. Booher and Anthony B. Petrelli. None of the directors is or was in the past one of our officers or employees. No interlocking relationship exists between the Board of Directors or the Compensation Committee and the board of directors or compensation committee of any other company, nor has such an interlocking relationship existed in the past.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information

The following table provides certain information with respect to the Company’s equity compensation plans in effect as of June 30, 2002.

					Number of securities
					remaining available for
	Number of securities to		Weighted-average		issuance under equity
	be issued upon exercise		exercise price of		compensation plans
	of outstanding options,		outstanding options,		(excluding securities
	warrants and rights		warrants and rights		reflected in column (a))
Plan Category	(a)		(b)		(c)(1)
Equity compensation plans approved by security holders		1,737,834	$	5.58		1,333,515
Equity compensation plans not approved by security holders		None		None		None
Total		1,737,834	$	5.58		1,333,515

(1) Numbers in this column include 51,900 shares available for grant under the Company’s Stock Grant Plan and 601,232 shares available for grant under the Company’s Employee Stock Purchase Plan.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth the number and percentage of shares of our Common Stock owned beneficially, as of August 30, 2002, by any person who is known to us to be the beneficial owner of five percent or more of such Common Stock, and, in addition, by each of our Directors and Executive Officers, and by all of our Directors and Executive Officers as a group. Information as to beneficial ownership is based upon statements furnished to us by such persons. For purposes of this disclosure, the amount of our Common Stock beneficially owned is the aggregate number of shares of the Common Stock outstanding on such date plus an amount equal to the aggregate amount of Common Stock which could be issued upon the exercise of stock options within 60 days of such date by each individual, irrespective of exercise price.

	Amount and Nature
	of Beneficial		Percent
Name of Beneficial Owner	Ownership		of Class
Joseph H. Kiser(1)		394,543		5.4	%
6160 South Olathe Street Aurora, Colorado 80016

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	Amount and Nature
	of Beneficial		Percent
Name of Beneficial Owner	Ownership		of Class
Sarah L. Booher(2)		77,033		1	%
8253 Green Road Dansville, New York 14437
David A. Lisowski(3)		48,750		<1	%
4800 Dahlia Denver, Colorado 80216
Anthony B. Petrelli(4)		41,050		<1	%
1675 Larimer St., #300 Denver, Colorado 80202
Gil J. Van Lunsen(5)		11,800		<1	%
171 Crazy Horse Drive Durango, Colorado 81301
David M. Risley(6)		4,950		<1	%
1284 North Telegraph Road Monroe, Michigan 48162-3390
Robert C. Dixon(7)		1,900		<1	%
1807 Pine Mesa Grove Colorado Springs, Colorado 80918
Charles R. Bland(8)		46,400		<1	%
4895 Peoria Street Denver, Colorado 80239
Richard P. Dutkiewicz(9)		16,423		<1	%
4895 Peoria Street Denver, Colorado 80239
Daniel J. Wilmot(10)		124,909		1.7	%
4895 Peoria Street Denver, Colorado 80239
All Directors and Executive		373,215		5.1	%
Officers as a Group(11) (9 Persons)

(1)	Excludes options to purchase 265,000 shares which the Company seeks to rescind in a lawsuit brought against Mr. Kiser on the basis that such options were granted based upon mistaken or misrepresented information provided to the Company by Mr. Kiser. See Item 3 — “Legal Proceedings — Company Action against Former Officers.”
(2)	Includes 11,920 shares held by Ms. Booher pursuant to trust arrangements. Also includes options to purchase 45,000 shares. Does not include an additional 3,230 shares held by her husband, Robert Booher, for which shares she has disclaimed beneficial ownership.
(3)	Includes options to purchase 45,000 shares.
(4)	Includes options to purchase 38,500 shares.
(5)	Includes options to purchase 11,000 shares.
(6)	Includes options to purchase 4,500 shares.
(7)	Includes options to purchase 1,500 shares.

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(8)	Includes options to purchase 31,450 shares.
(9)	Includes options to purchase 13,000 shares.
(10)	Consists of options to purchase 124,909 shares.
(11)	Includes options to purchase 314,859 shares.

Item 13. Certain Relationships and Related Transactions

In the past, the Company has entered into various transactions with its officers and major shareholders. Transactions with such individuals which subject the Company to continuing obligations are described below.

Lease

We currently lease one of our manufacturing facilities under long-term operating leases from J.C. Enterprises, a Colorado general partnership in which Mr. Kiser, our former Chairman of the Board and former Chief Scientific Officer is the general partner. The lease expires in 2005 and contains provisions which would permit us to extend the terms of the lease. Total rent expense associated with this lease for the year ended June 30, 2002 was $130,000. In August 1998, the lease was amended to extend the lease period and the monthly rental was increased from $4,000 to $10,801 beginning November 1, 1998. At the time the Company entered into the amendment, the Company’s Board of Directors was advised by Mr. Kiser and Mr. Sherman that the increase was no greater than would have been paid in an arms-length transaction and that the rent levels were substantially similar to leases of similar terms on commercial properties in the same area. The Company now believes that the lease rate for this facility is approximately double the fair market value lease rates for comparable facilities within the area. The Company is seeking to recover rent paid in excess of market prices pursuant to the lease agreement in reliance on misrepresented information provided by Mr. Kiser and Mr. Sherman. See Item 3 - “Legal Proceedings — Company Action against Former Officers.”

Indemnification and Expense Advancement

Under our Articles of Incorporation, Bylaws and applicable Colorado corporate law, we have certain obligations to indemnify our officers and directors for expenses they incur in connection with the defense of litigation brought against them on account of actions taken by them in those capacities if such officers or directors are wholly successful, on the merits or otherwise, in their defense in such proceedings.

In addition, we and certain of our former officers and employees, namely, Derek L. Bailey, Jon L. Clark, Joseph Kiser, David G. Sherman and Sarah E. Hume have entered into agreements (the “Undertakings”) relating to the advancement of legal fees and other expenses incurred in connection with the SEC Investigation with respect to Messrs. Clark, Kiser, Sherman and Ms. Hume and the ongoing shareholder litigation with respect to Mr. Bailey. Those officers and employees have agreed to repay any amounts advanced by us under the Undertakings if (a) a determination is made by a committee of the Board of Directors, composed entirely of outside directors, that the officer or employee engaged in conduct which disqualifies him or her from indemnification by us under applicable law, or (b) an express finding is made by a court of law or tribunal with jurisdiction that the officer or employee is not entitled to indemnification under applicable law (either (a) or (b) is referred to hereinafter as an “Adverse Determination”).

In consideration of our advancement of legal fees and expenses, including the payment of retainers in many cases, the officers and employees agreed to fully cooperate with us in connection with our own internal investigation and in the defense of any claims. The officers and employees affirmed in the Undertakings that, in the course of providing services to us, they had at all times conducted themselves in good faith and that their conduct had always been in our best interests.

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In the absence of an Adverse Determination, we agreed in the Undertakings to pay reasonable legal fees and expenses incurred by the officers and employees in connection with the claims. In the event of an Adverse Determination, no further advances are to be made and the affected officer or employee would be required to repay prior advances. As a result of determinations made by the Company’s Audit Committee or Special Litigation Committee, the Company has stopped making advances to Mr. Sherman, Mr. Clark and Ms. Hume. The Company had made voluntary advances to Mr. Kiser in connection with the shareholder class action, but discontinued those advances in March 2002.

During the year ended June 30, 2002, the Company paid or accrued the following amounts for legal fees and expenses, including retainers: $12,040 for Mr. Bailey, $95,910 for Mr. Kiser and $35,371 for Mr. Clark. No amounts were paid or accrued for legal fees and expenses for Ms. Hume or Mr. Sherman during the year ended June 30, 2002. See Item 3 — “Legal Proceedings — Securities and Exchange Commission Investigation, Private Securities Class Action, and Shareholder Derivative Suit.”

During Mr. Sherman’s tenure as President and Chief Executive Officer, he traveled extensively on our behalf, visiting suppliers and customers and recruiting sales and other personnel. Mr. Sherman received cash advances from us to pay for some of his expenses on these trips. Our Audit Committee determined that Mr. Sherman failed to adequately document the business purpose for which he had utilized some of the amounts advanced. Due to Mr. Sherman’s inability to provide additional information and documentation to the Audit Committee, the Audit Committee suspended payment of the consulting fees payable to Mr. Sherman pursuant to his Termination and Consulting Agreement with us and suspended further advances to him for the legal fees and expenses he has incurred in connection with the claims. See Item 3 — “Legal Proceedings - Company Action against Former Officers.”

The Company has entered into indemnity agreements with certain of its current directors (the “Directors Indemnity Agreements”).

The Directors Indemnity Agreements provide that the Company shall indemnify each director to the fullest extent permitted by law if a director was or is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, any threatened, pending, or completed action, suit, or other proceeding of any sort by reason of any event or occurrence related to the director’s service to the Company. The Company’s obligation to indemnify its directors does not apply where a determination has been made that the director is not entitled to indemnification under applicable law, in which case the director agrees to reimburse the Company for any amounts previously paid or advanced to the director. Additionally, the Company shall not be required to indemnify a director for any claims for which indemnification is not lawful, for claims based on a director’s intentional acts or transactions in violation of the Company’s policies, for claims initiated by a director and not by way of defense (except in certain limited circumstances), for claims in which a court of competent jurisdiction has determined that each of the material assertions made by a director was not made in good faith or was frivolous, or for claims under Section 16(b) of the Securities Exchange Act of 1934.

The Directors Indemnity Agreements also provide a contractual period of limitations for any claims brought by the Company against a director of two years from the date of accrual of any such claim.

On October 4, 2002, the Company entered into indemnity agreements with Charles R. Bland and Richard P. Dutkiewicz (the “Indemnity Agreements”). The Indemnity Agreements provide that the Company will indemnify each indemnitee to the fullest extent authorized by the Company’s Bylaws and the Colorado Business Corporation Act, including against any and all reasonable expenses, witness fees, damages, judgments, fines and amounts paid because of any claim made against or by him in connection with any threatened, pending or completed action, suit or proceeding of any sort to which the director is, was or at any time becomes a party, or is threatened to be made a party, by reason of the fact that the indemnitee is, was or at any time becomes a director, officer, employee or other agent of the Company. The Company’s obligation to indemnify the indemnitees, however, does not apply in certain enumerated circumstances, including for claims under Section 16(b) of the Securities Exchange Act of 1934, for claims on account

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of an indemnitee’s deliberately dishonest or willful misconduct, for claims based on a breach of the indemnitee’s fiduciary duty of loyalty to the Company, for expenses which are actually paid to an indemnitee under a valid and collectible insurance policy or indemnity clause, for claims in which indemnification is not lawful, and in connection with any proceeding initiated by the indemnitee against the Company (except in certain limited circumstances).

The indemnification obligation of the Company under the Indemnity Agreements extends throughout an indemnitee’s term of service to the Company and for so long thereafter as an indemnitee shall be subject to any possible claim or action of any sort by reason of the fact that the indemnitee was serving the Company. The Company is also obligated to advance reasonable expenses incurred by an indemnitee in connection with a covered claim or action if it receives any affirmation by the indemnitee required by the Company’s Bylaws or the Colorado Business Corporation Act and an undertaking by the indemnitee to repay any amounts advanced if it shall be determined ultimately that the indemnitee is not entitled to be indemnified under the Indemnity Agreements.

The Directors Indemnity Agreements and the Indemnity Agreements provide additional indemnification to certain of the Company’s directors and to Messrs. Bland and Dutkiewicz. As a result of this additional indemnification, the liability exposure of the Company is increased. The assets and equity of the Company will be subject to risk if any of the indemnitees incur liability for which they are entitled to indemnification under the agreements. At the present time, Mr. Kiser has asserted certain counterclaims against Messrs. Bland and Dutkiewicz with respect to the Company’s litigation against Mr. Kiser. See Item 3 — Legal Proceedings — “Company Action Against Former Officers.”

Joseph Kiser Employment Agreement and Related Litigation

Mr. Kiser’s employment contract requires him to perform any directive of the Company’s Board of Directors. Subsequent to March 19, 2002, Mr. Kiser has not performed any services for the Company. We believe that our claim to rescind Mr. Kiser’s employment contract based upon mistaken or misrepresented information regarding the Company’s true financial performance is based upon a valid principle of law. Since March 19, 2002, we have suspended all payments required by Mr. Kiser’s employment contract. We have recorded approximately $203,000 of liabilities representing the present value of post-employment health care obligations and a one time separation bonus to be paid to Mr. Kiser upon termination of contract payments.

In the event that Mr. Kiser prevails in requiring us to comply with the terms of the employment contract, we could be obligated to total future payments of approximately $1,400,000 payable over ten years. If we are successful in our claims against Mr. Kiser, we could be awarded as much as $5,600,000 plus attorneys’ fees. Additionally, we would reverse all previously recorded liabilities associated with this matter. See Item 3 — “Legal Proceedings — Company Action against Former Officers.”

Promissory Notes

Pursuant to an agreement dated December 31, 1991, between us and certain of our current and former officers, we guaranteed a series of promissory notes payable by such officers, including Messrs. Sherman and Kiser, to a former officer in connection with her separation from us. Two of those notes, as subsequently amended, remain outstanding. The principal of Mr. Sherman’s note is $57,000 and Mr. Kiser’s is $37,000. Both notes mature on March 1, 2003.

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Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

Exhibit No.	Description
3.1a	Restated Articles of Incorporation, as Amended, filed as Exhibit 4.1 to the 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 the Form 10-KSB for the year ended December 31, 1996 and incorporated herein by reference.
3.2	Amended and Restated Bylaws adopted September 26, 2002.
4.1	Specimen Certificate for $.01 par value Common Stock filed as Exhibit 4.3 to the Form SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by reference.
4.2	Rights Agreement with American Securities Transfer, Inc. dated March 15, 1996 filed as Exhibit 4.2 to the Form 8-A/A Registration Statement (No. 0-23866) and incorporated herein by reference.
4.3	Specimen Certificate for Right to Purchase $.01 par value Common Stock filed as Exhibit 4.3 to the Form 8-A/A Registration Statement (No. 0-23866) and incorporated herein by reference.
4.4	Securities Purchase Agreement with the Purchasers dated March 4, 1997 filed as Exhibit 4.5 to the Form S-3 Registration Statement (No. 333-25173) and incorporated herein by reference.
4.6	Form of Warrant to Purchase Common Stock issued to the Purchasers under the Securities Purchase Agreement dated March 4, 1997 filed as Exhibit 4.7 to the Form S-3 Registration Statement (No. 333-25173) and incorporated herein by reference.
4.7	Amendment No. 1 to Rights Agreement with American Securities Transfer, Inc. dated October 7, 2002.
10.1	Executive Employment Agreement with Joseph H. Kiser, dated effective June 1, 1997, filed as Exhibit 10.1 to the Form 10-QSB for the quarter ended September 30, 1998 and incorporated herein by reference.
10.2	Lease Agreement dated January 1, 1987 with J.C. Enterprises for the facility located at 5165 Peoria Street, Denver, Colorado, as amended on December 6, 1990 and March 23, 1993, filed as Exhibit 10.15 to the Form SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by reference.
10.3	Settlement Agreement with Joseph H. Kiser, David G. Sherman, Alwin E. Branson and Carolyn Y. Kiser dated January 31, 1992, as amended March 23, 1993, filed as Exhibit 10.18 to the Form SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by reference.
10.4	Profit Sharing Plan and Trust Agreement, as amended and restated effective April 19, 1994 filed as Exhibit 10.16 to the Form 10-KSB for the year ended December 31, 1994 and incorporated herein by reference.

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Exhibit No.	Description
10.5	Lease Agreement dated March 12, 1997 with Five K Investments for the facility located at 4895 Peoria Street, Denver, Colorado filed as Exhibit 10 to the Form 10-QSB for the quarter ended September 30, 1997 and incorporated herein by reference.
10.6	Third Amendment to Lease Agreement dated January 1, 1987 with J.C. Enterprises for the facility located at 5165 Peoria Street, Denver, Colorado, as amended December 6, 1990, March 23, 1993, and October 30, 1998 filed as Exhibit 10.6 to the Form 10-QSB for the quarter ended September 30, 1998 and incorporated herein by reference.
10.7	Termination and Consulting Agreement with David G. Sherman dated August 1, 2000 filed as Exhibit 10.1 to the Form 8-K dated August 1, 2000 and incorporated herein by reference.
10.8	Employment Agreement with Timothy M. Micun dated March 2, 2001 filed as Exhibit 10.26 to the Form 10-K for the fiscal year ended June 30, 2001 and incorporated herein by reference.
10.9	Credit and Security Agreement with Wells Fargo Business Credit, Inc. dated June 28, 2001 filed as Exhibit 99.2 to the Form 8-K dated June 28, 2001 and incorporated herein by reference.
10.10	Patent and Trademark Security Agreement with Wells Fargo Business Credit, Inc. dated June 28, 2001 filed as Exhibit 99.3 to the Form 8-K dated June 28, 2001 and incorporated herein by reference.
10.11	First Amendment to Credit and Security Agreement dated September 17, 2001 filed as Exhibit 10.1 to the Form 10-Q dated September 30, 2001 and incorporated herein by reference.
10.12	Employee Stock Purchase Plan effective as of November 30, 2001 filed as Exhibit 10.1 to the Form 10-Q for the quarter ended December 31, 2001 and incorporated herein by reference.
10.13	Amended and Restated Tandem Stock Option and Stock Appreciation Rights Plan, effective as of January 1, 2002 filed as Exhibit 10.1 to the Form 10-Q for the quarter ended March 31, 2002 and incorporated by reference herein.
10.14	Stock Grant Plan effective as of January 1, 2002 filed as Exhibit 10.2 to the Form 10-Q for the quarter ended March 31, 2002 and incorporated herein by reference.
10.15	Agreement between Vari-L Company, Inc. and Asvan Technology, LLC dated January 25, 2002.
10.16	Second Amendment to Credit and Security Agreement with Wells Fargo Business Credit, Inc. dated February 8, 2002.
10.17	Form of Indemnity Agreement by and among Vari-L Company, Inc. and each of Gil J. Van Lunsen (dated June 1, 2001), Sarah L. Booher (dated July 5, 2001), David A. Lisowski (dated July 5, 2001), Anthony B. Petrelli (dated July 5, 2001), David M. Risley (dated November 21, 2001) and Robert C. Dixon (dated January 11, 2002)
10.18	Employment Agreement with Charles R. Bland dated August 1, 2002.

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Exhibit No.	Description
10.19	Employment Agreement with Russell M. Crouch dated August 1, 2002.
10.20	Employment Agreement with Richard P. Dutkiewicz dated August 1, 2002.
10.21	Employment Agreement with Ernest C. Hafersat dated August 1, 2002.
10.22	Employment Agreement with Janice E. Hyland dated August 1, 2002.
10.23	Employment Agreement with Matthew D. Pope dated August 1, 2002.
10.24	Employment Agreement with Larry M. Romero dated August 1, 2002.
10.25	Employment Agreement with Timothy G. Schamberger dated August 1, 2002.
10.26	Employment Agreement with Daniel J. Wilmot dated August 1, 2002.
10.27	Engagement letter with Green, Manning & Bunch, Ltd. dated September 9, 2002.
10.28	Forbearance Agreement and Third Amendment to Credit and Security Agreement with Wells Fargo Business Credit, Inc. dated September 26, 2002 filed as Exhibit 99.1 to the Form 8-K dated October 1, 2002 and incorporated herein by reference.
10.29	Indemnity Agreement, dated October 2, 2002, by and among Vari-L Company with Charles R. Bland.
10.30	Indemnity Agreement, dated October 2, 2002, by and among Vari-L Company, Inc. with Richard P. Dutkiewicz.
10.31	Memorandum of Understanding dated October 3, 2002 between Vari-L Company, Inc. and the plaintiffs in Civil Action No. 00-S-1198 between plaintiffs Michael Rasner, et al., on behalf of themselves and other similarly situated and defendants Vari-L Company, Inc., Derek Bailey, Joseph Kiser, David G. Sherman and Jon Clark in the United States District Court, District of Colorado, by and through their respective attorneys, for settlement of litigation against Vari-L Company, Inc.
10.32	Loan Agreement with Sirenza Microdevices, Inc. dated October 7, 2002.
10.33	Security Agreement with Sirenza Microdevices, Inc. dated October 7, 2002.
10.34	Exclusivity and Right of First Refusal Agreement with Sirenza Microdevices, Inc. dated October 7, 2002.
10.35	Resale Registration Rights Agreement with Sirenza Microdevices, Inc. dated October 7, 2002.
23	Consent of KPMG LLP

Financial Statement Schedule

Schedule II, Valuation and Qualifying Accounts, for the years ended June 30, 2002 and 2001 and six months ended June 30, 2000 (Unaudited)

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Reports on Form 8-K

A report on Form 8-K dated May 13, 2002 under Item 7 and 9 was filed with the Commission on May 15, 2002. A report on Form 8-K dated May 13, 2002 under Item 5 and 7 was filed with the Commission on May 14, 2002. A report on Form 8-K dated April 18, 2002 under Item 5 was filed with the Commission on April 18, 2002. No financial statements were filed with any of the foregoing reports.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

VARI-L COMPANY, INC.
By:	/s/ Charles R. Bland
	Charles R. Bland, President and Chief Executive Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ Charles R. Bland Charles R. Bland, President, Chief Executive Officer and Director, Principal Executive Officer	Date: October 7, 2002
/s/ Richard P. Dutkiewicz Richard P. Dutkiewicz, Vice President of Finance and Chief Financial Officer, Principal Financial and Accounting Officer	Date: October 7, 2002
/s/ Sarah L. Booher Sarah L. Booher, Director	Date: October 7, 2002
/s/ Robert C. Dixon Robert C. Dixon, Director	Date: October 7, 2002
/s/ David A. Lisowski David A. Lisowski, Director	Date: October 7, 2002
/s/ Anthony B. Petrelli Anthony B. Petrelli, Director	Date: October 7, 2002
/s/ David M. Risley David M. Risley, Director	Date: October 7, 2002
/s/ Gil J. Van Lunsen Gil J. Van Lunsen, Director	Date: October 7, 2002

- -54-

CERTIFICATIONS

I, Charles R. Bland, certify that:

1.	I have reviewed this annual report on Form 10-K of Vari-L Company, Inc.
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which statements were made, not misleading with respect to the period to the period covered by this annual report; and
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.

Date: October 7, 2002

/s/ Charles R. Bland

Charles R. Bland, President and
Chief Executive Officer

I, Richard P. Dutkiewicz, certify that:

1.	I have reviewed this annual report on Form 10-K of Vari-L Company, Inc.
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which statements were made, not misleading with respect to the period to the period covered by this annual report; and
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.

Date: October 7, 2002

/s/ Richard P. Dutkiewicz

Richard P. Dutkiewicz, Vice President
of Finance and Chief Financial Officer

-55-

VARI-L COMPANY, INC.

Financial Statements

June 30, 2002 and 2001

(With Independent Auditors’ Report Thereon)

VARI-L COMPANY, INC.

Financial Statements

June 30, 2002

Index

Financial Statements:
	Independent Auditors’ Report	F-1
	Balance Sheets, June 30, 2002 and June 30, 2001	F-2
	Statements of Operations, for the years ended June 30, 2002 and 2001 and six months ended June 30, 2000 (unaudited)	F-3
	Statements of Stockholders’ Equity, for the years ended June 30, 2002 and 2001 and six months ended June 30, 2000 (unaudited)	F-4
	Statements of Cash Flows, for the years ended June 30, 2002 and 2001 and six months ended June 30, 2000 (unaudited)	F-5
	Notes to Financial Statements	F-6
Schedule:
Schedule II — Valuation and Qualifying Accounts for the years ended June 30, 2002 and 2001 and the six months ended June 30, 2000 (unaudited)		F-33

Independent Auditors’ Report

To the Board of Directors
Vari-L Company, Inc.:

We have audited the accompanying balance sheets of Vari-L Company, Inc. as of June 30, 2002 and 2001 and the related statements of operations, stockholders’ equity and cash flows for the years ended June 30, 2002 and 2001. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Vari-L Company, Inc. as of June 30, 2002 and 2001, and the results of its operations and cash flows for the years ended June 30, 2002 and 2001, in conformity with accounting principles generally accepted in the United States of America.

Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information included in Schedule II—Valuation and Qualifying Accounts as of and for the years ended June 30, 2002 and 2001 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

The accompanying statements of operations, stockholders’ equity, and cash flows for the six months ended June 30, 2000 and the supplementary information included in related Schedule II—Valuation and Qualifying Accounts as of and for the six months ended June 30, 2000 were not audited by us and, accordingly, we do not express an opinion on them.

/s/ KPMG LLP

Denver, Colorado
August 23, 2002, except for notes 3, 13 and 14 as to which the date is October 7, 2002.

F-1

VARI-L COMPANY, INC.

Balance Sheets

(in thousands of dollars)

			June 30,			June 30,
Assets			2002			2001
Current assets:
	Cash and cash equivalents		$	553			2,013
	Trade accounts receivable, less allowance for doubtful accounts of $132 and $279, respectively (note 3)			2,589			5,942
	Inventories (notes 2 and 3)			2,491			3,640
	Prepaid expenses and other current assets			617			645
		Total current assets		6,250			12,240
Property and equipment (note 3):
	Machinery and equipment			12,263			11,616
	Furniture and fixtures			839			822
	Leasehold improvements			1,509			1,500
				14,611			13,938
	Less accumulated depreciation and amortization			8,211			6,362
		Net property and equipment		6,400			7,576
Intangible and other assets, net of accumulated amortization				744			638
		Total assets	$	13,394			20,454
Liabilities and Stockholders’ Equity
Current liabilities:
	Trade accounts payable		$	1,392			1,669
	Accrued compensation			756			1,286
	Other accrued expenses			492			428
	Notes payable and current installments of long-term obligations (note 3)			1,611			1,764
		Total current liabilities		4,251			5,147
Long-term obligations (note 3)				55			1,321
Other liabilities (note 8)				149			157
		Total liabilities		4,455			6,625
Settlement obligation to issue 2,000,000 shares of common stock (note 13)				1,200			—
Stockholders’ equity (note 6):
	Common stock, $.01 par value, 50,000,000 shares authorized; 7,179,832 and 7,107,161 shares issued and outstanding, respectively			72			71
	Additional paid-in capital			36,945			36,829
	Unamortized stock compensation cost			(31	)		(79	)
	Accumulated deficit			(29,247	)		(22,992	)
		Total stockholders’ equity		7,739			13,829
Commitments and contingencies (notes 3, 6, 7, 8 and 12)
		Total liabilities and stockholders’ equity	$	13,394			20,454

See accompanying notes to financial statements.

F-2

VARI-L COMPANY, INC.

Statements of Operations

(in thousands of dollars, except share and per share data)

			Year ended			Year ended			Six months
			June 30,			June 30,			ended June 30,
			2002			2001			2000
									(unaudited)
Net sales			$	21,348			41,377			17,158
Cost of goods sold				13,647			21,747			10,311
		Gross profit		7,701			19,630			6,847
Operating expenses:
	Selling			2,925			4,268			1,948
	General and administrative			6,418			9,664			2,440
	Research and development			2,669			4,021			3,003
	Expenses relating to accounting restatements and related legal matters, net of recoveries (note 12)			1,805			2,387			469
		Total operating expenses		13,817			20,340			7,860
		Operating loss		(6,116	)		(710	)		(1,013	)
Other income (expense):
	Interest income			48			416			315
	Interest expense			(199	)		(1,062	)		(453	)
	Other, net			12			(43	)		(28	)
		Total other income (expense)		(139	)		(689	)		(166	)
		Net loss	$	(6,255	)		(1,399	)		(1,179	)
Loss per share, basic and diluted			$	(0.87	)		(0.20	)		(0.17	)
Weighted average shares outstanding, basic and diluted				7,152,342			7,083,866			7,042,247

See accompanying notes to financial statements.

F-3

VARI-L COMPANY, INC.

Statements of Stockholders’ Equity

Year ended June 30, 2002 and 2001 and six months ended June 30, 2000

(in thousands of dollars, except share data)

									Unamortized
	Common stock					Additional			stock						Total
						paid-in			compensation			Accumulated			stockholders'
	Shares			Amount		capital			cost			deficit			equity
Balance, December 31, 1999 (unaudited)		6,945,483		$	70		40,449			(5,733	)		(20,414	)		14,372
Stock options exercised (unaudited)		116,569			1		931			—			—			932
Common stock issued under employee stock purchase plan (unaudited)		7,471			—		50			—			—			50
Common stock issued under stock award plan (unaudited)		900			—		17			—			—			17
Stock options forfeited (unaudited)		—			—		(922	)		922			—			—
Amortization of stock compensation cost (unaudited)		—			—		—			493			—			493
Net loss (unaudited)		—			—		—			—			(1,179	)		(1,179	)
Balance, June 30, 2000		7,070,423			71		40,525			(4,318	)		(21,593	)		14,685
Common stock issued under employee stock purchase plan		35,388			—		45			—			—			45
Common stock issued under stock award plan		1,350			—		11			—			—			11
Stock options forfeited		—			—		(219	)		219			—			—
Amortization of stock compensation cost		—			—		—			487			—			487
Reversal of stock compensation due to reformation (note 5)		—			—		(3,533	)		3,533			—			—
Net loss		—			—		—			—			(1,399	)		(1,399	)
Balance June 30, 2001		7,107,161			71		36,829			(79	)		(22,992	)		13,829
Common stock issued under employee stock purchase plan		76,011			1		123			—			—			124
Common stock issued under stock award plan		2,900			—		4			—			—			4
Common stock repurchased and retired		(6,240	)		—		(7	)		—			—			(7	)
Stock options forfeited		—			—		(4	)		4			—			—
Amortization of stock compensation cost		—			—		—			44			—			44
Net loss		—			—		—			—			(6,255	)		(6,255	)
Balance June 30, 2002		7,179,832		$	72		36,945			(31	)		(29,247	)		7,739

See accompanying notes to financial statements.

F-4

VARI-L COMPANY, INC.

Statements of Cash Flows

(in thousands of dollars)

				Year ended			Year ended			Six months
				June 30,			June 30,			ended June 30,
				2002			2001			2000
										(unaudited)
Net loss				$	(6,255	)		(1,399	)		(1,179	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
	Depreciation and amortization				2,095			1,756			732
	Loss on disposal of assets				30			47			—
	Common stock issued under profit sharing and stock award plans				4			11			17
	Amortization of stock compensation				44			487			493
	Settlement obligation to issue 2,000,000 shares of common stock				1,200			—			—
	Changes in operating assets and liabilities:
		Trade accounts receivable, net			3,353			(61	)		(1,805	)
		Inventories, net			1,149			3,795			(2,970	)
		Prepaid expenses and other current assets			28			(454	)		(168	)
		Trade accounts payable			(277	)		(2,513	)		1,797
		Accrued compensation			(530	)		(214	)		(665	)
		Other accrued expenses and liabilities			56			360			169
			Total adjustments		7,152			3,214			(2,400	)
			Cash provided by (used in) operating activities		897			1,815			(3,579	)
Cash flows from investing activities:
	Purchases of property and equipment				(953	)		(2,034	)		(1,699	)
	Proceeds from sale of equipment				59			25			—
	Increase (decrease) in other assets				(102	)		27			(85	)
			Cash used in investing activities		(996	)		(1,982	)		(1,784	)
Cash flows from financing activities:
	Increase (decrease) in bank overdraft				—			(321	)		321
	Proceeds from notes payable				7,257			1,480			11,500
	Payments of notes payable				(8,738	)		(11,500	)		(11,107	)
	Proceeds from long-term obligations				484			1,500			—
	Payments of long-term obligations				(422	)		(54	)		(24	)
	Payment of debt issue costs				(59	)		—			—
	Proceeds from stock options exercised				—			—			932
	Proceeds from common stock issued under stock purchase plan				124			45			50
	Common stock repurchased and retired				(7	)		—			—
			Cash provided by (used in) financing activities		(1,361	)		(8,850	)		1,672
			Increase (decrease) in cash and cash equivalents		(1,460	)		(9,017	)		(3,691	)
Cash and cash equivalents at beginning of period					2,013			11,030			14,721
Cash and cash equivalents at end of period				$	553			2,013			11,030
Supplemental disclosure of cash flow information:
	Cash paid for interest			$	159			1,217			315
	Cash paid for income taxes			$	—			—			—

See accompanying notes to financial statements.

F-5

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

(1) Summary of Significant Accounting Policies

(a)	Description of Business
	Vari-L Company, Inc. (the Company) was founded in 1953 and is a manufacturer of electronic components. The Company designs, manufactures, and markets radio frequency and microwave signal source and processing components and other electronic devices used in the communications industry. The Company operates as a single business segment, and its products are sold to original equipment manufacturers of communication equipment who market their products in both commercial and military markets in the United States and internationally. See note 14 for a discussion regarding liquidity and subsequent events.
(b)	Change in Fiscal Year End
	The Company’s Board of Directors approved a change in the Company’s year end to June 30, effective in 2000.
(c)	Use of Estimates
	Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Significant assumptions inherent in the preparation of the accompanying financial statements include, but are not limited to, revenue recognition and allowances for doubtful accounts, the provision for excess and obsolete inventories, and commitments and contingencies. Actual results could differ from those estimates.
(d)	Reclassifications
	Certain reclassifications have been made to prior year amounts to conform to the current year’s presentation.
(d)	Cash Equivalents
	For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments with maturities of three months or less at the date of purchase to be cash equivalents.
(e)	Marketable Securities
	Marketable securities, consisting of an investment in Stancorp Financial Group Common Stock, is classified as held for trading and is carried at a fair market value of $35,000 as of June 30, 2002. Unrealized gains and losses are reported as other income (expense) in the

F-6

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

	statements of operations. The balance sheet classification of the Company’s marketable securities is included in other current assets.
(f)	Inventories
	Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. A provision is recorded to reduce excess and obsolete inventories to their estimated net realizable value. The provision for excess and obsolete inventory included in cost of goods sold was $564,000 and $1,362,000 for the years ended June 30, 2002 and 2001, respectively and $444,000 for the six months ended June 30, 2000.
(g)	Property and Equipment
	Property and equipment are stated at cost. Plant and equipment under capital leases are recorded initially at the present value of the minimum lease payments. Depreciation and amortization of property and equipment is computed using the straight-line method over estimated useful lives of the respective assets, which range from 3 to 10 years.
	Included in property and equipment are assets under capital leases of $165,000 at June 30, 2002 and 2001. Accumulated amortization of assets under capital leases was $137,000 and $85,000 at June 30, 2002 and 2001, respectively. Amortization of assets under capital leases is included in depreciation expense.
	During the years ended June 30, 2002 and 2001 and six months ended June 30, 2000, equipment was acquired under capital lease financing transactions in the amounts of $0, $35,000, and $34,000 respectively.
(h)	Goodwill and Other Intangible Assets
	In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets.” Under SFAS No. 142, goodwill and intangible assets with indefinite useful lives will no longer be amortized, but will instead be tested periodically for impairment. SFAS No. 142 also requires that intangible assets with definite lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed periodically for impairment.
	Goodwill of $112,000 resulting from the acquisition of certain assets of Asvan Technologies, LLC, is recorded at cost and is included in other assets. In accordance with SFAS No. 142, the Company does not amortize goodwill.
	Intangible assets, consisting of patents and trademarks, are recorded at cost and are included in other assets. Intangible assets of $338,000 and $368,000, net of accumulated amortization of $141,000 and $109,000 at June 30, 2002 and 2001, respectively, are being amortized on a straight-line basis over an estimated useful life of 10 years.

F-7

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

	The Company reviews goodwill and intangible assets for impairment at least annually. For the year ended June 30, 2002, the Company evaluated the recoverability of goodwill and intangible assets and recorded impairment charges of $30,000 related to patents no longer in use.
(i)	Stock Compensation Plans
	The Company applies the intrinsic value-based method of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, in accounting for its fixed award stock options. As such, compensation expense is recorded only if the current market price of the underlying common stock exceeds the exercise price of the option on the date of grant. SFAS No. 123, Accounting for Stock-Based Compensation, established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS No. 123, the Company has elected to continue to apply the intrinsic value-based method of accounting described above, and has adopted the disclosure requirements of SFAS No. 123.
(j)	Income Taxes
	Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
	Deferred tax assets are reduced by a valuation allowance for the portion of such assets for which it is more likely than not the amount will not be realized. Deferred tax assets and liabilities are classified as current or noncurrent based on the classification of the underlying asset or liability giving rise to the temporary difference or the expected date of utilization of the carryforwards.
(k)	Earnings Per Share
	The Company computes earnings (loss) per share in accordance with the requirements of Statement of Financial Accounting Standards No. 128, Earnings Per Share (SFAS 128). SFAS 128 requires the disclosure of “basic” earnings per share and “diluted” earnings per share.
	Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding increased for potentially dilutive common shares outstanding. The effect of potentially dilutive common shares represented by stock options

F-8

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

	outstanding (see note 5) was anti-dilutive for the years ended June 30, 2002 and 2001 and six months ended June 30, 2000.
(l)	Research and Development and Advertising Costs
	Research and development and advertising costs are expensed when incurred. Research and development expense for the years ended June 30, 2002 and 2001 and six months ended June 30, 2000 totaled $2,669,000, $4,286,000 and $3,003,000, respectively. This amount is comprised of product development expenses of $1,856,000, $2,252,000 and $1,046,000, respectively, which are the design costs associated with customized products for customers and research expenses of $813,000, $2,034,000 and $1,957,000, respectively, which are costs associated with the development of new product lines. Advertising costs were $220,000, $230,000 and $164,000 for the years ended June 30, 2002 and 2001 and six months ended June 30, 2000, respectively.
(m)	Long-Lived Assets
	The Company reviews long-lived assets and identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
(n)	Revenue Recognition
	Revenues are recognized at the time of shipment. Provisions are made for sales discounts and allowances at the time product sales are recognized.
(o)	Product Warranties and Returns
	Product warranties and returns are provided for in the period the products are sold. The Company provides a one-year warranty on most of its products. As the majority of its products are built to customer specifications, the Company generally does not accept product returns. Historically, warranty expense and product returns have been insignificant.
(p)	Unaudited Financial Information
	The accompanying financial statements of the Company for the six months ended June 30, 2000 have been prepared without audit. In the opinion of management, the accompanying unaudited financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the financial position and results of operations for the periods presented.

F-9

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

(2) Inventories

     Inventories, net of allowances for excess and obsolete items, consist of the following:

	June 30,		June 30,
	2002		2001
	(in thousands of dollars)
Finished goods	$	658		463
Work-in-process		394		623
Raw materials		1,439		2,554
	$	2,491		3,640

(3) Notes Payable and Long-term Obligations

     Notes payable and long-term obligations consist of the following:

			June 30,		June 30,
			2002		2001
			(in thousands of dollars)
Notes payable under Credit Facility (a):
	Revolving loan		$	—		1,481
	Term loan			1,498		1,500
Promissory notes (b)				139		21
Capital lease obligations (c)				29		83
				1,666		3,085
Less current installments				1,611		1,764
		Long-term obligations	$	55		1,321

     Future maturities of notes payable and long-term obligations as of June 30, 2002 are as follows (in thousands of dollars):

Year ending June 30:
	2003	$	1,611
	2004		55
	2005		—
		$	1,666

F-10

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

(a)	Bank Credit Facilities
	On June 28, 2001, the Company entered into a credit agreement with Wells Fargo Business Credit, Inc. (“Wells Fargo”) (“the Credit Facility”), consisting of, among other things, a revolving loan (“Revolving Loan”) and a term loan (“Term Loan”). During fiscal 2002, the Company was required to negotiate amendments to avoid potential default under the Credit Facility due to the continuing softness of demand for the Company’s products and within the wireless industry.
	In late May 2002, the Company determined that it was not in compliance with the minimum tangible net worth of the loan agreement with Wells Fargo, which constitutes an event of default. In early July 2002, the Company received notice from Wells Fargo confirming that an event of default had occurred. Accordingly, the amounts outstanding as of June 30, 2002 have been classified as current. A default interest rate of 3% over the floating rate is currently being charged against amounts outstanding under the loan agreement. No other default remedies were sought by the lender.
	On September 26, 2002, the Company entered into a forbearance agreement with Wells Fargo that is in effect until November 15, 2002. The forbearance agreement allows the Company to borrow amounts on the Revolving Loan up to the lesser of the amount available under a borrowing base formula or $2,500,000. The Credit facility is secured by substantially all of the Company’s accounts receivable, inventories, intellectual property and equipment. The forbearance agreement also imposes certain financial covenants along with limitations on capital expenditures and investments, and restricts certain payments and distributions.
	The Company is required to pay an unused credit line fee of 0.25% per annum on the average daily unused amount. The unused line fee is payable monthly in arrears. Additionally, the Company is required to pay a minimum interest charge on the Credit Facility of $30,000 per calendar quarter.
	At June 30, 2002, the interest rates on the Revolving Loan and the Term Loan were 8.75% and 10.25%, respectively. The Company had additional borrowing availability of $1.8 million under the Revolving Loan.
	Debt issuance costs are being amortized using the straight-line method over the term of the Revolving Loan. Amortization expense of $23,000 and $0 related to issuance costs for the Credit Facility has been recorded for the years ended June 30, 2002 and 2001, respectively.
	As explained in note 14, on October 7, 2002, the Company entered into a loan agreement with Sirenza Microdevices, Inc. (“Sirenza”). The loan agreement provides for a $5.3 million secured bridge loan (the “Loan Facility”). The Loan Facility is secured by substantially all of the Company’s assets, matures on September 25, 2003 and has an annual interest rate of 25.0%. Proceeds from the Loan Facility will be used to pay amounts outstanding to Wells Fargo and to fund the Company’s operations over the next twelve months.

F-11

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

(b)	Promissory Notes
	The Company has a two year promissory note payable to Asvan Technologies, LLC., a related party, in the amount of $175,000 secured by a letter of credit. The note matures on January 30, 2004 and has principal and interest payable in equal monthly installments of $7,300 at an annual rate of 10%.
(c)	Leases
	The Company is obligated under various capital leases for certain machinery and equipment that expire at various dates during the next two years. The Company also has noncancelable operating leases primarily for corporate office and manufacturing facilities. Rent expense was $802,000 and $835,000 for the years ended June 30, 2002 and 2001, respectively and $389,000 for the six months ended June 30, 2000.
	The Company currently leases a manufacturing facility under a long-term operating lease. Additionally, the Company leased a separate facility under a long-term operating lease that expired in July 2002. Both of these facilities were leased from our former Chief Scientific Officer and from a partnership in which he is a partner. As described in Note 13, the Company is currently engaged in litigation with the landlord of the facilities. The manufacturing facility lease expires in 2005 and contains options to extend the terms of the lease. Total rent expense associated with both of the leases was $133,000 and $169,000 for the years ended June 30, 2002 and 2001, respectively and $84,000 for the six months ended June 30, 2000.

F-12

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

Future minimum capital lease payments and future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of June 30, 2002 are as follows:

			Capital		Operating
			leases		leases
			(in thousands of dollars)
Year ending June 30,			$	27		794
	2003		$	27		794
	2004			4		624
	2005			—		624
	2006			—		537
	2007			—		494
	Thereafter			—		3,049
		Total minimum lease payments		31	$	6,122
Less amount representing interest				2
		Present value of net minimum capital lease payments		29
Less current installments of obligations under capital leases				25
		Obligations under capital leases, excluding current installments	$	4

(4)	Acquisitions
	On January 25, 2002, the Company acquired certain assets of Asvan Technologies, LLC (“Asvan”) for approximately $313,000. The purchase price included $100,000 in cash, a two year promissory note in the amount of $175,000 secured by a letter of credit and approximately $38,000 in direct costs of acquisition. The note has principal and interest payable in equal monthly installments of $7,300 at an annual rate of 10%. The fair value of assets acquired was approximately $201,000, resulting in goodwill of approximately $112,000. The goodwill is expected to be fully deductible for tax purposes.
(5)	Income Taxes
	For the years ended June 30, 2002 and 2001 and six months ended June 30, 2000, the Company recorded no provision for federal or state income taxes since a valuation allowance was provided for the income tax benefit of the net operating losses incurred during those periods.

F-13

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

Income tax benefit attributable to net loss differed from the amounts computed by applying the U.S. federal income tax rate of 35% to pretax loss as a result of the following:

	Year ended			Year ended			Six months
	June 30,			June 30,			ended June 30,
	2002			2001			2000
	(in thousands of dollars)
Income tax benefit at federal statutory tax rate	$	(2,189	)		(490	)		(413	)
State income taxes, net of federal tax effect		(188	)		(43	)		(36	)
Change in the beginning of year balance of the valuation for deferred tax assets allocated to income tax expense		(225	)		—			—
Officers’ life insurance		46			53			18
Non-deductible meals and entertainment expenses		8			11			2
Other		—			5			(15	)
Increase in valuation allowance for net deferred tax assets		2,548			464			444
Actual income tax expense (benefit)	$	—			—			—

F-14

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

     Significant components of deferred tax balances were as follows:

			June 30,			June 30,
			2002			2001
			(in thousands of dollars)
Deferred tax assets:
	Allowance for doubtful accounts recognized for financial reporting purposes		$	50			106
	Inventory reserve recognized for financial reporting purposes			959			923
	Intangible assets, due to differences in amortization methods			21			16
	Other accounts and reserves accrued for financial reporting purposes			435			412
	Stock compensation expense recognized for financial reporting purposes			361			373
	Accrual for shareholder lawsuit			551			—
	Net operating loss carryforwards			13,010			11,067
				15,387			12,897
	Less valuation allowance			(15,082	)		(12,534	)
		Total deferred tax assets	$	305			363
Deferred tax liabilities:
	Property and equipment, due to differences in depreciation methods		$	(305	)		(363	)
		Total deferred tax liabilities		(305	)		(363	)
		Net deferred tax assets (liabilities)	$	—			—

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment. Based upon management’s projections of future taxable income and future taxable income generated from the reversal of deferred tax liabilities over the periods in which the deferred tax assets are deductible, management does not believe that it is more likely than not that the Company will realize the benefits of these deductible differences. Accordingly, a valuation allowance equal to the balance of net deferred tax assets has been recognized as of June 30, 2002 and 2001. The increase in the valuation allowance for net deferred tax assets was $2,548,000 and $464,000 for the years ended June 30, 2002 and 2001, respectively.

F-15

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

	The Company has net operating loss carryforwards for federal income tax purposes of approximately $34,228,000 at June 30, 2002, expiring through 2020. A portion of the net operating loss carryforwards relate to excess stock option deductions for tax purposes. The valuation allowance at June 30, 2002 includes approximately $361,000 attributable to excess stock option deductions. If realized, the benefit will be recorded as an increase in additional paid-in capital.
(6)	Stock Compensation Plans
	The Company has three stock-based compensation plans. The Company applies the intrinsic value method in accounting for its stock compensation plans. For the years ended June 30, 2002 and 2001 and six months ended June 30, 2000, the Company recognized employee stock compensation expense under these plans of $48,000, $498,000 and $510,000 respectively. Had compensation cost been determined on the basis of fair value as computed using the assumptions herein, net loss and loss per share would have been increased to the following pro forma amounts:

		Year ended				Year ended			Six months ended
		June 30,				June 30,			June 30,
		2002				2001			2000
					(in thousands of dollars)
Net loss:
	As Reported	$	(6,255	)			(1,399	)		(1,179	)
	Pro Forma	$	(8,470	)			(3,871	)		(2,235	)
Loss Per Share:
	As Reported	$	(0.87	)			(0.20	)		(0.17	)
	Pro Forma	$	(1.18	)			(0.55	)		(0.32	)

(a)	Stock Option Plan
	The Company has a stock option plan which provides for the grant of incentive stock options, nonqualified stock options and stock appreciation rights to officers, directors or employees of, as well as advisers and consultants to, the Company.
	The Company has reserved 3,624,000 shares of its common stock for issuance upon exercise of options and rights granted under the plan. Typically, rights and options have been granted which vest over three to five years, become fully vested upon a change in control of the Company, and expire 10 years from the date of issuance. Certain options granted to former senior management were vested upon issuance or over a shorter vesting period. The exercise price was equal to the market value of the Company’s common stock on the grant date or the average of the market value over a stated period of time prior to the grant date.

F-16

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

For stock options granted at an exercise price less than the market value of the common stock at the date of grant, stock compensation cost is recorded based on the difference between the market value of the common stock at the date of grant and the exercise price of the option. For options that are vested on the date of grant, the related stock compensation cost is expensed immediately. Unamortized employee stock compensation cost is recorded as a separate component of stockholders’ equity and amortized to expense over the vesting period of the related options.

The plan provides that each non-executive member of the Board of Directors receive options to purchase 500 shares of common stock for attending each meeting of the Board of Directors, a committee of the Board, or a meeting with management of the Company or other directors for Company business or affairs.

Following is a summary of stock option activity during the six months ended June 30, 2000 and the years ended June 30, 2002 and 2001:

					Weighted
					average
		Number of			exercise
		options			price
Outstanding at December 31, 1999			1,527,323		$	10.73
	Granted at market price		32,000			16.35
	Exercised		(116,569	)		7.99
	Canceled		(115,169	)		13.75
Outstanding at June 30, 2000			1,327,585			10.84
	Granted at market price		224,500			2.68
	Exercised		—			—
	Canceled		(32,535	)		19.62
Outstanding at June 30, 2001			1,519,550			12.30
	Granted at market price		848,700			1.92
	Exercised		—			—
	Canceled		630,416			16.87
Outstanding at June 30, 2002			1,737,834			5.58
Options exercisable at June 30, 2000			667,062			8.90
Options exercisable at June 30, 2001			956,569			9.95
Options exercisable at June 30, 2002			764,653			8.43

F-17

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

     Following is a summary of the status of stock options outstanding at June 30, 2002:

			Outstanding options				Exercisable options
			Weighted
			average		Weighted				Weighted
			remaining		average				average
Exercise			contractual		exercise				exercise
price range	Number		life		price		Number		price
$0.00 — 3.45		998,150		9.0	$	1.98		118,700	$	2.05
3.46 — 6.90		102,500		7.3		5.51		87,500		5.86
6.91 — 10.35		545,424		5.0		8.68		497,449		8.71
10.36 — 13.80		20,500		6.7		11.89		20,500		11.89
13.81 — 17.25		11,500		7.3		15.53		11,500		15.53
17.26 — 24.15		1,500		7.8		18.56		1,500		18.56
24.16 — 27.60		3,000		7.6		26.75		3,000		26.75
27.61 — 31.05		2,000		7.6		28.50		2,000		28.50
31.06 — 34.50		53,260		7.5		34.48		22,504		34.46
		1,737,834		7.5	$	5.58		764,653	$	8.43

Included in options outstanding as of June 30, 2002 are 265,000 options granted to the Company’s former Chief Scientific Officer. Of the 265,000 options outstanding, 250,000 options are exercisable at a weighted average exercise price of $8.59. As described in Note 13, the Company is currently engaged in litigation against this former officer.

In December 2000, the Company’s Compensation Committee reformed the terms of stock options to purchase 350,397 shares which had been granted by the Committee on December 27, 1999 to change the option exercise price from a 60-day average price of $18.76 to $34.50, the market price of the Company’s common stock on the date of grant. After the reformation, the Company informed the holders of the affected options of the change. All of the option holders expressly acknowledged and accepted the change in the option exercise price. As a result of the change, the Company recorded an adjustment in December 2000 of $3,533,000 to reverse unamortized compensation cost relating to these options.

On April 25, 2002, the Company filed a Tender Offer (the “Offer”) with the Securities and Exchange Commission which offered employees the right to exchange all outstanding options to purchase shares of Company common stock with an exercise price equal to $34.50 per share for replacement options to be granted no earlier than six months and one day from the expiration of the Offer at an exercise price equal to no less than the fair market value of the common stock on that date. Under the terms and subject to the conditions set forth in the Offer, 180,579 options were surrendered by eligible employees and cancelled on May 23, 2002. The Company will issue replacement options to purchase an aggregate of up to 180,579 shares of

F-18

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

common stock in exchange for the options surrendered pursuant to the Offer on or around November 24, 2002.

Compensation cost for the SFAS 123 pro forma amounts disclosed above was estimated using the Black-Scholes option-pricing model with the following assumptions:

							Six Months
	Year ended			Year ended			ended
	June 30,			June 30,			June 30,
	2002			2001			2000
Expected life of options from date of grant	5.9 years			6.3 years			5.8 years
Risk-free interest rate		3.4	%		5.7	%		5.7	%
Volatility		145.0	%		212.0	%		72.0	%
Assumed dividend yield		0.0	%		0.0	%		0.0	%

	The weighted average fair value of options granted at market price during the years ended June 30, 2002 and 2001 and the six months ended June 30, 2000 was $1.79, $2.66 and $10.95, respectively. No options were granted at less than or greater than market for the years ended June 30, 2002 and 2001 and during the six months ended June 30, 2000.
(b)	Employee Stock Purchase Plan
	In 1995, the Company adopted an employee stock purchase plan. Eligible employees may designate up to ten percent of their earnings, through payroll deductions, to purchase shares of the Company’s common stock. The purchase price is equal to 85 percent of the fair market value of the common stock on specified dates. A total of 800,000 common shares have been reserved for issuance under the plan, and the maximum number of shares to be issued in any annual period is 200,000. The plan is considered non-compensatory under APB No. 25, and therefore no expense was reported in the Company’s statements of operations.
	The plan is considered compensatory under SFAS No. 123, and therefore, compensation cost for the SFAS No. 123 pro forma amounts disclosed above was estimated using the Black-Scholes option-pricing model with the following assumptions:

							Six Months
	Year ended			Year ended			ended
	June 30,			June 30,			June 30,
	2002			2001			2000
Expected life of options from date of grant	1.0 years			1.0 years			1.0 years
Risk-free interest rate		3.4	%		5.7	%		5.3	%
Volatility		145.0	%		212.0	%		72.0	%
Assumed dividend yield		0.0	%		0.0	%		0.0	%

F-19

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

	The weighted-average fair value of stock purchase rights granted during the year ended June 30, 2002, 2001 and the six months ended June 30, 2000 was $1.64, $1.11, and $0.38, respectively.
(c)	Stock Award Plan
	In 1996, the Company adopted a stock award plan under which shares of common stock can be awarded to the Company’s officers, directors, employees, consultants, and advisors. The Company reserved 100,000 shares of its common stock for issuance under the stock award plan. Stock compensation cost is recognized based on the market value of the common stock on the date of the award. For the years ended June 30, 2002 and 2001 and the six months ended June 30, 2000, there have been no shares of common stock issued to officers, employees, consultants or advisors.
	The plan includes a provision for automatic awards of 50 shares per month to non-management members of the Company’s Board of Directors who serve on the Company’s audit or compensation committees. During the years ended June 30, 2002 and 2001, 2,900 and 1,350 shares with a fair market value of $4,000 and $11,000, respectively were issued under this provision of the plan. During the six months ended June 30, 2000, 900 shares with a fair market value of $17,000 were issued under this provision of the plan.

(7) Profit Sharing and Retirement Plans

During 1990, the Company adopted a qualified profit sharing plan for its employees. Annual contributions to the plan, which may be in the form of cash or shares of the Company’s common stock, are determined by the Board of Directors in its sole discretion. During the years ended June 30, 2002 and 2001, the Company made no contributions to the Plan. During the six months ended June 30, 2000, the Company contributed $14,000 in cash to the Plan.

Effective December 31, 2001, the Company’s Board of Directors terminated the Vari-L Company, Inc. Profit Sharing Plan and Trust (the “Plan”). Under termination of the Plan, participants became fully vested in their accounts. The assets of the Plan, which were primarily comprised of shares of the Company’s common stock, were distributed on March 15, 2002.

During 1998, the Company adopted a 401(k) plan to which employees may contribute up to 15 percent of their pay. The Company may make discretionary matching contributions to the plan. No matching contributions were made during the years ended June 30, 2002 and 2001 or during the six months ended June 30, 2000.

(8) Employment Agreements

Effective June 1, 1997, the Company entered into four-year employment agreements with two officers which provide for minimum annual base salaries during the officers’ employment with the

F-20

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

Company, and severance pay in the event of termination. In the case of involuntary termination by the Company, severance payments are equal to the greater of the officer’s annual base salary multiplied by the remaining term of the agreement or 2.99 times the officer’s average annual compensation over the last five years. In the case of voluntary termination or retirement, the officer will be entitled to (i) one-half of his annual base salary as severance pay, (ii) be engaged as a consultant for a period of up to five years for which he is paid a fee equal to 50 percent of his annual base salary upon termination of employment, and (iii) an annual retirement benefit equal to 25 percent of his annual base salary payable during the period he provides consulting services to the Company. All unvested stock awards and options and stock appreciation rights previously granted to the officers will fully vest in the event of a change of control of the Company or an involuntary termination. In addition, the officers have agreed they will not compete against the Company for a period of one year after termination or expiration of their respective employment agreements, or the period covered by any consulting arrangement or retirement benefit, whichever is greater.

Effective August 1, 2000, one of the officers entered into a Termination and Consulting Agreement, the terms of which supersede his employment agreement. Under the agreement, the Company agreed to engage the officer as a consultant for the period August 1, 2000 through July 31, 2001. As a consultant he was to receive compensation of $195,000 along with certain other benefits. Due to his failure to submit certain documentation for travel expenses in which amounts were advanced, the Audit Committee suspended payment of the consulting fees in October 2000.

In early March 2002, both former officers were informed of the Company’s intent to terminate certain employment and termination and consulting agreements. As a result, neither is currently being paid compensation under the agreements. As described in Note 13, on March 19, 2002, the Company filed a lawsuit against these officers. In the lawsuit, the Company seeks to rescind the employment and consulting agreements between the Company and these officers, and to rescind certain stock option grants made to them, on the basis that such agreements were entered into, and such option grants were made, based upon mistaken or misrepresented information regarding the Company’s true financial performance.

Effective as of August 1, 2002, the Company is a party to employment agreements with nine other officers which provide for employment terms of one year automatically renewable for an additional year without any further action on the part of the Company or the employee unless terminated under certain clauses within the employment agreement. The agreements provide for severance pay based on their annual salary for periods ranging from six months to one year in the event of involuntary termination. In the event of voluntary termination, severance pay is equal to one month’s salary for every year of service completed up to a maximum of three month’s salary.

(9) Related Party Transactions

As described in notes 3 and 13, the Company leases one of its manufacturing facilities from a partnership in which the Company’s former Chief Scientific Officer is a partner. The Company is currently engaged in litigation with the landlord of the facility.

F-21

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

The Company has a two year promissory note payable to Asvan Technology, LLC, in which one of the shareholders is an employee of the Company.

The Company is contingently liable for guarantees of indebtedness owed by former senior officers of the Company to a former officer. The maximum amount of this contingent liability at June 30, 2002 was approximately $94,000.

(10) Financial Instruments

At June 30, 2002 and 2001, the Company had $0 and $610,000 respectively, invested in a U.S. government securities money market fund. The money market fund invests in United States government securities and is not otherwise federally insured.

Disclosures of fair value information about certain financial instruments is presented in accordance with the requirements of Statement of Financial Accounting Standards No. 107, Disclosures about Fair Value of Financial Instruments. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short maturities of these instruments. The carrying amounts of the Company’s notes payable and long-term obligations at June 30, 2002 and 2001 approximate their fair values since the instruments carry a variable rate of interest or a rate that approximates current rates.

(11) Significant Customers

The Company’s products are sold to original equipment manufacturers of communications equipment, either in commercial or military markets. The following table shows the percentage of total revenues contributed by significant customers for the periods presented. A significant customer is defined as one contributing 10% or more of total revenues:

							Six Months
	Year ended			Year ended			ended
	June 30,			June 30,			June 30,
	2002			2001			2000
Nokia		17.49	%		25.0	%		20.4	%
Motorola		16.71	%		14.6	%		14.3	%
ACAL Electronics (includes Siemens)		12.99	%		12.7	%		13.5	%

F-22

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

     The following table shows the accounts receivable balance of the three most significant customers for the periods presented:

					Six Months
	Year ended		Year ended		ended
	June 30,		June 30,		June 30,
	2002		2001		2000
	(in thousands of dollars)
Nokia	$	546		1,803		678
Motorola		255		225		1,451
ACAL Electronics (includes Siemens)		564		1,060		602

The Company performs credit evaluations of its customers but generally does not require collateral. Receivables due from foreign customers are generally insured by a private indemnity company; otherwise, letters of credit are required of foreign customers.

The Company produces and sells electronic components in four product lines. Net sales for each of the product lines for the years ended June 30, 2002 and 2001 and six months ended June 30, 2000 were as follows:

					Six Months
	Year ended		Year ended		ended
	June 30,		June 30,		June 30,
	2002		2001		2000
	(in thousands of dollars)
Commercial Signal Source Components	$	15,615		34,898		14,608
Hi-Rel Signal Source Components		3,651		2,809		1,238
Military Signal Processing Components		1,848		1,318		668
Other Products		234		2,352		644
Net Sales	$	21,348		41,377		17,158

F-23

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

     The Company attributes sales to customers based on the country to which the products are shipped. Net sales by country are as follows:

					Six Months
	Year ended		Year ended		ended
	June 30,		June 30,		June 30,
	2002		2001		2000
	(in thousands of dollars)
United States	$	8,985		15,596		7,464
China		3,800		1,532		—
Finland		2,995		4,110		1,297
England		1,349		5,393		3,938
Sweden		1,321		1,527		481
Germany		1,147		4,731		1,142
Italy		462		4,788		1,143
Canada		109		1,540		567
Other		1,180		2,160		1,126
Net Sales	$	21,348		41,377		17,158

(12) Expenses of Accounting Restatements and Related Matters

As discussed in note 13, in early 2000, management of the Company commenced efforts to restate its previously issued financial statements after being notified by the Securities and Exchange Commission (the Commission) that the Commission was investigating its accounting and reporting practices. Certain costs incurred in conjunction with these efforts have been separately classified on the Company’s statements of operations as “expenses relating to accounting restatements and related legal matters, net of recoveries.” Expenses included in this classification include the cost of external counsel for services provided in connection with shareholder lawsuits, the Commission’s investigation of the Company, legal fees and expenses of the Special Litigation Committee of the Board of Directors, the cost of certain consultants and temporary labor hired to assist in the accounting restatements, and reimbursements to former employees of the Company for their legal fees and expenses. The accounting restatements were completed in February 2001, however, the Company continues to incur costs related to shareholder litigation and legal fees and expenses of the Special Litigation Committee.

Included in these expenses for the year ended June 30, 2002 is $1.45 million representing the approximate cost to settle the Private Securities Class Action as discussed in note 13.

F-24

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

(13)	Litigation, Commitments and Contingencies
	Securities and Exchange Commission Investigation

In December 1999, the Company learned that the SEC was conducting an investigation to determine whether there were violations of the federal securities laws by the Company or any of its officers, directors, or employees. The Commission’s investigation was focused primarily on the Company’s prior financial reporting and its accounting practices and procedures. In September 2001, the Company agreed to a settlement with the Securities and Exchange Commission under which the Company, without admitting or denying that it violated any laws, consented to the entry of an injunction prohibiting future violations by the Company of certain periodic reporting, record keeping, internal controls, proxy solicitation and antifraud provisions of the Securities Exchange Act of 1934. On November 9, 2001, the Company’s settlement with the Securities and Exchange Commission was approved by the United States District Court for the District of Colorado.

Private Securities Class Action

A number of private shareholder class actions alleging violations of federal securities laws were filed against the Company and certain of its former officers in the United States District Court for the District of Colorado beginning in June 2000. Those actions have since been consolidated and an amended consolidated complaint has been filed by the class representatives. On November 21, 2001, the Company filed a motion to dismiss all claims against the Company in the consolidated private securities class action, Rasner v. Vari-L Company, Inc., Civ. No. 00-S-1181, D. Colo. The Company’s motion argues that the amended consolidated complaint alleges wrongdoing by former corporate employees in furtherance of their personal interests, as opposed to corporate interests, which does not state a claim for securities fraud against the Company. The class action representatives have filed their response to the Company’s motion to dismiss and the Company has filed a reply to that response but the court has not yet ruled on the motion.

On October 3, 2002, the Company and the class action representatives reached an agreement in principle for the settlement of the litigation and executed a memorandum of understanding (the “MOU”), subject to court approval. The MOU outlines the general terms of the proposed settlement and is intended to be used as a basis for drafting a Stipulation of Settlement. The MOU requires the Company to pay $250,000 in cash and issue 2.0 million shares of the Company’s common stock. The number of shares issuable pursuant to the MOU is subject to certain anti dilution adjustments in the event the Company sells its common stock or securities convertible into its common stock below certain threshold prices. The Company has calculated the value of shares to be issued based upon the closing price of the Company’s common stock on the date in which all substantive aspects with respect to the MOU were agreed upon. At June 30, 2002, the Company recorded $1.45 million representing the approximate cost to settle this litigation. This amount has been included in expenses of accounting restatements and related matters in the statements of operations.

The Company is also required to transfer its claims against Joseph H. Kiser, David G. Sherman, Jon C. Clark and Derek L. Bailey to the plaintiffs. However, the Company will retain the claims from the lawsuit filed in the District Court for the City and County of Denver as a result of the Special

F-25

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

Litigation Committee investigation, against David G. Sherman, Joseph H. Kiser, Joan Sherman, the Kathryn Sherman Trust and J.C. Enterprises. The Company will also assign to the Plaintiffs any right it might have to proceeds or other damages from the Directors and Officers insurance policies with Reliance Insurance Company and Agricultural Excess and Surplus Insurance Company. There can be no assurance that the court will accept our proposal. Moreover, irrespective of the outcome with respect to the Company, the individual defendants may assert claims against the Company for advancement or indemnification of their attorneys fees and other costs of defense, which claims may be material.

Shareholder Derivative Suit

On August 4, 2000, a shareholder derivative action was filed, purportedly on behalf of the Company, in District Court, City and County of Denver against the same officers named in the class action as well as the members of the Company’s board of directors at the time. The Company was also named as a nominal defendant. The derivative complaint alleged many of the same facts as in the federal securities class action, claiming that those facts demonstrate that the individual defendants breached their fiduciary duties to the Company and the shareholders. The action was dismissed without prejudice in April 2001 but an amended complaint was filed by the same plaintiff in September 2001.

On October 9, 2001, the Company filed a motion to dismiss the amended shareholder derivative action, on various grounds, including the failure to make the required demands, the failure to commence a new action rather than trying to revive the previously dismissed case, and the availability of new management and a new independent Board member to evaluate the merits, and the timing, of any claims which could be brought by the Company against the individual defendants. Substantially all of the individually named defendants subsequently joined in the Company’s motion.

On April 4, 2002, the court granted the plaintiff’s motion for a stay of the shareholders derivative action against certain of the Company’s former officers and directors pending the results of the investigation by the Company’s Special Litigation Committee of the claims raised in that action. On June 28, 2002, the Company filed a motion to dismiss or in the alternative a motion for summary judgment based on the findings of the Special Litigation Committee, which recommended dismissal of the action without prejudice. On August 21, 2002, the court granted the Company’s motion and dismissed the amended action without prejudice.

Insurance Claims

Reliance Insurance Company (“Reliance”) is the issuer of the $5 million primary directors and officers’ liability insurance policy in effect for the period of time covered by the securities class action and the derivative action. In January 2002, the Reliance liquidator notified claimants concerning the procedures by which insureds and other claimants may file claims against the Reliance estate. The Company intends to file a claim against the Reliance estate, however all rights under the claim will be assigned to the plaintiffs pursuant to the MOU.

F-26

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

Declaratory Judgment Action by Excess Insurer

On June 5, 2001, Agricultural Excess and Surplus Insurance Company (“AESIC”), which had issued to the Company a $2.5 million excess directors and officers liability insurance policy for the period of time covered by the shareholder and class action litigation referenced above, filed suit in United States District Court for the District of Colorado asking the court to find that it is not obligated to provide coverage, or in the alternative, seeking permission to rescind its policy.

A settlement conference was held in February 2002 before the U.S. Magistrate assigned to this declaratory judgment action brought by the Company’s excess liability directors and officers liability insurance carrier. Representatives of the excess insurer, the Company, the individual defendants in the securities class action, and the plaintiffs in the securities class action attended the conference. While meaningful discussions were held at that conference, no settlement was reached and no further settlement conference has been scheduled.

Company Action against Former Officers

On December 5, 2001, the Company formed a Special Litigation Committee (the “SLC”) of the Board of Directors. The SLC is comprised of two outside directors who joined the Company’s Board subsequent to the time of certain alleged wrongdoings as discussed below.

On December 20, 2001, the SLC retained independent counsel to advise the Committee in its investigation of the allegations of wrongdoing during prior periods by former employees, as well as current and former members of the Company’s Board of Directors. Additionally, the SLC suspended the advancement of certain legal fees and expenses being paid on behalf of former officers of the Company.

On March 19, 2002, the Company filed a lawsuit in the District Court, City and County of Denver, against Mr. David Sherman, Mr. Joseph Kiser, individuals, and J.C. Enterprises, a Colorado general partnership. Mr. Sherman is the former president of the Company and Mr. Kiser is the former Chairman of the Company’s Board of Directors and Chief Scientific Officer. Additionally, Mr. Kiser is the General Partner of J.C. Enterprises. On April 2, 2002, the Company filed an Amended Complaint and Jury Demand. On May 17, 2002, the Company filed a Second Amended Complaint and Jury Demand and added Ms. Joan Sherman, an individual, and the Kathryn Sherman Trust, a Colorado trust, as defendants. In its lawsuit, the Company seeks to rescind certain employment and consulting agreements between the Company and Messrs. Kiser and Sherman, and to rescind certain stock and stock option grants made to them, on the basis that such agreements were entered into, and such stock option grants were made, based upon mistaken or misrepresented information regarding the Company’s true financial performance. The Company also seeks to recover the compensation and bonuses paid to them as a result of such mistaken or misrepresented information. In addition, the Company seeks to recover excessive rent it paid pursuant to a lease agreement between the Company and J.C. Enterprises in reliance on misrepresented information provided by Messrs. Kiser and Sherman. The Company added Ms. Sherman and the Kathryn Sherman Trust to this action because they may possess assets from Mr. Sherman that Vari-L is entitled to recover.

F-27

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

On April 30, 2002, Mr. Kiser filed a motion to dismiss the lawsuit in its entirety. On June 13, 2002, the motion to dismiss was denied.

On May 30, 2002, David Sherman filed a counter-claim against the Company alleging that the Company breached its obligation to him by suspending payment of consulting fees under the Termination and Consulting Agreement. On July 8, 2002, Joseph Kiser filed counter-claims against the Company, Charles R. Bland, Richard P. Dutkiewicz, Gil J. Van Lunsen and David M. Risley. Mr. Bland is our President and Chief Executive Officer. Mr. Dutkiewicz is our Vice President of Finance and Chief Financial Officer. Messrs. Risley and Van Lunsen are on our Board of Directors and are members of the SLC. The counter-claim alleges claims for: (i) violation of the Colorado Wage Act against all counter-claim defendants; (ii) breach of contract relating to Mr. Kiser’s employment agreement with the Company against the Company only; (iii) breach of contract relating to the Company’s promise to fulfill the obligations of Mr. Kiser’s employment agreement against the Company only; (iv) breach of contract relating to the indemnification agreements with the Company against the Company only; (v) promissory estoppel relating to Mr. Kiser’s retirement from the Company against the Company only; (vi) intentional interference with Mr. Kiser’s employment agreement with the Company against Mr. Bland only; and (vii) negligent misrepresentation relating to Mr. Kiser’s plans for retirement against Mr. Bland only.

A trial date of February 24, 2003 has been set and the parties are about to commence discovery.

Mr. Kiser’s employment contract requires him to perform any directive of the Company’s Board of Directors. Subsequent to March 19, 2002, Mr. Kiser has not performed any services for the Company. The Company believes that its claim to rescind Mr. Kiser’s employment contract based upon mistaken or misrepresented information regarding the Company’s true financial performance is based upon a valid principle of law. Since March 19, 2002, the Company has suspended all payments required by Mr. Kiser’s employment contract. The Company has recorded approximately $203,000 of liabilities representing the present value of post-employment health care obligations and a one time separation bonus to be paid to Mr. Kiser upon termination of contract payments.

In the event that Mr. Kiser prevails in requiring us to comply with the terms of the employment contract, we could be obligated to total future payments of approximately $1,400,000 payable over ten years. If we are successful in our claims against Mr. Kiser, we could be awarded as much as $5,600,000 plus attorneys’ fees. Additionally, we would reverse all previously recorded liabilities associated with this matter.

If Mr. Kiser prevails on his breach of contract action related to the indemnification agreements he had with the Company, the Company could be liable for attorney fees and costs incurred in the various actions as well as for future covered attorney’s fees, the present amount of which is unknown.

Under Mr. Sherman’s termination and consulting agreement, the Company agreed to engage Mr. Sherman as a consultant for the period August 1, 2000 through July 31, 2001. As a consultant he was

F-28

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

to receive compensation of $195,000 as consulting fees along with certain other benefits. Due to his failure to submit certain documentation for travel expenses in which amounts were advanced, the Audit Committee suspended payment of the consulting fees in October 2000 and elected to terminate the agreement due to misappropriation of funds. During the quarter ended December 31, 2002, the Company recognized a $145,000 benefit from an insurance recovery for Mr. Sherman’s undocumented travel advances. If Mr. Sherman prevails on his breach of contract action, the Company could be liable for amounts under his termination and consulting agreement, attorney fees and costs incurred in the various actions as well as for future covered attorney’s fees, the present amount of which is unknown.

Patent Litigation

On August 8, 2002, Anaren Microwave, Inc. (“Anaren”) sued the Company for infringement of U.S. Patent No. 4,821,007. The Company has not been served with the complaint. The Company has been advised that a license may be available under the patent, and the Company and its counsel are investigating Anaren’s allegations.

                     Financial Impact of Litigation

All of these legal actions have the potential of a possible loss to the Company. The Company Action against Former Officers is a potential gain contingency for the Company. At this time, we are unable to reasonably estimate the possible future cost or net loss or gain, if any, associated with certain of these matters. Accordingly, we have not recorded any loss or gain contingencies associated with certain of these matters as of June 30, 2002. It is reasonably possible that such amounts could be material to our financial condition, results of operations or liquidity.

(14) Subsequent Event — Sirenza Loan Facility

The continuing weakness in the wireless telecommunications industry has caused the Company’s customers to continually revise their estimates of demand for products downward. These downward adjustments have required the Company to provide revised financial projections to Wells Fargo as described in note 3. In early May 2002, the Company determined that additional equity capital or subordinated debt would be necessary to provide sufficient liquidity through this period of weakened sales. At that time, the Company commenced efforts to identify potential investors and solicit their interest in a financing transaction.

On October 7, 2002, the Company entered into a Loan Agreement with Sirenza Microdevices, Inc. (“Sirenza”) which provides for a $5.3 million senior secured bridge loan facility (the “Loan Facility”). As a condition to the Loan Facility, the Company entered into an Exclusivity and Right of First Refusal Agreement (the “Exclusivity Agreement”) with Sirenza to evaluate a potential acquisition of all or substantially all of the Company’s assets.

The Loan Facility is effective for the period October 7, 2002 to September 25, 2003, is secured by substantially all of our assets and has an annual interest rate of 25%. Additionally, the Loan Facility

F-29

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

is subject to covenants that among other things impose limitations on capital expenditures and investments, restrict certain payments and distributions and require the Company to maintain certain financial ratios.

Under the terms of the Loan Facility, Sirenza has provided for funding in two tranches. The first tranche (“Tranche A “) consists of an initial term loan of $1.4 million to repay amounts outstanding under the Credit Facility at Wells Fargo. The second tranche (“Tranche B”) consists of additional term loans of up to $3.9 million which may be drawn down in accordance with an agreed schedule. The Company expects to use the proceeds from any advances under Tranche B to fund its working capital requirements.

In the event of a change of control or execution of a definitive acquisition agreement with any party other than Sirenza, amounts outstanding under the Loan Facility are due in full within five business days. Additionally, the Company must pay a prepayment fee in the amount of $1,000,000 (the “Prepayment Fee”). The Company may voluntarily prepay the Tranche A and Tranche B loan provided that in the event of a change of control or execution of a definitive acquisition agreement with any party other than Sirenza within 180 days of such prepayment, the Company must pay the Prepayment Fee.

Under the terms of the Loan Facility, at Sirenza’s option, the Tranche A loan is convertible into 19.9% of the Company’s Common Stock on a fully diluted basis at the following times: Five business days prior to the maturity date of the Tranche A loan, the date Sirenza receives written notice of the Company’s intent to to prepay the Tranche A loan, the date of the commencement of a tender offer by a party other than Sirenza, or the date the Company executes a definitive acquisition agreement with another party. The shares of common stock issuable upon conversion of the Tranche A Note are subject to certain registration rights as set forth in the Resale Registration Rights Agreement between the parties. The Company has amended its Rights Agreement with American Securities Transfer, Inc. to make the rights thereunder inapplicable to certain transactions with Sirenza that are approved by the Company’s board of directors, including the conversion of the Tranche A Note.

The Company’s ability to draw down amounts under Tranche B is conditioned upon, among other things, the absence of an event of default and our representations and warranties being true and correct at the time of such draw down request. In the event the Company is unable to draw down amounts under Tranche B, the Company may be required to seek additional capital through other sources, which the Company’s ability is limited by the terms of the Exclusivity Agreement described below. There can be no assurance that the Company would be able to procure adequate funds in such an event. If such funds are not available, the Company may be forced to curtail or suspend our operations.

Pursuant to the terms of the Exclusivity Agreement, the Company has agreed, subject to certain exceptions, not to solicit acquisition proposals from other parties or otherwise negotiate with such parties with respect to an acquisition proposal. Such exclusivity period terminates upon the earlier of March 31, 2003 or the occurrence of certain other events. Under the Exclusivity Agreement the Company has granted Sirenza a right of first refusal in the event that the Company receives any

F-30

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

future offer to acquire it or substantially all of its assets. Such right of first refusal terminates upon the earlier of: the date that Sirenza advises us the Company in writing that they are terminating all negotiations with the Company regarding a transaction or that they are no longer interested in pursuing a transaction with the Company, such time as the Loan Facility has terminated and no loans remain outstanding thereunder, or such time as they default on their obligations to make loans to the Company pursuant to the Loan Facility.

(15) Fourth Quarter Transactions

During the quarter ended June 30, 2002, the Company sold inventories with a net book value of approximately $250,000 for $75,000. As a result, the Company recorded a charge to cost of goods sold for $175,000. Additionally, due to the continuing decline in the industry and weak demand of the commercial signal source products, the Company offered certain of their preferred customers’ price decreases which resulted in a $152,000 decrement in gross margin for the quarter ended June 30, 2002.

As discussed in notes 12 and 13, the Company recorded $1.45 million representing the approximate cost to settle the Private Securities Class Action during the quarter ended June 30, 2002. This amount has been included in expenses of accounting restatements and related matters in the statements of operations.

F-31

VARI-L COMPANY, INC.

Notes to Financial Statements

June 30, 2002 and June 30, 2001

(Information for the six months ended June 30, 2000 is unaudited)

(16) Quarterly Financial Information (Unaudited)

     The following is a summary of the unaudited quarterly financial information:

	Quarters Ended
	September 30,			December 31,			March 31,			June 30,
	2001			2001			2002			2002
	(in thousands of dollars, except per share amounts)
Net sales	$	5,676			5,607			5,163			4,902
Gross profit		2,146			2,322			1,928			1,305
Operating loss		(1,079	)		(493	)		(1,160	)		(6,116	)
Net loss		(1,120	)		(528	)		(1,211	)		(6,255	)
Basic and diluted earnings per share		(0.16	)		(0.07	)		(0.17	)		(0.47	)

	Quarters Ended
		September 30,			December 31,			March 31,		June 30,
		2000			2000			2001		2001
		(in thousands of dollars, except per share amounts)
Net sales		$	11,495			10,894			10,000		8,988
Gross profit			5,357			5,189			5,561		3,523
Operating income (loss)			(50	)		220			215		(1,095	)
Net income (loss)			(201	)		(10	)		43		(1,231	)
Basic and diluted earnings per share			(0.03	)		*			0.01		(0.17	)

* Loss per share is less than $.01

F-32

VARI-L COMPANY, INC.

Schedule II – Valuation and Qualifying Accounts

(in thousands of dollars)

			Balance at						Balance at
			beginning						end
Description			of period		Additions (a)		Deductions (b)		of period
Year ended June 30, 2002:
	Allowance for doubtful accounts		$	279		104		(251)		132
	Allowance for excess and obsolete inventories			2,423		564		(465)		2,522
	Reserve for product warranties and returns			31		10		(21)		20
		Total	$	2,733		678		(737)		2,674
Year ended June 30, 2001:
	Allowance for doubtful accounts		$	175		155		(51)		279
	Allowance for excess and obsolete inventories			2,659		1,362		(1,598)		2,423
	Reserve for product warranties and returns			42		12		(23)		31
		Total	$	2,876		1,529		(1,672)		2,733
Six months ended June 30, 2000 (unaudited):
	Allowance for doubtful accounts		$	208		78		(111)		175
	Allowance for excess and obsolete inventories			2,215		444		—		2,659
	Reserve for product warranties and returns			7		35		—		42
		Total	$	2,430		557		(111)		2,876

Notes:

(a)	Amounts charged to costs and expenses.
(b)	Bad debt write-offs and charges to reserves.

See accompanying auditor’s report

F-33

EXHIBIT INDEX

Exhibit No.	Description
3.1a	Restated Articles of Incorporation, as Amended, filed as Exhibit 4.1 to the 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 the Form 10-KSB for the year ended December 31, 1996 and incorporated herein by reference.
3.2	Amended and Restated Bylaws adopted September 26, 2002.
4.1	Specimen Certificate for $.01 par value Common Stock filed as Exhibit 4.3 to the Form SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by reference.
4.2	Rights Agreement with American Securities Transfer, Inc. dated March 15, 1996 filed as Exhibit 4.2 to the Form 8-A/A Registration Statement (No. 0-23866) and incorporated herein by reference.
4.3	Specimen Certificate for Right to Purchase $.01 par value Common Stock filed as Exhibit 4.3 to the Form 8-A/A Registration Statement (No. 0-23866) and incorporated herein by reference.
4.4	Securities Purchase Agreement with the Purchasers dated March 4, 1997 filed as Exhibit 4.5 to the Form S-3 Registration Statement (No. 333-25173) and incorporated herein by reference.
4.6	Form of Warrant to Purchase Common Stock issued to the Purchasers under the Securities Purchase Agreement dated March 4, 1997 filed as Exhibit 4.7 to the Form S-3 Registration Statement (No. 333-25173) and incorporated herein by reference.
4.7	Amendment No. 1 to Rights Agreement with American Securities Transfer, Inc. dated October 7, 2002.
10.1	Executive Employment Agreement with Joseph H. Kiser, dated effective June 1, 1997, filed as Exhibit 10.1 to the Form 10-QSB for the quarter ended September 30, 1998 and incorporated herein by reference.
10.2	Lease Agreement dated January 1, 1987 with J.C. Enterprises for the facility located at 5165 Peoria Street, Denver, Colorado, as amended on December 6, 1990 and March 23, 1993, filed as Exhibit 10.15 to the Form SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by reference.
10.3	Settlement Agreement with Joseph H. Kiser, David G. Sherman, Alwin E. Branson and Carolyn Y. Kiser dated January 31, 1992, as amended March 23, 1993, filed as Exhibit 10.18 to the Form SB-2 Registration Statement (No. 33-74704-D) and incorporated herein by reference.
10.4	Profit Sharing Plan and Trust Agreement, as amended and restated effective April 19, 1994 filed as Exhibit 10.16 to the Form 10-KSB for the year ended December 31, 1994 and incorporated herein by reference.

Exhibit No.	Description
10.5	Lease Agreement dated March 12, 1997 with Five K Investments for the facility located at 4895 Peoria Street, Denver, Colorado filed as Exhibit 10 to the Form 10-QSB for the quarter ended September 30, 1997 and incorporated herein by reference.
10.6	Third Amendment to Lease Agreement dated January 1, 1987 with J.C. Enterprises for the facility located at 5165 Peoria Street, Denver, Colorado, as amended December 6, 1990, March 23, 1993, and October 30, 1998 filed as Exhibit 10.6 to the Form 10-QSB for the quarter ended September 30, 1998 and incorporated herein by reference.
10.7	Termination and Consulting Agreement with David G. Sherman dated August 1, 2000 filed as Exhibit 10.1 to the Form 8-K dated August 1, 2000 and incorporated herein by reference.
10.8	Employment Agreement with Timothy M. Micun dated March 2, 2001 filed as Exhibit 10.26 to the Form 10-K for the fiscal year ended June 30, 2001 and incorporated herein by reference.
10.9	Credit and Security Agreement with Wells Fargo Business Credit, Inc. dated June 28, 2001 filed as Exhibit 99.2 to the Form 8-K dated June 28, 2001 and incorporated herein by reference.
10.10	Patent and Trademark Security Agreement with Wells Fargo Business Credit, Inc. dated June 28, 2001 filed as Exhibit 99.3 to the Form 8-K dated June 28, 2001 and incorporated herein by reference.
10.11	First Amendment to Credit and Security Agreement dated September 17, 2001 filed as Exhibit 10.1 to the Form 10-Q dated September 30, 2001 and incorporated herein by reference.
10.12	Employee Stock Purchase Plan effective as of November 30, 2001 filed as Exhibit 10.1 to the Form 10-Q for the quarter ended December 31, 2001 and incorporated herein by reference.
10.13	Amended and Restated Tandem Stock Option and Stock Appreciation Rights Plan, effective as of January 1, 2002 filed as Exhibit 10.1 to the Form 10-Q for the quarter ended March 31, 2002 and incorporated by reference herein.
10.14	Stock Grant Plan effective as of January 1, 2002 filed as Exhibit 10.2 to the Form 10-Q for the quarter ended March 31, 2002 and incorporated herein by reference.
10.15	Agreement between Vari-L Company, Inc. and Asvan Technology, LLC dated January 25, 2002.
10.16	Second Amendment to Credit and Security Agreement with Wells Fargo Business Credit, Inc. dated February 8, 2002.
10.17	Form of Indemnity Agreement by and among Vari-L Company, Inc. and each of Gil J. Van Lunsen (dated June 1, 2001), Sarah L. Booher (dated July 5, 2001), David A. Lisowski (dated July 5, 2001), Anthony B. Petrelli (dated July 5, 2001), David M. Risley (dated November 21, 2001) and Robert C. Dixon (dated January 11, 2002).
10.18	Employment Agreement with Charles R. Bland dated August 1, 2002.

Exhibit No.	Description
10.19	Employment Agreement with Russell M. Crouch dated August 1, 2002.
10.20	Employment Agreement with Richard P. Dutkiewicz dated August 1, 2002.
10.21	Employment Agreement with Ernest C. Hafersat dated August 1, 2002.
10.22	Employment Agreement with Janice E. Hyland dated August 1, 2002.
10.23	Employment Agreement with Matthew D. Pope dated August 1, 2002.
10.24	Employment Agreement with Larry M. Romero dated August 1, 2002.
10.25	Employment Agreement with Timothy G. Schamberger dated August 1, 2002.
10.26	Employment Agreement with Daniel J. Wilmot dated August 1, 2002.
10.27	Engagement letter with Green, Manning & Bunch, Ltd. dated September 9, 2002.
10.28	Forbearance Agreement and Third Amendment to Credit and Security Agreement with Wells Fargo Business Credit, Inc. dated September 26, 2002 filed as Exhibit 99.1 to the Form 8-K dated October 1, 2002 and incorporated herein by reference.
10.29	Indemnity Agreement, dated October 2, 2002, by and among Vari-L Company with Charles R. Bland.
10.30	Indemnity Agreement, dated October 2, 2002, by and among Vari-L Company, Inc. with Richard P. Dutkiewicz.
10.31	Memorandum of Understanding dated October 3, 2002 between Vari-L Company, Inc. and the plaintiffs in Civil Action No. 00-S-1198 between plaintiffs Michael Rasner, et al., on behalf of themselves and other similarly situated and defendants Vari-L Company, Inc., Derek Bailey, Joseph Kiser, David G. Sherman and Jon Clark in the United States District Court, District of Colorado, by and through their respective attorneys, for settlement of litigation against Vari-L Company, Inc.
10.32	Loan Agreement with Sirenza Microdevices, Inc. dated October 7, 2002.
10.33	Security Agreement with Sirenza Microdevices, Inc. dated October 7, 2002.
10.34	Exclusivity and Right of First Refusal Agreement with Sirenza Microdevices, Inc. dated October 7, 2002.
10.35	Resale Registration Rights Agreement with Sirenza Microdevices, Inc. dated October 7, 2002.
23	Consent of KPMG LLP

EX-3.2

                                                                     EXHIBIT 3.2



                         RESTATED AND AMENDED BYLAWS OF
                              VARI-L COMPANY, INC.



                                TABLE OF CONTENTS



                                                                                                               PAGE
                                                                                                            

ARTICLE I    Officers.............................................................................................1

                  Section 1.        Offices and Qualification.....................................................1
                  Section 2.        Election and Term.............................................................1
                  Section 3.        Subordinate Officers..........................................................1
                  Section 4.        Removal.......................................................................1
                  Section 5.        Resignation...................................................................1
                  Section 6.        Vacancies.....................................................................1
                  Section 7.        The President.................................................................2
                  Section 8.        The Vice President............................................................2
                  Section 9.        The Secretary.................................................................2
                  Section 10.       The Treasurer.................................................................3
                  Section 11.       The Controller................................................................4
                  Section 12.       The Chief Scientific Officer..................................................5

ARTICLE II   Directors............................................................................................5

                  Section 1.        Number, Election and Term.....................................................5
                  Section 2.        Qualifications................................................................5
                  Section 3.        Duties........................................................................5
                  Section 4.        Chairman of the Board.........................................................6
                  Section 5.        Executive and Other Committees................................................6
                  Section 6.        Annual and Regular Meetings...................................................7
                  Section 7.        Special Meetings..............................................................7
                  Section 8.        Place of Meetings.............................................................7
                  Section 9.        Notice........................................................................7
                  Section 10.       Waiver of Notice and Approval of Action.......................................7
                  Section 11.       Meetings by Conference Telephone or Similar Communications Equipment..........8
                  Section 12.       Action by Directors Without a Meeting.........................................8
                  Section 13.       Quorum and Manner of Acting...................................................8
                  Section 14.       Compensation of Directors.....................................................8
                  Section 15.       Vacancies.....................................................................8
                  Section 16.       Removal of Directors..........................................................9
                  Section 17.       Resignation...................................................................9

ARTICLE III  Shares...............................................................................................9

                  Section 1.        Certificates..................................................................9
                  Section 2.        Transfers.....................................................................9
                  Section 3.        Lost Certificates.............................................................9
                  Section 4.        Stock Certificate and Transfer Books.........................................10
                  Section 5.        Voting of Shares.............................................................10
                  Section 6.        Closing Transfer Books and Fixing Record Date................................10



                                       -i-


                                TABLE OF CONTENTS



                                                                                                               PAGE
                                                                                                            

                  Section 7.        Issuance of Fractional Shares or Scrip.......................................11

ARTICLE IV   Shareholders........................................................................................11

                  Section 1.        Annual Meeting...............................................................11
                  Section 2.        Special Meetings.............................................................11
                  Section 3.        Place of Meetings............................................................12
                  Section 4.        Notice of Meetings...........................................................12
                  Section 5.        Meetings by Conference Telephone or Similar Communications Equipment.........12
                  Section 6.        Action by Shareholders Without a Meeting.....................................12
                  Section 7.        Election of Directors........................................................12
                  Section 8.        Quorum and Manner of Acting..................................................12
                  Section 9.        Waiver of Notice and Approval of Action......................................13
                  Section 10.       Order of Business............................................................13

ARTICLE V    Dividends...........................................................................................13

ARTICLE VI   Indemnification.....................................................................................14

                  Section 1.        Definitions..................................................................14
                  Section 2.        Permissive Indemnification of Directors......................................15
                  Section 3.        Mandatory Indemnification of Directors.......................................16
                  Section 4.        Prohibited Indemnification of Directors......................................16
                  Section 5.        Authority for Permissive Indemnification of Directors........................16
                  Section 6.        Advances of Expenses.........................................................16
                  Section 7.        Indemnification of Officers, Employees and Agents............................17
                  Section 8.        Required Notice to Shareholders..............................................17
                  Section 9.        Rights, Powers and Duties Not Exclusive......................................17

ARTICLE VII  Personal Liability..................................................................................18

                  Section 1.        Liability Insurance..........................................................18
                  Section 1.        Colorado Corporation Code....................................................18
                  Section 2.        Corporate-Seal...............................................................18
                  Section 3.        Benefit Program..............................................................18
                  Section 4.        Reimbursement by Officers of Expenses........................................18

ARTICLE IX   Definitions.........................................................................................19

ARTICLE X    Amendments..........................................................................................21



                                      -ii-



                         RESTATED AND AMENDED BYLAWS OF
                              VARI-L COMPANY, INC.


                                    ARTICLE I
                                    Officers

         Section 1. Offices and Qualification. The officers of this Corporation
shall be a president, one or more Vice Presidents, a Secretary, a Treasurer, the
Chairman of the Board a Chief Scientific Officer, and such other officers as may
be appointed in accordance with the provisions of Section 3 of this Article. One
person may hold any two of said offices (except the same person shall not be
both President and Vice President, or President and Secretary), but no such
officer shall execute, acknowledge or verify any instruments in more than one
capacity if such instrument is required by law or by these Bylaws or by
resolution of the Board of Directors to be executed, acknowledged or verified by
any two or more officers. The officers of this Corporation shall be natural
persons of the age of eighteen (18) years or older.

         Section 2. Election and Term. The officers of this Corporation shall be
elected annually by the Board of Directors at a meeting held immediately after
the annual meeting of shareholders. Election shall be by ballot, and a majority
of the votes cast shall be necessary to elect. Each officer, except such
officers as may be appointed in accordance with the provisions of Section 3 of
this Article, shall hold office until such officer's successor shall have been
duly elected and qualified, or until such officer's death, resignation, or
removal in the manner hereinafter provided.

         Section 3. Subordinate Officers. The Board of Directors may appoint
such other subordinate officers to hold office for such periods of time, have
such authority and perform such duties as may be considered desirable, and the
Board of Directors may delegate to any officer the power to appoint any such
subordinate officers.

         Section 4. Removal. The officers specifically designated in Section 1
of this Article may be removed by the vote of a majority of the whole Board of
Directors at a meeting of the Board called for that purpose whenever in the
Board's judgment the best interests of this Corporation will be served thereby.
The officers appointed in accordance with the provisions of Section 3 of this
Article may be removed, either with or without cause by a majority vote of the
directors present at a meeting called for that purpose, or by the officer to
whom such power of removal may be delegated by the Board of Directors.

         Section 5. Resignation. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or Secretary of
this Corporation. Any such resignation shall take effect at the time specified
therein; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.

         Section 6. Vacancies. A vacancy occurring in any office because of
death, resignation, removal, disqualification, or any other cause shall be
filled for the unexpired portion of the term of office by the Board of
Directors, except that in the case of a vacancy occurring in



                                      -1-


an office filled in accordance with the provisions of Section 3 of this Article,
such vacancy may be filled by any officer to whom such power may be delegated by
the Board of Directors.

         Section 7. The President. The President shall be the active executive
officer of this Corporation and shall exercise detailed supervision over the
business of this Corporation and over its several officers, subject, however, to
the control of the Board of Directors. The President shall preside at meetings
of the shareholders and shall perform all duties as from time to time may be
assigned to the President by the Board of Directors.

         The President shall execute all deeds, conveyances, deeds of trust,
bonds and other contracts under the seal of this Corporation except where
otherwise permitted by law and except where the signing and execution thereof
shall be expressly delegated by the Board of Directors to some other officer or
agent of this Corporation.

         Section 8. The Vice President. The Vice President shall perform such
duties as are given to the Vice President by these Bylaws or assigned by the
Board of Directors. The Vice President shall perform all the duties of the
President in Case of the disability or absence of the President and, when so
acting, shall have all the powers of and be subject to all the restrictions upon
the President. The Board of Directors may from time to time appoint more than
one Vice President, each of whom shall perform the duties designated by the
Board of Directors.

         Section 9. The Secretary. The Secretary shall:

                  (a) Keep or cause to be kept correct and complete minutes of
the proceedings of this Corporation's shareholders and Board of Directors and
committees having any of the authority of the Board of Directors;

                  (b) Keep or cause to be kept the seal of this Corporation;

                  (c) Affix the seal to all share certificates and to all
documents requiring such seal;

                  (d) Keep or cause to be kept correct and complete share and
transfer books reflecting the number of shares issued and outstanding, the
manner in which and the time when the consideration for such shares is received,
and the names and addresses of the holders of such shares;

                  (e) Cause to be kept at this Corporation's registered office
or principal place of business or at the office of the transfer agent or
registrar a record of shareholders, setting forth the names and addresses of all
shareholders and the number and class of the shares held by each;

                  (f) Make available to any member of the Board of Directors or
to any person who has been a holder of record of shares for at least three (3)
months immediately preceding his demand or who is the holder of record of at
least five percent (5%) of all outstanding shares of this Corporation upon
written demand stating the purpose thereof, for examination, in person or by
agent or attorney, at any reasonable time and for any proper



                                      -2-


purpose, this Corporation's books and records of account, minutes, and record of
holders of shares and to make extracts therefrom;

                  (g) Make available at the principal office of this Corporation
at least ten (10) days before each meeting of shareholders and at the time and
place of the meeting of shareholders a complete record of the shareholders
entitled to vote at the meeting or any adjournment thereof, arranged in
alphabetical order with the address of and the number of shares held by each,
for inspection by any shareholder for any purpose germane to the meeting at any
time during usual business hours and during the whole time of the meeting;

                  (h) Give all notices required by law and these Bylaws;

                  (i) Execute with the President or Vice President share
certificates and other documents requiring attestation and certification by this
Corporation's Secretary; and

                  (j) Perform all duties incident to the office of Secretary and
such other duties as may be assigned to the Secretary by the Board of Directors
or the President.

         Section 10. The Treasurer. The Treasurer shall:

                  (a) Have charge and custody of, and be responsible for, all
funds and securities of this Corporation;

                  (b) Receive and give receipts for moneys due and payable to
this Corporation from any source whatsoever;

                  (c) Keep or cause to be kept correct and complete books and
records of account;

                  (d) Render financial statements upon request to the Board of
Directors;

                  (e) Have charge of, and be responsible for, the preparation
and filing of all tax returns and reports required by law, and the collection
and payment of taxes such as withheld taxes, sales and use taxes, and any other
taxes for which this Corporation may be responsible;

                  (f) In the absence of the Secretary, execute with the
President or a Vice President share certificates; and

                  (g) Perform all duties incident to the office of Treasurer,
and such other duties as may be assigned to the Treasurer by the Board of
Directors or the President. The Treasurer may be required to give a bond for the
faithful performance of such Treasurer's duties in such sum and with such surety
as may be determined by the Board of Directors.



                                      -3-


         Section 11. The Controller. The controller shall:

                  (a) Subject to the direction of the Treasurer, have
responsibility for the day-to-day management and custody of all funds and
securities of the Corporation;

                  (b) Subject to the direction of the Treasurer, receive and
give receipts for moneys due and payable to the Corporation from any source
whatsoever;

                  (c) Subject to the direction of the Treasurer, keep or cause
to be kept correct and complete books and records of account;

                  (d) Subject to the direction of the Treasurer, render
financial statements upon request to the Board of Directors;

                  (e) Subject to the direction of the Treasurer, have
responsibility for the preparation and filing of all tax returns and reports
required by law, and the collection and payment of taxes, such as withheld
taxes, sales and use taxes, and any other taxes for which the Corporation may be
responsible;

                  (f) Subject to the direction of the President, Vice President
and Treasurer, have responsibility for day-to-day communications with, and the
supply of information to, the Corporation's independent accountants, legal
counsel and any other similar or related experts retained by the Corporation;

                  (g) Subject to the direction of the President and Vice
President, have responsibility for providing documents and information,
including but not limited to certificates of compliance, to agencies,
contractors and subcontractors of the United States government in connection
with the Corporation's federal government and government-related contracts, and
for completing and executing such documents on behalf of the Corporation as may
be prudent or necessary;

                  (h) Subject to the direction of the President, Vice President
and Treasurer, have responsibility for the calculation or determination of
acceptable price ranges for the Corporation's products insofar as such prices
are required to conform with or are otherwise limited by, legal, contractual or
regulatory restrictions;

                  (i) Subject to the direction of the President and Vice
President, maintain records and have responsibility for the Corporation's
day-to-day compliance with state and federal laws and regulations relating to
wages and hours, fair employment practices, labor relations, employee benefits,
employee safety and health, and similar or related employee matters;

                  (j) Subject to the direction of the President and Vice
President, have responsibility for day-to-day routine communications with, and
information supplied to, employees, stockholders, insurers and bonding
companies, customers, subcontractors, banks and other financial institutions,
and suppliers;



                                      -4-


                  (k) Have such other duties and obligations as may be delegated
to the Controller by the Board of Directors, any duly formed committee thereof,
the President, the Vice President or the Treasurer;

                  (l) Notwithstanding the foregoing, the Controller shall have
no borrowing authority without the express approval of the President, the Vice
President or the Treasurer; and

                  (m) Notwithstanding the foregoing, the Controller shall have
no authority to enter into contracts with vendors on behalf of the Corporation
which will incur indebtedness or liability for the Corporation without the
express approval of the Treasurer, the Vice President or the President.

         Section 12. The Chief Scientific Officer. The Chief Scientific Officer
shall have full responsibility for, and supervise all activities of, the
Corporation's Research and Development and Engineering Departments, and shall
supervise all other scientific and technical activities and functions of the
Corporation.

                                   ARTICLE II
                                    Directors

         Section 1. Number, Election and Term. The business and affairs of this
Corporation shall be managed by the Board of Directors, as more fully set forth
in Section 3 of this Article. The Board shall consist of not less than three (3)
directors nor more than nine (9) directors, except that there need be only as
many directors as there are shareholders in the event that the outstanding
shares are held of record by fewer than three (3) shareholders. The number of
directors may be increased or decreased at any time by a majority vote of the
whole Board of Directors, except that no decrease in the number of directors
shall have the effect of shortening the term of any incumbent director.

         The Board of Directors shall be elected annually by ballot of the
holders of the shares of the Corporation entitled to vote thereon at the annual
meeting of shareholders for the term of one (1) year and until the election and
qualification of their successors, unless they sooner resign or are removed as
provided by Section 16 of this Article.

         Section 2. Qualifications. Directors shall be natural persons of the
age of eighteen years (18) or older, but need not be residents of the State of
Colorado or shareholders of this Corporation.

         Section 3. Duties. The Board of Directors shall manage the business and
affairs of this Corporation, including the issuance of and fixing consideration
for the sale of shares of this Corporation, reviewing the reports of the
Secretary and Treasurer, auditing all bills and accounts against this
Corporation, fixing or delegating authority to fix the compensation of officers
and employees of this Corporation and managing the assets of this Corporation.
The Board may direct any officer or officers of this Corporation to conduct the
ordinary business of this Corporation. The Board may, from time to time, employ
such persons as the Board may



                                      -5-


deem necessary for the carrying on of the business of this Corporation, any of
whom may also be officers or directors of this Corporation.

         A director shall perform the duties as a director, including the duties
as a member of any committee of the Board upon which the director may serve, in
good faith, in a manner the director reasonably believes to be in the best
interests of this Corporation, and with such care as an ordinarily prudent
person in a like position would use under similar circumstances. In performing
such duties, a director shall be entitled to rely on information, opinions,
reports, or statements, including financial statements and other financial data,
in each case prepared or presented by persons and groups listed in paragraphs
(a), (b), and (c) of this Section; but such director shall not be considered to
be acting in good faith if such director has knowledge concerning the matter in
question that would cause such reliance to be unwarranted. A director who so
performs said duties shall not have any liability by reason of being or having
been a director of this Corporation. Those persons and groups on whose
information, opinions, reports, and statements a director is entitled to rely
are:

                  (a) One or more officers or employees of this Corporation whom
the director reasonably believes to be reliable and competent in the matters
presented;

                  (b) Counsel, public accountants, or other persons as to
matters which the director reasonably believes to be within such persons'
professional or expert competence; or

                  (c) A committee of the Board upon which the director does not
serve, duly designated in accordance with a provision of the Articles of
Incorporation or these Bylaws, as to matters within its designated authority,
which committee the director reasonably believes to merit confidence.

         Section 4. Chairman of the Board. The Board of Directors may elect a
Chairman of the Board who shall serve in such capacity for a term of one (1)
year and until his successor is duly elected and qualified. The Chairman shall
preside at all meetings of the Board of Directors, provide a general direction
for the Board of Directors and shall perform all such duties incident to the
office of Chairman of the Board and such other duties as may be prescribed from
time to time by the Board of Directors. The Chairman of the Board shall be
responsible for formulating the general and long term policies, practices and
strategy of the Corporation.

         Section 5. Executive and Other Committees. The Board of Directors, by
resolution adopted by a majority of the whole Board of Directors, may designate
from among its members an executive or other committees, each of which, to the
extent provided in the resolution or in the Articles of Incorporation or these
Bylaws shall have all of the authority of the Board of Directors, except that no
such committee shall have the authority to (i) declare dividends or
distributions; (ii) approve or recommend to shareholders actions or proposals
required by the Colorado Corporation Code to be approved by shareholders; (iii)
fill vacancies on the Board of Directors or any committee thereof, (iv) amend
these Bylaws; (v) approve a plan of merger; (vi) reduce earned or capital
surplus; (vii) authorize or approve the reacquisition of shares unless pursuant
to a general formula or method specified by the Board of Directors; or (viii)
authorize or approve the issuance or sale of, or any contract to issue or sell,
shares or designate the terms of a series of a class of shares, and except that
the Board of Directors, having



                                      -6-


acted regarding general authorization for the issuance or sale of shares or any
contract therefor and, in the case of a series, the designation thereof, may,
pursuant to a general formula or method specified by the Board by resolution or
by adoption of a stock option or other plan, authorize a committee to fix the
terms of any contract for the sale of the shares and to fix the terms upon which
such shares may be issued or sold, including, without limitation, the price, the
dividend rate, provisions for redemption, sinking fund, conversion, or voting or
preferential rights, and provisions for other features of a class of shares or a
series of a class of shares, with full power in such committee to adopt any
final resolution setting forth all terms thereof and to authorize the statement
of the terms of a series for filing with the Secretary of State under the
Colorado Corporation Code.

         Neither the designation of any such committee, the delegation of
authority to such committee, nor any action by such committee pursuant to its
authority shall alone constitute compliance by any member of the Board of
Directors, not a member of the committee in question, with such director's
responsibility to act in good faith, in a manner the director reasonably
believes to be in the best interests of this Corporation, and with such care as
an ordinarily prudent person in a like position would use under similar
circumstances.

         Section 6. Annual and Regular Meetings. The annual meeting of the Board
of Directors shall be held immediately following the annual meeting of
shareholders. The Board of Directors shall hold regular meetings at such other
time or times as they may from time to time determine.

         Section 7. Special Meetings. Special meetings of the Board of Directors
or any committee designated by the Board, shall be held whenever called by the
President or by any member of the Board.

         Section 8. Place of Meetings. The Board of Directors or any committee
designated by the Board may hold its meetings at such place or places within or
without the State of Colorado as the Board may from time to time determine or as
shall be specified or fixed in the respective notices or waivers of notice of
such meetings.

         Section 9. Notice. Notice of special meetings shall be mailed to each
director or committee person, addressed to the director at the director's
address as it appears on the records of this Corporation, at least three (3)
days before the day on which the meeting is to be held; or shall be sent to the
director at such address by facsimile, electronic mail or delivered personally
not later than one (1) day before the day on which the meeting is to be held.
The notice shall indicate briefly the business to be transacted at or the
purpose of the meeting.

         Section 10. Waiver of Notice and Approval of Action. Attendance of a
director at a meeting constitutes a waiver of notice of such meeting, except
where a director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Notice may be expressly waived by a writing executed and filed with
the records of the meeting either before or after the holding thereof. No notice
need be given of any adjourned meeting of the Board of Directors.



                                      -7-


         As to any director who shall sign the minutes of any special or regular
directors' meeting, such meeting shall be deemed to have been legally and duly
called, noticed, held and conducted, and the signature of any director to the
minutes of a meeting shall for all purposes and as to all persons be held to be
an approval of the action thereto.

         Section 11. Meetings by Conference Telephone or Similar Communications
Equipment. Members of the Board or any committee designated by the Board may
participate in a meeting of the Board or committee by means of conference
telephone or similar communications equipment by which all persons participating
in the meeting can hear each other at the same time. Such participation shall
constitute presence in person at a meeting.

         Section 12. Action by Directors Without a Meeting. Any action required
by the Colorado Corporation Code to be taken at a meeting of the directors or
committee of the directors or any action which may be taken at a meeting of the
directors or committee may be taken without a meeting if a consent in writing,
setting forth the action so taken, is signed by all of the directors or
committee members entitled to vote with respect to the subject matter thereof.

         Such consent has the same force and effect as a unanimous vote of the
directors or committee members, as the case may be.

         Section 13. Quorum and Manner of Acting. A majority of the number of
directors shall constitute a quorum for the transaction of business at any
regular or special meeting of the Board of Directors.

         Except as otherwise required by law, by the Articles of Incorporation,
or by these Bylaws, the act of the majority of the directors present at a
meeting at which a quorum is present, shall be the act of the Board of
Directors.

         A director who is present at a meeting of the Board of Directors or a
committee thereof when corporate action is taken is deemed to have assented to
the action taken unless: (i) he objects at the beginning of such meeting to the
holding of the meeting or the transacting of business at the meeting; (ii) he
contemporaneously requests that his dissent from the action taken be entered in
the minutes of such meeting; or (iii) he gives written notice of his dissent to
the presiding officer of such meeting before its adjournment or the Secretary of
this Corporation immediately after adjournment of such meeting. The right to
dissent as to a specific action taken in a meeting of the Board of Directors or
a committee thereof shall not be available to a director who votes in favor of
such action.

         Section 14. Compensation of Directors. The Board of Directors shall
have the authority to fix the compensation of directors. Directors may be
reimbursed for their expenses, if any, of attendance at each meeting of the
Board of Directors and may be paid a fixed sum for attendance at each meeting of
the Board of Directors or a stated salary as director. Members of special or
executive committees may be allowed like compensation for attending committee
meetings.

         Section 15. Vacancies. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining directors
though less than a



                                      -8-


quorum of the Board of Directors. A director elected to fill a vacancy shall be
elected for the unexpired term of such director's predecessor in office. Any
directorship to be filled by reason of an increase in the number of directors
shall be filled by the affirmative vote of a majority of the directors then in
office or by an election at an annual meeting or at a special meeting of
shareholders called for that purpose. A director chosen to fill a position
resulting from an increase in the number of directors shall hold office until
the next annual meeting of shareholders and until such director's successor has
been elected and qualified.

         Section 16. Removal of Directors. At a meeting called expressly for
that purpose, directors may be removed in the manner provided in this Section.
The entire Board of Directors or any lesser number may be removed, with or
without cause, by a vote of the holders of the majority of the shares then
entitled to vote at an election of directors. In case any vacancy so created
shall not be filled by the shareholders at such meeting, such vacancy may be
filled by the directors as provided hereinabove.

         If the holders of the shares of any class are entitled to elect one or
more directors by the provisions of the Articles of Incorporation, the
provisions of this Section shall apply, in respect to the removal of a director
or directors so elected, to the vote of the holders of the outstanding shares of
that class and not to the vote of the outstanding shares as a whole.

         Section 17. Resignation. Any director may resign at any time by giving
written notice to the President or the Secretary of this Corporation. Such
resignation shall take effect at the time specified therein, and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.

                                   ARTICLE III
                                     Shares

         Section 1. Certificates. Each shareholder of this Corporation shall be
entitled to a certificate showing the number of fully paid shares of the
Corporation standing on the books in such shareholder's name. Each certificate
shall be numbered, bear the signature of the President, or in case of the
President's inability to act, the signature of the Vice President, and of the
Secretary, or an Assistant Secretary, or the Treasurer, or an Assistant
Treasurer, and the seal of the Corporation, and be issued in numerical order
from the respective share certificate books. A full record of each certificate
for shares as issued shall be entered in the stock transfer books of this
Corporation.

         No certificate shall be issued for any shares until such shares are
fully paid.

         Section 2. Transfers. Transfers of all shares shall be made upon the
proper stock transfer books of this Corporation and must be accompanied by the
surrender of the duly endorsed certificate or certificates representing the
transferred shares, except as provided in Section 3 of this Article. Surrendered
certificates shall be canceled and attached to the stock certificate book and a
new certificate issued to the parties entitled thereto.

         Section 3. Lost Certificates. The Board of Directors may order a new
certificate for shares to be issued in the place of any certificate of this
Corporation alleged to



                                      -9-


have been lost or destroyed, but in either such case the board may direct that
the owner of the lost certificate shall first cause to be given to this
Corporation a bond in such sum as said board may fix as indemnity against any
loss or claim that this Corporation may incur by reason of the issuance of such
certificate. The Board may, in its discretion, refuse to replace any lost
certificate save upon the order of some court having jurisdiction in such
matters.

         Section 4. Stock Certificate and Transfer Books. The stock certificate
and transfer books of this Corporation shall be kept at its registered office or
principal place of business, or at the office of the transfer agent or registrar
either within or without Colorado, and shall be subject to inspection as
provided by Section 9 of Article I of these Bylaws and by the Colorado
Corporation Code.

         Section 5. Voting of Shares. Unless otherwise provided by the Articles
of Incorporation or a Certificate of Designation, each outstanding share of this
Corporation is entitled to one (1) vote, and each fractional share is entitled
to a corresponding fractional vote on each matter submitted to a vote at a
meeting of shareholders. As more fully set forth in Section 7 of Article IV of
these Bylaws, in the election of directors, each record holder of shares
entitled to vote at such election has the right to vote the number of shares
owned by such record holder for as many persons as there are directors to be
elected, and for whose election such record holder has a right to vote.
Cumulative voting shall not be allowed in the election of directors.

         Neither treasury shares nor shares held by another corporation, if the
majority of the shares entitled to vote for the election of directors of such
other corporation is held by this Corporation, shall be voted at any meeting or
counted in determining the total number of outstanding shares at any given time.

         A shareholder may vote either in person or by proxy executed in writing
by the shareholder or by the shareholder's duly authorized attorney-in-fact. No
proxy shall be valid after eleven (11) months from the date of its execution,
unless otherwise provided in the proxy.

         Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the board of directors
of that corporation may approve.

         A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.

         Section 6. Closing Transfer Books and Fixing Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors of this Corporation may provide
that the stock transfer books be closed for a stated period but not to exceed,
in any case, fifty (50) days. If the stock transfer books are closed for the
purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least ten (10) days
immediately preceding such meeting.



                                      -10-


         In lieu of closing the stock transfer books, the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than fifty (50) days and, in
case of a meeting of shareholders, not less than ten (10) days prior to the date
on which the particular action requiring such determination of shareholders is
to be taken.

         If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring the dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders.

         When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section, the determination shall
apply to any adjournment thereof.

         Section 7. Issuance of Fractional Shares or Scrip. The Corporation may,
but shall not be required to, issue fractions of a share. If this Corporation
does not issue fractions of a share, it shall arrange for the disposition of
fractional interests by those entitled thereto, pay in cash the fair value of
fractions of a share as of the time when those entitled to receive such
fractions are determined, or issue scrip in registered or bearer form which
shall entitle the holder to receive a certificate for a full share upon the
surrender of such scrip aggregating a full share. A certificate for a fractional
share shall, but scrip shall not unless otherwise provided therein, entitle the
holder to exercise voting rights, to receive dividends thereon, and to
participate in any of the assets of this Corporation in the event of
liquidation. The Board of Directors may cause such scrip to be issued subject to
the condition that it shall become void if not exchanged for certificates
representing full shares before a specified date, or subject to the condition
that the shares for which the scrip is exchangeable may be sold by this
Corporation and the proceeds thereof distributed to the holders of such scrip,
or subject to any other conditions which the Board of Directors may deem
advisable.

                                   ARTICLE IV
                                  Shareholders

         Section 1. Annual Meeting. The regular annual meeting of shareholders
of this Corporation shall be held on such date and at such time as may be
designated from time to time by the Board of Directors. At the regular annual
meeting of the shareholders, the directors for the ensuing year shall be
elected, the officers of this Corporation shall present their annual reports,
and the secretary shall have on file for inspection and reference a complete
record of shareholders, as provided in Section 9(g) of Article I of these
bylaws.

         Section 2. Special Meetings. Special meetings of the shareholders may
be called by the Board of Directors, the President, the Vice President or the
holders of not less than ten percent (10%) of the outstanding shares entitled to
vote at the meeting. Calls for special meetings shall specify the time, place,
and object or objects thereof, and no other business than that specified in the
call shall be considered in any such meeting.



                                      -11-


         Section 3. Place of Meetings. The Board of Directors may designate any
place, either within or without the State of Colorado, as the place for any
annual meeting or for any special meeting called by the Board of Directors. If a
special meeting shall be called otherwise than by the Board, or if the Board of
Directors does not designate a place, the place of meeting shall be the
principal office of this Corporation.

         Section 4. Notice of Meetings. Written notice stating the place, date,
and hour of the meeting, and, in case of a special meeting, the purpose for
which the meeting is called, shall be delivered not less than ten (10) nor more
than fifty (50) days before the date of the meeting, either personally or by
mail, by or at the direction of the President, or the Secretary, or the officer
or person calling the meeting, to each shareholder of record entitled to vote at
such meeting, except that if the authorized shares are to be increased, at least
thirty (30) days notice shall be given.

         Section 5. Meetings by Conference Telephone or Similar Communications
Equipment. Shareholders may participate in a meeting by means of conference
telephone or similar communications equipment by which all persons participating
in the meeting can hear each other at the same time. Such participation shall
constitute presence in person at a meeting.

         Section 6. Action by Shareholders Without a Meeting. Any action
required by the Colorado Corporation Code to be taken at a meeting of
shareholders, or any action which may be taken at a meeting of shareholders may
be taken without a meeting if a consent in writing, setting forth the action so
taken, is signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.

         Such consent shall have the same force and effect as a unanimous vote
of the shareholders.

         Section 7. Election of Directors. At each annual meeting of the
shareholders of this Corporation, directors shall be elected to serve until the
next annual meeting and until their successors are duly elected and qualified,
unless they sooner resign or are removed pursuant to these Bylaws. Election of
directors shall be by such of the shareholders as attend the annual meeting,
either in person or by proxy, provided that if the majority of such shares
entitled to vote is not represented, such meeting may be adjourned by the
shareholders present for a period not exceeding sixty (60) days at any one
adjournment. Each shareholder entitled to vote at such election has the right to
vote, in person or by proxy, the number of shares owned by the shareholder for
as many persons as there are directors to be elected and for whose election the
shareholder has a right to vote. Cumulative voting shall not be allowed in the
election of directors.

         Section 8. Quorum and Manner of Acting. Unless otherwise provided in
the Articles of Incorporation or a Certificate of Designation, a majority of the
shares entitled to vote, represented in person or by proxy, shall constitute a
quorum at a meeting of shareholders but in no event shall a quorum consist of
less than one-third of the shares entitled to vote at the meeting. If a quorum
is present, the affirmative vote of the majority of the shares represented at
the meeting and entitled to vote on the subject matter shall be the act of the
shareholders, unless the vote of a greater proportion or number or voting by
classes is required by the Colorado



                                      -12-


Corporation Code, the Articles of Incorporation or a Certificate of Designation.
In the absence of a quorum, those present may adjourn the meeting from day to
day but in no event for a period to exceed sixty (60) days at any one
adjournment.

         Section 9. Waiver of Notice and Approval of Action. When any notice is
required to be given to any shareholder of this Corporation under the provisions
of the Colorado Corporation Code, the Articles of Incorporation, or these
Bylaws, a waiver thereof in writing signed by the person entitled to such
notice, whether before, at, or after the time stated therein, shall be
equivalent to the giving of such notice.

         As to any shareholder who shall sign the minutes of any annual, regular
or special meeting of shareholders, such meeting shall be deemed to have been
legally and duly called, noticed, held and conducted, and the action taken
thereat approved, and the minutes of such shareholders meeting shall be
conclusive for all purposes and as to all persons to be an approval thereof.

         Section 10. Order of Business. The order of business at the annual
meeting, and so far as is practicable at all other meetings of the shareholders,
shall be as follows:

                  (a) Calling of roll;

                  (b) Proof of due notice of meeting or waiver of notice;

                  (c) Reading and disposal of any unapproved minutes;

                  (d) Annual reports of officers and committees;

                  (e) Election of directors;

                  (f) Unfinished business;

                  (g) New business; and

                  (h) Adjournment.

                                    ARTICLE V
                                    Dividends

         The Board of Directors may, from time to time, declare and this
Corporation may pay dividends in cash, property, or its own shares, except when
this Corporation is insolvent or when the payment thereof would render this
Corporation insolvent or when the declaration or payment thereof would be
contrary to any restrictions contained in the Articles of Incorporation, subject
to the following provisions:

                  (a) Dividends may be paid out of this Corporation's net assets
in excess of its stated capital; except that no such dividends shall be paid to
the holders of any class



                                      -13-


of shares if the payment would reduce the remaining net assets of this
Corporation below the total of stated capital, plus additional amounts not
forming part of stated capital, payable in the event of voluntary liquidation to
the holders of shares having rights to the assets of this Corporation in
liquidation preferential to those of the class on which such distribution is
made.

                  (b) Dividends may be declared and paid in this Corporation's
authorized but unissued shares out of any unreserved and unrestricted surplus of
this Corporation provided such shares shall be issued at not less than the par
value thereof, and there shall be transferred to stated capital at the time such
dividend is paid an amount at least equal to the aggregate par value of the
shares to be issued as a dividend.

                  (c) No dividend payable in shares of any class shall be paid
to the holders of shares of any other class unless the Articles of Incorporation
so provide or such payment is authorized by the affirmative vote or the written
consent of the holders of at least a majority of the outstanding shares of the
class in which the payment is to be made.

                  (d) Dividends may be declared and paid in this Corporation's
treasury shares.

                  (e) When any dividend is paid or any other distribution is
made, in whole or in part, from sources other than unreserved and unrestricted
earned surplus, such dividend or distribution shall be identified as such, and
the source and amount per share paid from each source shall be disclosed to the
shareholder receiving the same concurrently with the distribution thereof and to
all other shareholders not later than six months after the end of this
Corporation's fiscal year during which such distribution was made.

         A split-up or division of the issued shares of any class into a greater
number of shares of the same class without increasing the stated capital of this
Corporation shall not be construed to be a share dividend within the meaning of
this Section.

                                   ARTICLE VI
                                 Indemnification

         Section 1. Definitions. As used in this Article VI:

                  (a) "Corporation" includes any domestic or foreign predecessor
entity of this Corporation in a merger, consolidation, 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
this Corporation and an individual who, while a director of this Corporation, is
or was serving at this Corporation's request as a director, officer, partner,
trustee, employee, or agent of any other foreign or domestic corporation or of
any partnership, joint venture, trust, other enterprise, or employee benefit
plan. A director shall be considered to be serving an employee benefit plan at
this Corporation's request if his duties to this Corporation also impose duties
on or otherwise involve services by him to the plan or to participants in or
beneficiaries of the plan. "Director" includes, unless the context otherwise
requires, the estate or personal representative of a director.



                                      -14-


                  (c) "Expenses" includes attorney fees;

                  (d) "Liability" means the obligation to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with respect to an
employee benefit plan), or reasonable expense incurred with respect to a
proceeding;

                  (e) "Official Capacity," when used with respect to a director,
means the office of director in this Corporation, and, when used with respect to
a person other than a director, means the office in this Corporation held by the
officer or the employment or agency relationship undertaken by the employee or
agent on behalf of this Corporation. "Official Capacity" does not include
service for any other foreign or domestic corporation or for any partnership,
joint venture, trust, other enterprise, or employee benefit plan;

                  (f) "Party" includes an individual 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.

         Section 2. Permissive Indemnification of Directors. Except as provided
in Section 4 of this Article VI, this Corporation may indemnify against
liability incurred in any proceeding an individual made a party to the
proceeding because he is or was a director if:

                  (a) He conducted himself in good faith;

                  (b) He reasonably believed: (i) in the case of conduct in his
official capacity with this Corporation, that his conduct was in this
Corporation's best interests; or (ii) in all other cases, that his conduct was
at least not opposed to this Corporation's best interests; and

                  (c) In the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful.

         A director's conduct with respect to an employee benefit plan for a
purpose he reasonably believed to be in the interests of the participants in or
beneficiaries of the plan shall be deemed to be conduct which is not opposed to
this Corporation's best interests for purposes of this Section. A director whose
conduct with respect to an employee benefit plan is for a purpose that he did
not reasonably believe to be in the interests of the participants in or
beneficiaries of the plan shall not be deemed to have conducted himself in good
faith for purposes of this Section.

         The termination of any proceeding by judgment, order, settlement, or
conviction, or upon a plea of nolo contendere or its equivalent, shall not of
itself be determinative that the individual did not meet the standard of conduct
set forth in this Section 2.

         Indemnification permitted under this Section in connection with a
proceeding by or in the right of this Corporation shall be limited to reasonable
expenses incurred in connection with the proceeding.



                                      -15-

         Section 3. Mandatory Indemnification of Directors. Unless limited by
the Articles of Incorporation, this Corporation shall indemnify a director of
this Corporation who was wholly successful, on the merits or otherwise, in
defense of any proceeding to which he was a party against reasonable expenses
incurred by him in connection with the proceeding.

         Section 4. Prohibited Indemnification of Directors. The Corporation may
not indemnify a director under Section 2 of this Article either:

                  (a) In connection with a proceeding by or in the right of this
Corporation in which the director was adjudged liable to this Corporation; or

                  (b) In connection with any proceeding charging improper
personal benefit to the director, whether or not involving action in his
official capacity, in which he was adjudged liable on the basis that personal
benefit was improperly received by him.

         Section 5. Authority for Permissive Indemnification of Directors. The
Corporation may not indemnify a director under Section 2 of this Article unless
authorized in the specific case after a determination has been made that
indemnification of the director is permissible in the circumstances because he
has met the standard of conduct set forth in Section 2 of this Article. The
determination required to be made by this Section shall be made:

                  (a) By the Board of Directors by a majority vote of a quorum,
which quorum shall consist of directors not parties to the proceeding;

                  (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 directors who are parties to the proceeding may participate in the
designation of directors for the committee; or

                  (c) If a quorum cannot be obtained or the committee cannot be
established, or even if a quorum is obtained or a committee designated if such
quorum or committee so directs, by: (i) independent legal counsel selected by a
vote of the Board of Directors or the committee in the manner specified in
Subsections (a) and (b) of this Section 5 or, if a quorum of the full Board of
Directors 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 (ii) by the shareholders.

         Authorization of indemnification and evaluation as to reasonableness of
expenses shall be made in the same manner as the determination that
indemnification is permissible; except that, if the determination that
indemnification is permissible is made by independent legal counsel,
authorization of indemnification and evaluation as to reasonableness of expenses
shall be made by the body that selected said counsel.

         Section 6. Advances of Expenses. The Corporation may pay for or
reimburse the reasonable expenses incurred by a director who is a party to a
proceeding in advance of the final disposition of the proceeding if:



                                      -16-


                  (a) The director furnishes this Corporation a written
affirmation of his good faith belief that he has met the standard of conduct
described in Subsection (a) of Section 2 of this Article;

                  (b) The director furnishes this Corporation a written
undertaking, executed personally or on his behalf, to repay the advance if it is
determined that he did not meet such 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 Section.

         The undertaking required by Subsection (b) 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.

         Determinations and authorizations of payments under this Section shall
be made in the manner specified in Section 5 of this Article.

         Section 7. Indemnification of Officers, Employees and Agents. The
Corporation shall have the following powers and duties of indemnification with
respect to officers, employees and agents:

                  (a) An officer of this Corporation who is not a director shall
be entitled to mandatory indemnification pursuant to Section 3 of this Article.

                  (b) The Corporation may indemnify and advance expenses
pursuant to Section 6 of this Article to an officer, employee, or agent of this
Corporation who is not a director to the same extent as a director.

                  (c) The Corporation may indemnify and advance expenses to an
officer, employee, or agent of this Corporation who is not a director to a
greater extent if consistent with law.

         Section 8. Required Notice to Shareholders. Any indemnification or
advance of expenses to a director in accordance with this Article, if arising
out of a proceeding by or on behalf of this Corporation, shall be reported in
writing to the shareholders with or before the notice of the next shareholder's
meeting.

         Section 9. Rights, Powers and Duties Not Exclusive. The indemnification
provided by this Article shall not be construed to limit any other rights of
indemnification to which directors, officers, employees and agents of this
Corporation may be entitled under the laws of the State of Colorado; nor shall
the indemnification provided by this Article be construed to limit any other of
this Corporation's power to indemnify its directors, officers, employees and
agents as may be provided by the laws of the State of Colorado.



                                      -17-

                                   ARTICLE VII
                               Personal Liability

         Section 1. Liability Insurance. The Corporation may purchase-and
maintain insurance on behalf of an individual who is or was a director, officer,
employee, fiduciary, or agent of this Corporation or who, while a director,
officer, employee, fiduciary, or agent of this Corporation, is or was serving at
the request of this Corporation as a director, officer, partner, trustee,
employee, fiduciary, or agent of any other foreign or domestic corporation or of
any partnership, joint venture, trust, other enterprise, or employee benefit
plan against any liability asserted against or incurred by him in any such
capacity or arising out of his status as such, whether or not this Corporation
would have the power to indemnify him against such liability under the
provisions of this Section. Any such insurance may be procured from any
insurance company designated by the Board of Directors of this Corporation,
whether such insurance company is formed under the laws of Colorado or any other
jurisdiction of the United States or elsewhere, including any insurance company
in which this Corporation has equity or any other interest, through stock
ownership or otherwise.

                                  ARTICLE VIII
                            Miscellaneous Provisions

         Section 1. Colorado Corporation Code. The provisions of the Colorado
Corporation Code shall apply to this Corporation.

         Section 2. Corporate-Seal. The seal of
the Corporation shall consist of two concentric
circles, between which shall be the name of this
Corporation and the word "Colorado" and in the
center of which shall be inscribed the word
"Seal," which seal, as impressed on the margin
hereof, is hereby adopted as the seal of the
Corporation.

         Section 3. Benefit Program. The directors shall have the power to
install and authorize any pension, profit sharing, stock option, insurance,
welfare, educational, bonus, health and accident or other benefit program which
the board deems to be in the best interest of this Corporation, at the expense
of this Corporation, and to amend or revoke any plan so adopted.

         Section 4. Reimbursement by Officers of Expenses. Any payments made to
an officer of this Corporation such as salary, commission, bonus, interest, or
rent, or entertainment, or travel expense incurred by such officer, which shall
be disallowed in whole or in part as a deductible expense by the Internal
Revenue Service or other properly constituted taxing authority, shall be
reimbursed by such officer to this Corporation to the full extent of such
disallowance. In lieu of payments by the officer, subject to the determination
of the directors, proportionate amounts may be withheld from such officer's
future compensation payments until the amount owed to this Corporation has been
recovered.



                                      -18-


                                   ARTICLE IX
                                   Definitions

         Unless the context requires otherwise, the following terms shall have
the meaning specified in this Article:

                  (a) "Address" means street name and number, city or town, and
United States post office zip code designation. If, by reason of rural location
or otherwise, a street name, number, town, or city shall not exist, other
appropriate "address" fixing as nearly as possible the actual physical location
may be substituted, but in all such exceptional cases the rural free delivery
route, the county, and the United States post office zip code designation shall
be included.

                  (b) "Articles of Incorporation" means the original Articles of
Incorporation or Articles of Consolidation and all amendments thereto, including
Articles of Merger and Certificates of Designation filed to create this
Corporation but also all other articles, certificates, agreements of merger or
consolidation, and other instruments, howsoever designated, which are filed
pursuant to the Colorado Corporation Code and which have the effect of amending
or supplementing in some respect this Corporation's original articles of
incorporation.

                  (c) "Authorized shares" means the shares of all classes which
this Corporation is authorized to issue.

                  (d) "Capital surplus" means the entire surplus of this
Corporation other than its earned surplus.

                  (e) "Certificate of Designation" means the statement filed
with the Secretary of State which sets forth the division of any class of shares
into series and the relative rights and preferences thereof.

                  (f) "Corporation" means Vari-L Company, Inc.

                  (g) "Earned surplus" means the portion of the surplus of this
Corporation equal to the balance of its net profits, income, gains, and losses
from the date of incorporation or from the latest date when a deficit was
eliminated by an application of its capital surplus or stated capital or
otherwise, after deducting subsequent distributions to shareholders and
transfers to stated capital and capital surplus to the extent such distributions
and transfers are made out of earned surplus. The term also includes any portion
of surplus allocated to earned surplus in mergers, consolidations, or
acquisitions of all or substantially all of the outstanding shares or of the
property and assets of another corporation, domestic or foreign.

                  (h) "Employee" includes officers but not directors. A director
may accept duties which make the director also an employee.

                  (i) Insolvent" means inability of this Corporation to pay its
debts as they become due in the usual course of its business.



                                      -19-


                  (j) "Net assets" means the amount by which the total assets of
this Corporation, excluding treasury shares, exceed the total debts of this
Corporation.

                  (k) "Notice to shareholders of record", if mailed, shall be
deemed given as to any shareholder of record when deposited in the United States
mail, addressed to the shareholder at such shareholder's address as it appears
on the stock transfer books of this Corporation, with postage thereon prepaid,
but if three successive letters mailed to the last-known address of any
shareholder of record are returned as undeliverable, no further notices to such
shareholder shall be necessary until another address for such shareholder is
made known to this Corporation.

                  (l) "Shareholder" means one who is a holder of record of
shares in this Corporation.

                  (m) "Shares" means the units into which the proprietary
interests in this Corporation are divided.

                  (n) "Stated capital" means, at any particular time, the sum
of:

                           1. The par value of all shares of this Corporation
having a par value that have been issued;

                           2. The amount of the consideration received by this
Corporation for all shares of this Corporation without par value that have been
issued, except such part of the consideration therefor as may have been
allocated to capital surplus in a manner permitted by law; and

                           3. Such amounts not included in paragraphs (1) and
(2) of this definition as have been transferred to stated capital of this
Corporation, whether upon the issue of shares as a share dividend or otherwise,
minus all reductions from such sum as have been effected in a manner permitted
by law.

                  (o) "Surplus" means the excess of the net assets of this
Corporation over its stated capital.

                  (p) "Treasury shares" means shares of this Corporation which
have been issued and subsequently acquired by and belong to this Corporation,
and have not, either by reason of the acquisition or thereafter, been canceled
or restored to the status of authorized but unissued shares. Treasury shares
shall be deemed to be "issued" shares, but not outstanding shares.



                                      -20-


                                    ARTICLE X
                                   Amendments

                  Any and all provisions of the Bylaws may be altered, amended,
repealed or added to at any annual or special meeting, of the Board of Directors
called for that purpose.

RESTATED AND AMENDED AS OF SEPTEMBER 26, 2002.



                                      -21-

EX-4.7

                                                                     EXHIBIT 4.7


                       AMENDMENT NO. 1 TO RIGHTS AGREEMENT

         Amendment No. 1 (the "AMENDMENT"), dated as of October 7, 2002, to the
Rights Agreement (the "RIGHTS AGREEMENT"), dated as of March 15, 1996, between
Vari-L Company, Inc., a Colorado corporation (the "CORPORATION"), and American
Securities Transfer, Inc. ("AST"), is being executed at the direction of the
Corporation.

         WHEREAS, by operation of Section 19 of the Rights Agreement,
Computershare Trust Company, Inc., successor in interest to AST, has replaced
AST as Rights Agent under the Rights Agreement;

         WHEREAS, pursuant to that certain Loan Agreement (the "LOAN
AGREEMENT"), dated as of October 7, 2002, by and among the Corporation and
Sirenza Microdevices, Inc., a Delaware corporation ("SIRENZA"), the parties
thereto have entered into a loan facility pursuant to which, among other things,
the Corporation will issue a promissory note (the "NOTE") to Sirenza that is
convertible, upon the occurrence of certain events and at the option of Steeler,
into common stock of the Corporation;

         WHEREAS, the Corporation further intends to enter into a definitive
agreement with Steeler pursuant to which, among other things, Sirenza and / or
an Affiliate (as defined in the Rights Agreement) or Associate (as defined in
the Rights Agreement) of Sirenza would acquire all or substantially all of the
assets of the Corporation or the common stock of the Corporation (whether by
tender offer, exchange offer, merger or otherwise) (the "DEFINITIVE AGREEMENT");

         WHEREAS, on October 4, 2002, the Board of Directors of the Corporation
resolved to amend the Rights Agreement to render the Rights (as defined in the
Rights Agreement) inapplicable to the Loan Agreement and the other transactions
contemplated by the Loan Agreement, the Note, the Definitive Agreement and the
other transactions contemplated thereby; and

         WHEREAS, Section 27 of the Rights Agreement permits the Corporation
from time to time to supplement and amend the Rights Agreement.

         NOW, THEREFORE, in consideration of the foregoing and the agreements,
provisions and covenants herein contained, the parties agree as follows:

         1. Section 1 of the Rights Agreement is hereby amended by adding the
following new paragraph at the end of Section 1:

         "Notwithstanding anything in this Agreement that might otherwise be
deemed to the contrary, neither Sirenza Microdevices, Inc., a Delaware
corporation ("SIRENZA") nor any of its Affiliates or Associates shall be deemed
an Acquiring Person and no Distribution Date, Triggering Event, Section
11(a)(ii) Event or Section 13 Event shall be deemed to occur, in each such case,
by the approval, announcement, execution, delivery or performance of (i) that
certain Loan Agreement (the "LOAN AGREEMENT"), dated as of October 7, 2002, by
and among the Corporation and Sirenza, and the consummation of the transactions
contemplated therein including the issuance by the Corporation of a promissory
note convertible into the Corporation's Common Shares or the issuance of the
Corporation's Common Shares issuable



                                       1.



upon conversion thereof or (ii) a definitive agreement by and among the
Corporation and Sirenza (or an Affiliate or Associate of Sirenza) pursuant to
which, among other things, Sirenza or an Affiliate or Associate of Sirenza would
acquire all or substantially all of the assets of the Corporation or the Common
Shares of the Corporation (whether by tender offer, exchange offer, merger or
otherwise) (the "DEFINITIVE AGREEMENT") and the transactions contemplated
therein; provided that such Definitive Agreement is approved by the
Corporation's Board of Directors and executed by and on behalf of the
Corporation. No such event shall entitle or permit the holders of the Rights to
exercise the Rights or otherwise affect the rights of the holders of the Rights,
including giving the holders of the Rights the right to acquire securities of
any party to the Loan Agreement or the Definitive Agreement."

         2. Section 7(a) of the Rights Agreement is hereby amended to read in
its entirety as follows:

         "Subject to Section 7(e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price for the total
number of Common Shares (or other securities, as the case may be) as to which
such surrendered Rights are exercised, at or prior to the earliest of (i) the
Final Expiration Date, or (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date"). For purposes of this
Agreement, "Final Expiration Date" shall mean the earlier of (A) immediately
prior to the close of the transaction or transactions contemplated by the
Definitive Agreement or (B) the close of business on March 15, 2006."

         3. The Rights Agreement shall not otherwise be supplemented or amended
by virtue of this Amendment, but shall remain in full force and effect. This
Amendment may be executed in one or more counterparts, all of which shall be
considered one and the same amendment and each of which shall be deemed an
original.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



                                       2.




         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and attested, all as of the day and year first above written.

VARI-L COMPANY, INC.                         COMPUTERSHARE TRUST
                                             COMPANY, INC. as Rights Agent

By: /s/ RICHARD P. DUTKIEWICZ                By: /s/ KELLIE GWINN
   --------------------------------             --------------------------------

Name:  Richard P. Dutkiewicz                 Name: Kellie Gwinn
                                                  ------------------------------

Title: Vice President of Finance and         Title: Vice President
       Chief Financial Officer                     -----------------------------


                                             COMPUTERSHARE TRUST
                                             COMPANY, INC. as Rights Agent

                                             By: /s/ DAN YEWER
                                                --------------------------------

                                             Name: Dan Yewer
                                                  ------------------------------

                                             Title: President
                                                   -----------------------------





                [SIGNATURE PAGE TO AMENDMENT TO RIGHTS AGREEMENT]






                             COMPLIANCE CERTIFICATE


         Richard P. Dutkiewicz hereby certifies that he is the duly elected,
qualified and acting Vice President of Finance and Chief Financial Officer of
Vari-L Company, Inc., a Colorado corporation (the "CORPORATION"), and hereby
further certifies as follows pursuant to Section 27 of the Rights Agreement (the
"RIGHTS AGREEMENT"), dated as of March 15, 1996, between the Corporation, and
Computershare Trust Company, Inc. (the "RIGHTS AGENT"), as successor in interest
to American Securities Transfer, Inc.:

         1. The above first amendment to the Rights Agreement (the "AMENDMENT")
is in compliance with the terms of Section 27 of the Rights Agreement.

         IN WITNESS WHEREOF, the undersigned has executed this certificate on
the 7th day of October, 2002.


                                                 /s/ RICHARD P. DUTKIEWICZ
                                                 -------------------------------
                                                 Richard P. Dutkiewicz
                                                 Vice President of Finance and
                                                 Chief Financial Officer



                            [COMPLIANCE CERTIFICATE]

EX-10.15

                                                                   EXHIBIT 10.15

January 25, 2002

Varalakshmi Basawapatna
5157 South Boston Street
Englewood, Colorado 80111

Ganesh Basawapatna
5157 South Boston Street
Englewood, Colorado 80111

Asvan Technology, LLC
5157 South Boston Street
Englewood, Colorado 80111


Dear Varalakshmi and Ganesh:

         When countersigned by all addressees, this letter will constitute our
binding agreement (this "Agreement") with respect to the acquisition (the
"Transaction") by Vari-L Company, Inc. (the "Company") from Asvan Technology,
LLC ("Asvan") of all right, title and interest to Asvan's YIG technology based
assets, including but not limited to all of the software, test equipment and
intellectual property relating to that technology listed on Exhibit A hereto
(the "Assets").

1. Overview. The Company intends to produce YIG oscillators, synthesizers, and
filters based upon the design expertise and manufacturing concepts of Asvan. The
Company believes that the combination of the Company's strong design, marketing
and manufacturing functions in the signal source market with the innovative YIG
design expertise of Asvan will result in a strong market entry into the YIG
oscillator, synthesizer, and filter market. The Company intends to commit
process, mechanical and electrical design engineering personnel to establish
this capacity. Accordingly, the parties intend to close this transaction quickly
and to enter the market as quickly as possible. Upon payment of the purchase
price described in Section 4 hereof (the "Purchase Price") by the Company, Asvan
will cause the Assets to be immediately transferred to the Company in accordance
with the terms of this Agreement.

2. Assets to be Acquired. As soon as all conditions precedent contained in
Section 9 below are met, the Company will acquire the Assets by paying the
Purchase Price to Asvan at the closing (the "Closing"). Even after the Closing,
however, Asvan will retain the right to develop and sell YIG based end item
instrument products pursuant to a grant by the Company of a non-exclusive
license to such effect at Closing. Notwithstanding the grant of such
non-exclusive license, however, the Company will have the exclusive right after
the Closing to sell YIG based products for use in instrumentation equipment,
such as spectrum analyzers, network analyzers



                                       1


and the like to other instrumentation manufacturers. While it is not the present
intention of the Company to enter the end item instrumentation market, it may
elect to do so in the future.

3. Closing. The Closing shall take place at the offices of the Company,
commencing at 2:00 p.m., on January 25, 2001, or on such later date and at such
time as the parties may mutually agree (the "Closing Date").

4. Consideration. The Purchase Price to be paid by the Company to Asvan for the
Assets shall be:

         A. The sum of $100,000 in cash or immediately available funds to be
paid at the Closing;

         B. A two year promissory note of the Company in the principal amount of
$175,000 (the "Note"), which will be secured by a letter of credit and will be
payable in monthly installments of $7,291.67 in principal plus interest on the
unpaid principal at an annual rate of 10%. If there are any damages to the
Company resulting from any breach of this Agreement by Asvan, Varalakshmi
Basawapatna or Ganesh Basawapatna (collectively referred to as the "Seller
Parties" and individually as the "Seller Party"), in addition to any other
rights or remedies the Company may have under this Agreement or at law, the
Company shall be entitled to set off such damages against its remaining payment
obligations under the Note;

         C. A contingent payment of $75,000 to be paid to Asvan ten (10) days
after the Company receives $1,000,000 in cumulative payments (net of customer
returns, customer allowances and credits reflecting post shipment customer price
negotiation) from shipments of the YIG Technology Based Products. For purposes
of this Agreement, the term "YIG Technology Based Products" shall mean any
product which incorporates a YIG technology device.

         D. Periodic payments ("Periodic Payments") shall be made to Asvan based
on orders ("Customer Orders" or, individually, a "Customer Order") received by
the Company during the period of time beginning January 1, 2002 and ending
December 31, 2010 (the "Earn Out Period") for the YIG Technology Based Products.
The dollar value of a Customer Order shall be the sum of the total sales price
of the YIG Technology Based Products in a Customer Order plus all fees for non
recurring engineering included in that Customer Order (net of customer returns,
customer allowances and credits reflecting post shipment customer price
negotiation) (the "Dollar Value"). Periodic Payments shall be paid to Asvan
within ten (10) days from the Company's receipt of the customer's payment for
products included in the related Customer Orders. During each month of the Earn
Out Period, the Company will furnish to Asvan, backup documentation with respect
to Customer Orders consistent with information it provides to the Company's
manufacturer representatives. Asvan shall have the right from time to time
during the Earn Out Period and for one (1) year thereafter to designate an agent
with power to review such books and records of Company as are related to the
determination of the Periodic Payments. Such review of the Company's books shall
be permitted by the Company upon fifteen (15) days prior written notice to the
Company. If Asvan elects to retain a certified public accountant to conduct such
review, and if that review determines that there has been a deficiency in the
Periodic Payments made to Asvan by the Company, then such deficiency shall be
paid to Asvan within thirty (30) days of the



                                       2


delivery of the certified public accountant's report (the "Report") to the
Company unless the Company, during such thirty (30) day period, provides a
written notice to Asvan indicating that the Company disagrees with the
deficiency stated in the Report. Asvan will pay any costs of the review by its
certified public accountant and the Report unless a deficiency of ten percent
(10%) or more of the amounts due Asvan is finally determined to exist. If the
Company does give notice of a disagreement with the Report, the parties agree to
negotiate in good faith for a minimum of twenty (20) days after Asvan's receipt
of the Company's notice of disagreement, but after such twenty (20) day period,
either party may elect to invoke the dispute resolution procedures set forth in
Section 14 hereof to resolve the disagreement.

         The amount of each Periodic Payment shall be determined as follows:

         (1) For each Customer Order placed in the period beginning on January
         1, 2002 and ending on December 31, 2003 ("Period One") regardless of
         the date of shipment, Asvan shall be paid a sum equal to 10% of the
         Dollar Value of each Customer Order placed during Period One;

         (2) In the absence of an Exclusivity Event (as defined below), for each
         Customer Order placed in the period beginning on January 1, 2004 and
         ending on December 31, 2007 ("Period Two") regardless of the date of
         shipment, Asvan shall be paid a sum calculated in accordance with the
         formula set forth on Exhibit C attached hereto;

         (3) In the absence of an Exclusivity Event (as defined below), for each
         Customer Order placed during the period beginning January 1, 2008 and
         ending on December 31, 2010 ("Period Three"), regardless of the date of
         shipment, Asvan shall be paid a sum equal to a percentage of the Dollar
         Value of Customer Orders to be negotiated between Asvan and the Company
         after a reassessment of the competitive position of YIG Technology
         Based Products by the Company and Asvan. If within first three (3)
         months of Period Three the parties fail to reach mutual agreement on a
         percentage rate to be paid to Asvan, Asvan will be paid a sum equal to
         1% of the Dollar Value of all Customer Orders placed in Period Three
         for YIG Technology Based Products that were substantially developed
         prior to 2007.

         For purposes of this Agreement, for so long as the Company is required,
pursuant to Section 4.E hereof, to sell YIG Technology Based Products to the
companies that have favorable pricing rights (the "Liberty Companies") pursuant
to the Product Purchase Agreement among Liberty Satellite & Technology, Inc., On
Command Corporation, TSAT Technologies, Inc. and Asvan, dated as of September
14, 2001 (the "Product Agreement") at the price set forth in Section 2.1(b) of
the Product Agreement, the term "Customer Order" shall not include orders from
the Liberty Companies and no Periodic Payments shall be made on account of any
such orders, provided, however, that sales to the Liberty Companies that are not
made at the discounted price set forth in Section 2.1 of the Product Agreement
shall be deemed to be Customer Orders on account of which Periodic Payments
shall be made to Asvan by the Company.

         Notwithstanding anything above to the contrary, if the Periodic
Payments received by Asvan are less than any one of the minimum amounts for
various time periods set forth on



                                       3


Exhibit D hereto, and Asvan gives the notice required by Exhibit D (an
"Exclusivity Event"), the non-exclusive license granted to Asvan by the Company
at the Closing permitting Asvan to continue selling certain YIG Technology Based
Products to certain customers will become an exclusive license from the Company
to Asvan to develop, sell, manufacture and sub-license YIG Technology Based
Products to any customer, notwithstanding the exclusivity rights otherwise
provided to the Company by Section 2 hereof , provided, however, that, after an
Exclusivity Event, the Company may continue to develop, sell and manufacture YIG
Technology Based Products but it may not license such technology to third
parties, provided, further, that nothing herein shall prevent the Company from
selling the Assets, as part of a merger, consolidation, sale of all or
substantially all of the Company's assets, or otherwise, subject to the
Company's rights and obligations under this Agreement, either before or after an
Exclusivity Event, so long as the successor party or purchaser expressly assumes
the terms and conditions of this Agreement. Upon an Exclusivity Event,
Varalakshmi Basawapatna and Ganesh Basawapatna will be immediately released from
their respective non-compete covenants found in Section 6.C. hereof but, in the
case of Varalakshmi Basawapatna, only to the extent such covenant applies to the
YIG technology and YIG Technology Based Products. In all other respects, her
non-compete covenant shall remain effective in accordance with its terms
notwithstanding the occurrence of an Exclusivity Event.

         E. The assumption by the Company of Asvan's obligation to sell certain
products to the Liberty Companies pursuant to the terms of the Product
Agreement. This Section 4.E. shall be deemed an assumption of such obligation by
the Company and an agreement by the Company that it will perform such obligation
in accordance with the terms and conditions of the Product Agreement. In order
to ensure that the Liberty Companies do not receive an undue benefit by virtue
of this assumption of the Product Agreement by the Company, Asvan and the
Company agree that each of them will provide to the other, on at least a
quarterly basis, information concerning their respective fulfillment (including
any fulfillment by their respective licensees or sub-licensees permitted under
this Agreement), if any, of sales to, or orders from, the Liberty Companies at
the price prescribed in Section 2.1(b) of the Product Agreement.

5. Right to Favorable Pricing Terms. The Company agrees that, so long as Asvan
is entitled to Periodic Payments under this Agreement or any portion of the
principal or interest of the Note remains unpaid, the Company will sell to
Asvan, for use in Asvan's instrument product line, YIG oscillator based products
at the lowest price it sells similar products to any other customer for like
quantities (other than the price the Company must charge the Liberty Companies
under Section 2.1(b) of the Product Agreement).

6. Employment and Consulting Matters.

         A. Varalakshmi Basawapatna. Varalakshmi Basawapatna will become an
employee of the Company, with the title of Director of Engineering, effective
January 2, 2002. As Director of Engineering, Ms. Basawapatna will be responsible
for coordinating the Company's efforts to transfer Asvan's YIG technology to the
Company, working with other Company personnel to establish the Company's
manufacturing capability for the YIG Technology Based Products, and training the
Company's design engineering personnel in the design of YIG oscillators. Ms.
Basawapatna will be paid an annual salary of $100,000 and will be entitled to
the same rights,



                                       4


benefits, and privileges as other Company employees under any generally
applicable employee benefit plan. Additional terms of Mrs. Basawapatna's
employment will be included in an offer letter from the Company which will be
executed on the Closing Date (the "Employment Offer"). Except as may be provided
otherwise in the Employment Offer, Ms. Basawapatna will be an "at will" employee
of the Company and will not be entitled to any rights, benefits or privileges
other than those provided to employees of the Company generally. The Company
acknowledges that Mrs. Basawapatna is, and will continue to be during the term
of her employment by the Company, the President of Asvan.

         B. Ganesh Basawapatna. Ganesh Basawapatna will provide consulting
services to the Company on the terms described herein and, if the parties so
elect, in a separate consulting agreement. Mr. Basawapatna will be primarily
responsible for the transfer of the YIG technology from Asvan to the Company and
for marketing the Company's YIG Technology Based Products. In those two
capacities, Mr. Basawapatna will work under the direction of, and report to, the
Company's Vice President of Business Development. Mr. Basawapatna will be
available to provide such consulting services, on an as needed basis, for at
least four (4) days per month through December 31, 2002. For the first three (3)
months of the consulting period, Mr. Basawapatna will be paid a base fee of
$8,000 per month. If additional consulting beyond four (4) days per month is
necessary during the first three (3) months of the consulting period, and to the
extent that consulting services are requested by the Company after the first
three (3) months of the consulting period, the Company will pay to Mr.
Basawapatna an additional consulting fee in the amount of $2,000 per day. While
Mr. Basawapatna will not be required to provide any particular level of
consulting services after 2002, the parties agree that, to the extent the
Company requests him to provide consulting services not directly related to
support of the Company's sale of the YIG Technology Based Products after 2002
and he agrees to provide such additional services, the parties will enter into
good faith negotiations to determine what additional compensation should be paid
to him on account of such services.

         C. Non-Competition. Mrs. Basawapatna and Mr. Basawapatna each agree
that, so long as (i) Mrs. Basawapatna remains an employee of the Company; (ii)
Mr. Basawapatna provides consulting services to the Company; or (iii) Asvan
continues to receive an aggregate of not less than $100,000 in any calendar year
in Periodic Payments or principal and interest under the Note from the Company,
and for a period of one (1) calendar year after the latest to terminate of these
three conditions, except as otherwise expressly permitted by this Agreement (a)
Mrs. Basawapatna will not, directly or indirectly, own, manage, operate,
control, provide services to, be employed by, participate in, or be connected in
any manner with the ownership, management, operation, or control of any business
which develops, manufactures, distributes or sells products competitive with the
Company's products, or products which are the functional equivalent of the
Company's products or currently planned products, including but not limited to
those relating to the YIG technology and the Assets, within and to the same
market as the Company's market (the "Competitive Products"), and (b) Mr.
Basawapatna will not, directly or indirectly, own, manage, operate, control,
provide services to, be employed by, participate in, or be connected in any
manner with the ownership, management, operation, or control of any business
which develops, manufactures, distributes or sells products which are related,
directly or indirectly to, the YIG technology or the Assets, within and to the
same market as the Company's market (the "YIG Competitive Products"). The
parties acknowledge that, to the extent that Asvan currently has a



                                       5


non-competition covenant with either or both of Varalakshmi or Ganesh
Basawapatna, the foregoing covenants to the Company constitute a transfer or
sale to the Company of the non-competition covenants held by Asvan.
Notwithstanding the foregoing, upon an Exclusivity Event under Section 4.E.
above, Varalakshmi Basawapatna and Ganesh Basawapatna will be immediately
released from their respective non-compete covenants found herein but, in the
case of Varalakshmi Basawapatna, only to the extent such covenants apply (i) to
the YIG technology and YIG Technology Based Assets and (ii) to current or future
technological projects of Asvan of which she has given the Company written
notice prior to her employment by the Company (which pre-employment notice is
attached hereto as Exhibit E) or prior to any substantive involvement by her as
an employee of the Company in the development, enhancement, modification or
production of similar, comparable, or directly competitive technology of the
Company. In all other respects, her non-compete covenant shall remain effective
in accordance with its terms notwithstanding the Exclusivity Event.

         D. Proprietary Rights; Assignment. Each of Varalakshmi Basawapatna and
Ganesh Basawapatna understands and agrees that as part of her employment or his
consulting for the Company, Mrs. Basawapatna and Mr. Basawapatna may improve,
modify, create or contribute to the creation of computer software, source codes,
object codes, designs, literature, or any other copyrightable works (the
"Works"), or hardware technology, know how, and designs (the "Inventions"), and
that the Company shall be the author of the Works, and shall own all right,
title, and interest in and to the copyrights in the Works. In the event that the
Works do not qualify as a "work for hire" under applicable law, Mrs. Basawapatna
and Mr. Basawapatna each hereby assign to the Company all right, title, and
interest in and to such Works, and to any and all other intellectual property
rights, including, without limitation, patents, trademarks, trade secrets, and
know-how, embodied in the Works, the Inventions, or in any other idea or
technology developed in whole or in part by Mrs. Basawapatna in the course of
her employment by, or Mr. Basawapatna in the course of his consulting for, the
Company. Each of Mrs. Basawapatna and Mr. Basawapatna further agrees to take all
actions necessary and to execute all documents in order to perfect and to vest
such intellectual property rights in the Company to the Works. The provisions of
this Section 6.D. shall not apply, except for instrumentation related products,
(i) with respect to Mrs. Basawapatna, to the Inventions and Works related to any
current or future technological projects of Asvan that are not related, directly
or indirectly, to YIG technology or YIG Technology Based Products of which she
has given the Company written notice prior to her employment by the Company
(which pre-employment notice is attached hereto as Exhibit E) or prior to any
substantive involvement by her as an employee of the Company in the development,
enhancement, modification or production of similar, comparable, or directly
competitive technology of the Company, and (ii) with respect to Mr. Basawapatna,
to those Inventions and Works which do not incorporate, which are not derived
from, and which do not relate to, the YIG technology or YIG Technology Based
Products.

         E. No Violation of Other Agreements. Asvan, Varalakshmi Basawapatna and
Ganesh Basawapatna hereby certify that neither her employment by the Company nor
his consulting for the Company will breach any other employment, consulting or
other agreement, including but not limited to any confidentiality or
non-disclosure agreement or covenant or any agreement relating to the ownership
of the Assets or any technology incorporated into the Assets.



                                       6


7. Representations and Warranties Regarding Assets.

         Asvan represents and warrants to the Company that the following
representations and warranties are true and correct as of the date hereof and as
of the Closing Date:

         A. Asvan is a limited liability company duly organized, formed, validly
existing and in good standing under the laws of the State of Colorado; has full
power and authority to carry on its business as currently conducted and to own
and dispose of its assets at the places currently located and in the manner
currently used and operated. No act or proceeding has been taken by or against
Asvan, in connection with the dissolution, liquidation, winding up, bankruptcy
or reorganization of Asvan.

         B. Asvan has the power and authority to enter into this Agreement and
all other agreements and instruments to be executed by it as contemplated by
this Agreement and to carry out its obligations under this Agreement and such
other agreements and instruments. The execution and delivery of this Agreement
and such other agreements and instruments and the completion of the transactions
contemplated by this Agreement and such other agreements and instruments have
been duly authorized by all necessary action on the part of Asvan, its
manager(s) and members.

         C. This Agreement constitutes a valid and binding obligation of Asvan,
enforceable against it in accordance with its terms, subject only to limitations
on enforcement imposed by bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of the rights of creditors or others and to the extent
that equitable remedies such as specific performance and injunctions are only
available in the discretion of the court from which they are sought. Asvan is
not insolvent and will not become insolvent as a result of the Transaction.

         D. Exhibit A lists all Assets to be transferred to the Company by Asvan
in the Transaction. Other than this Agreement, there is no agreement, option or
other right or privilege outstanding in favor of any person for the purchase
from any of the Seller Parties of any of the Assets other than in the ordinary
course of Asvan's business. There are no equipment leases, rental agreements,
conditional sales contracts or other similar agreements relating to the Assets.

         E. Exhibit A also generally describes all of the Intellectual Property
included in the Assets and lists all patents, patent applications, the
registrations and applications for registration of the non-patentable
Intellectual Property. All the registrations and applications for registration
of the Intellectual Property are valid and subsisting in good standing and are
recorded in the name of one or more of the Seller Parties. No application for
registration of any of the Intellectual Property has been rejected. There are no
written or oral licenses, sublicenses, franchises or other agreements under
which any third party has an interest in any of the Intellectual Property or
pursuant to which the Seller Parties are authorized to use a third party's
intellectual property in connection with the Intellectual Property. The Seller
Parties are the sole and exclusive owners of the Intellectual Property and are
entitled to the exclusive and uninterrupted use of the Intellectual Property
without payment of any royalty or other fees. No member, officer, consultant or
employee of Asvan or any other person or entity other than the Seller Parties
has any right, title or interest in any of the Intellectual Property and all
such persons have waived their moral rights in any copyright works within the
Intellectual Property.



                                       7


To the best of the Seller Parties' knowledge, the Seller Parties have diligently
protected their legal rights to the exclusive use of the Intellectual Property.
All employees, consultants, contractors, and advisors of the Seller Parties have
agreed to maintain the confidentiality of all confidential or proprietary
information relating to the Intellectual Property. No person has threatened to
challenge or challenged the validity of any registrations for the Intellectual
Property or the Seller Parties' rights to any of the Intellectual Property. To
the best of the Seller Parties' knowledge, neither the use of the Intellectual
Property nor the conduct of the Seller Parties' business has infringed or
currently infringes upon the industrial or intellectual property rights of any
other person. There is no governmental prohibition or restriction on the use of
the Intellectual Property contemplated by the Company.

         For purposes of this Agreement, Intellectual Property with respect to
the Assets means (a) all patents and patent rights; (b) all subject matter that
is eligible to be protected by a patent, whether or not fixed in a tangible
medium and whether or not reduced to practice; (c) all copyrights and copyright
applications, whether registered or unregistered; (d) all trade secrets; (e) all
know-how, whether or not protected by patent, trademark, copyright or trade
secret law; and (f) all confidential information.

         F. Exhibit B lists all oral and written licenses, permits, filings,
authorizations and approvals related to the Assets ("Licenses and Permits") and
identifies the ones, if any, that by their terms are not transferable. The
Seller Parties hold all Licenses and Permits free and clear of any and all liens
or encumbrances of any kind. All Licenses and Permits are in full force and
effect and none of the Seller Parties are in violation of any term, provision,
or requirement of any Licenses and Permits. No person or entity has threatened
to revoke, amend or impose any condition in respect of, or commenced proceedings
to revoke, amend or impose conditions in respect of, any such license, permit,
filing, authorization or approval.

         G. All consents and approvals required to be obtained by any of the
Seller Parties in connection with the execution and delivery of this Agreement
and the completion of the transactions contemplated by this Agreement, if any,
have been obtained or will be obtained before the Closing Date. All notices
required to be given to any person under applicable law or pursuant to any
contract or other obligation to which any of the Seller Parties is a party or by
which any Seller Party is bound or which is applicable to any of the Assets in
connection with the execution and delivery of this Agreement or the completion
of the transactions contemplated by this Agreement have been given or will be
given before the Closing Date. Except for the foregoing, no consent, approval
of, or notice to, any person is required in connection with the execution and
delivery of this Agreement and the completion of the transactions contemplated
by this Agreement.

         H. Except for the Product Agreement (which, among other things,
restricts a transfer of the Assets unless the transferee assumes certain
obligations to the Liberty Companies under the Product Agreement), the
execution, delivery and performance of this Agreement by the Seller Parties and
the completion of the Transaction provided for herein and the fulfillment of
terms hereof by the Seller Parties do not and will not, to the best of the
Seller Parties' knowledge, result in or constitute a default, breach or
violation or an event that, with notice or lapse of time or both, would be a
default, breach or violation of any of the terms, conditions or provisions of
the operating agreement of Asvan or of any contract to which a Seller Party is a



                                       8


party or which binds a Seller Party or of any license or permit; the creation or
imposition of any lien or other encumbrance on any Asset; or the violation of
any law applicable to or affecting any Seller Party which is related to, or
adversely affects, any of the Assets.

         I. There is no action, suit, proceeding, claim, application, complaint
or investigation in any court or before any arbitrator or before or by any
regulatory body or governmental or non-governmental body pending or threatened
by or against any Seller Party related to or affecting the Assets or the
Transaction contemplated by this Agreement; and, to the best of the Seller
Parties' knowledge, there is no factual or legal basis which could give rise to
any such action, suit, proceeding, claim, application, complaint or
investigation.

         J. There are no liens for taxes upon the Assets. No state of facts
exists or has existed that would constitute grounds for the assessment against
the Company, whether by reason of transferee liability or otherwise, of any
liability for any taxes resulting from the prior ownership or use of the Assets.
The Seller Parties have timely paid all taxes, and all interest and penalties
due thereon, which will have been required to be paid on or prior to the Closing
Date, the non-payment of which would result in a lien on any Asset or would
result in the Company becoming liable or responsible therefor. The Seller
Parties will timely pay all taxes which arise from or with respect to the Assets
prior to the Closing Date. For purposes of this Agreement, tax or taxes shall
mean any and all federal, state, and local taxes, fees, assessments or charge of
any kind whatsoever, including any interest, penalty, or addition thereto,
whether disputed or not.

         K. Each of Asvan and its former subsidiary, TSAT Technologies, Inc.
("TSAT"), has withheld and paid all payroll and withholding taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, or other third party.

         L. No person has or will have, as a result of the transactions
contemplated by this Agreement, any right, interest or claim against or upon the
Seller Parties or the Assets for any commission, fee or other compensation
because of any act or omission by the Seller Parties.

         M. None of the foregoing representations and warranties and no document
furnished by or on behalf of the Seller Parties in connection with the
negotiation of the transactions contemplated by this Agreement contains any
untrue statement of a material fact or omits to state any material fact
necessary to make any such statement or representation not misleading.

8. Representations and Warranties of the Company. The Company represents and
warrants to the Seller Parties, that the following representations and
warranties are true and accurate as of the date hereof and as of the Closing
Date:

         A. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado and has the corporate
power to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all necessary corporate action on the part
of the Company, and this Agreement constitutes the valid and binding obligation
of the Company, enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, moratorium and other
similar laws



                                       9


affecting creditors' rights generally and by general principles of equity,
whether considered in a proceeding at law or in equity.

         B. The execution and delivery of this Agreement, the consummation of
the transactions provided for herein, and the fulfillment of the terms hereof by
the Company do not and will not, with or without the giving of notice, the lapse
of time, or both, result in the breach of any of the terms and provisions of, or
constitute a default under, or conflict with, or cause any acceleration of any
obligation of the Company thereunder, any agreement, indenture or other
instrument by which the Company is bound, the Company's Articles of
Incorporation or Bylaws, any judgment, decree, order, or award of any court,
governmental body, or arbitrator, or any applicable law, rule, or regulation.

         C. No person has or will have, as a result of the transactions
contemplated by this Agreement, any right, interest or claim against or upon the
Company for any commission, fee or other compensation because of any act or
omission by the Company.

         D. None of the foregoing representations and warranties and no document
furnished by or on behalf of the Company to the Seller Parties in connection
with the negotiation of the transactions contemplated by this Agreement contain
any untrue statement of a material fact or omit to state any material fact
necessary to make any such statement or representation not misleading.

         E. The Company agrees to devote such personnel, financial and other
resources as are necessary to develop, produce, and market competitive YIG
Technology Based Products, subject only to (i) financial or operating
constraints or difficulties of the Company as a whole; (ii) technological
failures of YIG technology in general; or (iii) technological developments in
the marketplace which render the development, production or marketing of the YIG
Technology Based Products infeasible from a financial or technological stand
point.

9. Conditions. The parties understand that this Agreement, the consummation of
the Transaction, the grant of the non-exclusive license back to Asvan, Mrs.
Basawapatna's employment, and Mr. Basawapatna's engagement as a consultant
(collectively, the "Asvan Transactions") are subject to, among other things, the
satisfaction of the following conditions:

         A. Company's Board Approval. The Asvan Transactions must be approved by
the Company's Board of Directors.

         B. Additional Transaction Documents. Subject to the limitations set
forth in Sections 6.D., Varalakshmi Basawapatna and Ganesh Basawapatna must
execute the Company's standard non-disclosure, confidentiality and proprietary
rights agreement, and such other forms as are ordinary and customary for
employees or consultants, such as tax withholding forms. The parties must
execute such instruments and documents as may be necessary or advisable to
consummate the Asvan Transactions, including such additional instruments or
documents as may be mutually agreed upon by the parties before, during and after
the Closing.

         C. Due Diligence Review. Prior to the execution of this Agreement, the
Company has undertaken and substantially completed its technological,
commercial, accounting and legal



                                       10


due diligence investigation of the Assets. After the execution of this
Agreement, however, the Seller Parties will continue to cooperate with the
Company and its representatives in connection with any requests for additional
information or documentation which the Company may make before the Closing.
Without limiting the foregoing, Asvan will make all financial, accounting, legal
and business records related to the Assets available to the Company and its
legal counsel and accountants and will permit the Company to make reasonable
visits, during normal business hours, to their offices. All such additional
information or documentation received or reviewed by the Company shall confirm
that the Assets, including but not limited to the YIG based intellectual
property owned by Asvan, including any patents and patent applications, are not
subject to any claims or risks. The consummation of the Asvan Transactions at
Closing shall be deemed to be the Company's acknowledgment that its due
diligence investigation of the Assets has been completed.

         D. Assurance of Asvan's Solvency. At or prior to the Closing, Asvan
will deliver to the Company a written representation or statement of a certified
public accountant selected by Asvan and subject to the reasonable approval of
the Company, to the effect that, after the Closing, Asvan will not be insolvent.
For this purpose, "insolvent" shall mean that Asvan is unable to satisfy its
financial obligations in the ordinary course as they become due. Moreover, each
of the Seller Parties acknowledges and agrees that, in order to ensure that
Asvan continues to be in a position to fulfill its post-closing obligations
under this Agreement, including but not limited to Section 12 hereof, for a
period of one (1) year after the Closing, none of them will sell, pledge,
transfer or otherwise encumber or dispose of any of the Asvan's Assets or cause
such assets to be encumbered or seized other than in the ordinary course of
business in an arms length transaction for bona fide consideration that is
reasonable and customary for such type of transaction (a "Good Faith
Transaction"). For purposes hereof, the admission by Asvan into a joint venture,
partnership, corporation, or other business entity (the "New Entity") in a bona
fide, arms length transaction (including but not limited to a merger,
consolidation, or other combination or an asset sale) whereby Asvan or its
owners receive an interest in the New Entity in exchange for all or
substantially all of the assets or equity interests of Asvan shall be deemed to
be a Good Faith Transaction so long as the New Entity expressly assumes the
obligations of Asvan under this Agreement, provided, however, that a bona fide
arms length transaction which does not involve the exchange or transfer of all
or substantially all of Asvan's assets or equity interests shall not require any
assumption by the New Entity to be determined to be a Good Faith Transaction.

10. Exclusive Negotiation Rights. In order to induce the Company to commit the
resources, to forego other potential business opportunities and to incur the
legal, accounting and other expenses necessary to conduct the due diligence
investigation referenced in the preceding section, each of the Seller Parties
agrees (a) not to entertain any offers for, or enter into any negotiations
relating to, a transfer, lease, license, sale or other disposition of the Assets
from the date of this Agreement through January 31, 2002, or such later date as
may be mutually agreed by the parties and (b) to immediately inform the Company
of any such offers, solicitations or invitations to negotiate with respect to a
sale, transfer, lease, license or other disposition of the Assets from any
person or entity other than the Company.



                                       11


11. Confidentiality. Except for (i) the disclosure of the Asvan Transactions to
third parties whose approval or consent of such transactions is required under
agreements with such third parties, (ii) the Company's press release and other
legally required disclosures regarding the Asvan Transactions, (iii) disclosures
required by a court of competent authority or (iv) the disclosure by Asvan to
the Liberty Companies of the Asvan Transactions and the assumption by the
Company in Section 4.E hereof of Asvan's obligations to the Liberty Companies
under the Product Agreement, each party hereto shall keep confidential and shall
not disclose to others and shall use its reasonable efforts to prevent the
party's present or former employees, agents, affiliates, and representatives
from disclosing to others, any confidential or proprietary information obtained
by such party from any other party, as well as the existence of this Agreement,
any negotiations pertaining thereto, the terms of any of the transactions
contemplated hereby, or the planned relationship of the parties. No party shall
use, and each party shall use its best efforts to prevent its present or former
employees, agents, affiliates, and representatives from using, any information
which (a) pertains to this Agreement, any negotiations pertaining hereto, any of
the transactions contemplated hereby, or the business of the parties, or (b) any
other confidential or proprietary information of any party except in connection
with the Asvan Transactions.

12. Indemnification.

         A. Subject to the Threshold (as defined below), each of the Company and
Asvan agrees to reimburse, defend and hold harmless each other and each other's
affiliates (the "Injured Party") from and against any and all losses, damages,
costs and expenses including, without limitation, attorneys' fees ("Losses")
incurred or suffered by the Injured Party in connection with any suit, action,
claim or proceeding brought or, to the knowledge of the Injured Party,
threatened to be brought during the first year from the Closing Date based upon
or arising out of breach by either the Company or Asvan of this Agreement
including, without limitation, the representations and warranties contained in
Sections 7 and 8 hereof (a "Claim"). This right to indemnification shall exist
with respect to those Claims brought during the first year after the Closing
Date (the "Indemnification Period") or about which the Injured Party gained
actual knowledge during the Indemnification Period (the "Indemnifiable Claims")
except that claims for indemnification by Asvan for the Company's breach of
Section 4.E shall not be subject to such one (1) year limitation.

         B. The Injured Party shall give written notice to the indemnifying
party within reasonable time after the Injured Party has actual knowledge of the
Indemnifiable Claim or Losses, and the indemnifying party may participate at its
own expense in the defense, or if it so elects, to assume the defense of any
such Claim and any action or proceeding resulting from the Claim by giving a
written notice to the Injured Party of such election within thirty (30) days
from the receipt of the Injured Party notice of the Indemnifiable Claim or
Losses. The failure of the Injured Party to give notice as provided herein shall
not relieve the indemnifying party from its obligations under this Section 12.
The Injured Party shall not be liable for any settlement of any action or
proceeding effected without its prior written consent. If the Injured Party
decides to participate in any defense or settlement of the Indemnifiable Claim,
whether by failure of the indemnifying party to assume the defense or settlement
of the Indemnifiable Claim within the stated period or otherwise, then the
Injured Party, without waiving any rights against the



                                       12


indemnifying party, may settle or defend the Indemnifiable Claim in the Injured
Party's sole discretion and shall be entitled to recover the Losses from the
indemnifying party.

         C. Notwithstanding the foregoing provisions of this Section 12, absent
fraud, the indemnifying party shall not be liable to the Injured Party with
respect to any Indemnifiable Claim until the aggregate amount of all Losses
exceeds $25,000 (the "Threshold"), in which case the indemnifying party shall be
liable for all Losses (including the Threshold).

13. Survival of Representations and Warranties. All representations and
warranties of the parties shall survive the Closing Date and shall remain in
effect thereafter.

14. Dispute Resolution.

         A. Any dispute, controversy or claim arising under, out of or relating
to this Agreement and any subsequent amendments hereof (the "Dispute"), shall be
first submitted to mediation to be conducted in Denver, Colorado, by one
mediator appointed by all parties hereto. Each party agrees to submit such
information relating to the Dispute as may be requested by the mediator and to
meet with the mediator for at least a total of four (4) hours to attempt to
resolve the Dispute. In the event the Dispute is not resolved through the
mediation within three (3) months from the submission of the Dispute to the
mediation, the parties agree that the Dispute shall be resolved by arbitration
to be conducted in Denver, Colorado, by one arbitrator selected by all parties.
The arbitration shall be conducted in accordance with the Commercial Rules of
the American Arbitration Association then in effect. The parties agree that the
arbitration award shall be binding on all parties hereto and shall be enforced
by the parties in accordance with its terms.

         B. Notwithstanding provisions relating to mediation and arbitration,
the parties agree that with respect to any breach of the Agreement for which an
award of damages is an inadequate remedy to protect the injured party, the
injured party is entitled to seek injunctive relief in a court of competent
jurisdiction located in the State of Colorado. Seeking injunctive relief in
court would be in addition to, and not a substitution for, any other relief
available to it under the mediation and arbitration.

         C. The prevailing party in any arbitration or court proceeding between
the parties relating to this Agreement shall be entitled to recover its
reasonable costs, expenses and attorneys' fees in such proceeding from the
non-prevailing party or parties.

15. Expenses. Each party shall be responsible for its own costs of the Asvan
Transactions, including, without limitation, attorneys' fees incurred in
connection with the drafting and negotiation of this Agreement.

16. Miscellaneous. (a) This Agreement shall be governed by the laws of the State
of Colorado; (b) if any provision of this Agreement is found by a court or
arbitrator with jurisdiction to be unenforceable or invalid, then such provision
shall be amended to the extent necessary to render same lawful or reasonable,
and this Agreement shall be enforced as amended; (c) no waiver of any breach of
any provision herein contained shall be deemed a



                                       13


waiver of any other breach; (d) no extension of time for performance of any
obligations shall be deemed an extension of time for performance of any other
obligations; (e) this Agreement shall be binding upon the parties hereto, and
their heirs, successors, and assigns, provided, however, that notwithstanding
the foregoing, no party may assign this Agreement or delegate its obligations
hereunder to a third party without the other parties' prior written consent; (f)
from and after the Closing Date, each party agrees to cooperate, to take such
actions and to execute such documents as may be requested by the other party in
order to carry out the provisions and purposes of this Agreement; and (g) this
Agreement, together with all Exhibits hereto, constitutes the entire agreement
of the parties, supersedes all prior agreements of the parties with respect to
the subject matter hereof, and may only be amended by an instrument in writing
executed by all parties.



                                       14


         Please indicate your assent to the foregoing by countersigning below
and returning it to the attention of the undersigned.

                                       Very truly yours,


                                       VARI-L COMPANY, INC.



                                       /s/ CHARLES R. BLAND
                                       -----------------------------------------
                                       By: Charles R. Bland, President



Accepted and agreed to as of January 25, 2002:

ASVAN TECHNOLOGY, LLC




By: /s/ VARALAKSHMI BASAWAPATNA
   ------------------------------------
   Varalakshmi Basawapatna, President





VARALAKSHMI BASAWAPATNA, individually



/s/ VARALAKSHMI BASAWAPATNA
- ---------------------------------------


GANESH BASAWAPATNA, individually



/s/ GANESH BASAWAPATNA
- ---------------------------------------



                                       15

                                    EXHIBIT A

                               LIST OF THE ASSETS




ITEM                                        MAKE                   MODEL NO.             OPTIONS                UMBER      NOTES
                                                                                                            
9 KHz - 40 GHz Spectrum Analyzer            H.P.  (Agilent)        8564E                 008-Signal Ident         1

Phase Noise Measurement utility             H.P.  (Agilent)        85671A                W-50 5 year Svc          1

10 MHz - 40 GHz Synthsized Sweep Gen.       H.P.  (Agilent)        83640B                W-50 5 year Svc          1

10 MHz - 40 GHz Scalar Network Analyzer     H.P.  (Agilent)        8757D                 W-50 5 year Svc          1

10 MHz - 50 GHz Detector                    H.P.  (Agilent)        85025D                W-50 5 year Svc          3

10 MHz - 50 GHz Directional Bridge          H.P.  (Agilent)        85027D                W-50 5 year Svc          1

10 MHz - 50 GHz Power Splitter              H.P.  (Agilent)        11667C                                         1
2.4 mm Fem - Fem Adapter                    H.P.  (Agilent)        11900A                                         1
2.4 mm male - male Adapter                  H.P.  (Agilent)        11900B                                         1
50 Ohm Termination                          H.P.  (Agilent)        85138A                                         1
2.4 mm Short Circuit                        H.P.  (Agilent)        85140A                                         1
Power Meter                                 H.P.  (Agilent)        E4418B                                         1

50 MHz - 50 GHz Power Meter Detector        H.P.  (Agilent)        8487A                 W-50 5 year Svc          1

Modulation Domain Analyzer                  H.P.  (Agilent)        53310A                                         1

Noise Figure Meter                          H.P.  (Agilent)        8970A                                          1

50 GHz Noise Source - 346C K01              H.P.  (Agilent)        346C k01                                       1

10 MHz - 18 GHz Spectrum Analyzer           H.P.  (Agilent)        8555A/85552B                                   1        used

Sweep Oscillator Mainframe                  H.P.  (Agilent)        8620C                                          1        used

10 MHz - 18 GHz Frequency Counter           H.P.  (Agilent)        5340A                                          1        used

0-8V/0-15V Power Supply                     H.P.  (Agilent)        E3610A                                         2

0-20V/0-35V Power Supply                    H.P.  (Agilent)        E3611A                                         2

Triple Output Power Supply                  H.P.  (Agilent)        E3631A                                         2




                                       16


                                                                                                            
Misc. Old Power Supplies                    H.P.  (Agilent)                                                       5        used

Multimeter                                  H.P.  (Agilent)        34401A                                         1

Scalar Network Analyzer (1-26.5 GHz det)    Wiltron                560                                            1        used
Dual Trace Oscilloscope                     Tektronix              465B/DM44                                      1        used
Thermosonic Wire Bonder                     Hybond                 1065                                           1        used

Oven                                        VWR                    1300U                                          1

- -40 C Epoxy Freezer                         SOLO                   CH 45-5                                        1

Stereozoom Microscope                       B & L                                                                 1        used

8' Stainless Steel Top WorkBenches                                                                                2

6' Lab Work Benches                                                                                               1

Adjustable Lab Stools                                                                                             2

AWR Design Suite
HP VEE Software
Solidworks
PMC Motor Controller

TOTAL



PATENT APPLICATION - FERRITE CRYSTAL RESONATOR STRUCTURE, FILED NOV. 29 2001
FILING DOCUMENT AND APPLICATION COPY ATTACHED - TO BE ASSIGNED TO VARI-L



                                       17


                                    EXHIBIT B

             LICENSES, PERMITS, FILINGS, AUTHORIZATIONS & APPROVALS



Software Licenses for

     1.  HP VEE Software

     2.  AWR Design Suite*

     3.  Solidworks*


* This software package is subject to the payment of annual software maintenance
and/or support fees of not more than $5,000.



                                       18


                                    EXHIBIT C

        PERIODIC PAYMENT SCHEDULE FOR THE PERIOD FROM JANUARY 1, 2004 TO
                                DECEMBER 31, 2007

The Periodic Payment for this period of time shall be based on the Dollar Value
of Customer Orders according to the following formula as entered into Microsoft
Excel 2000:

Periodic Payment = (min(5,max(2,(6-2*(Dollar Value)/1,000,000))))*(Dollar
Value)/100



                                       19


                                    EXHIBIT D

                       ANNUAL AND CUMULATIVE SALES LEVELS
            FOR THE PERIOD FROM JANUARY 1, 2002 TO DECEMBER 31, 2007




                    Period                                                                   Cumulative Sales
                    ------                                                                   ----------------
                                                                                          
January 1, 2002 to June 30, 2003                                                                 1,000,000

July 1, 2003 to June 30, 2004                                                                    3,300,000

July 1, 2004 to June 30, 2005                                                                    5,800,000

July 1, 2005 to June 30, 2006                                                                    8,550,000

July 1, 2006 to June 30, 2007                                                                   11,550,000

July 1, 2007 to December 31, 2007                                                               13,050,000


The Company will provide a report of cumulative sales to Asvan no later than
fifteen (15) days after the close of each period listed above (the "Notification
Date").

1) If the Company fails to make the Periodic Payments prescribed for the
cumulative sales goals listed above for any respective period end, then Asvan
will have sixty (60) days after the Notification Date to give written notice to
the Company of the occurrence of an Exclusivity Event. In the absence of a
timely notice, no Exclusivity Event shall occur and the obligations of the
parties under the Agreement will be unaffected by the failure to reach the
designated sales level. In such an event, however, subsequent cumulative sales
requirements listed above will not be reduced or otherwise affected by the
non-occurrence of the earlier Exclusivity Event.

2) For a period of one year after an Exclusivity Event, the Company will
continue to make Periodic Payments for orders received during such one year
period in accordance with Exhibit C. At the end of such one year,
notwithstanding anything to the contrary in the Agreement, all Periodic Payments
will cease and the Company will have no further obligations under the Agreement
except for any unpaid principal or interest on the Note.

3) Upon an Exclusivity Event, the Company will provide to Asvan a list of all
current and recent customers of the Company for YIG Technology Based Products
(the "List"). For a period of one (1) year after an Exclusivity Event, Asvan and
the other Selling Parties may not contact or solicit, directly or indirectly,
any customers on the List with respect to the purchase of YIG Technology Based
Products. A willful and material violation of this provision by Asvan will
entitle the Company to injunctive relief together with liquidated damages equal
to all amounts paid to the Seller Parties under this Agreement, including but
not limited to all compensation paid to Ms. Basawapatna as an employee, Periodic
Payments paid to Asvan, consulting fees paid to Mr. Basawapatna, and principal
and interest paid on the Note. On the other hand, if all of the



                                       20


Selling Parties abide faithfully in all material respects with the no-contact,
no solicitation, obligations of the first sentence of this paragraph for the
entire one year period following an Exclusivity Event, then the Periodic
Payments payable to Asvan for such one year period shall be guaranteed by the
Company to be at least $100,000. The Company shall satisfy such guarantee
obligation by the payment of any shortfall from the $100,000 no later than sixty
(60) days after the conclusion of the one (1) year period.



                                       21


                                    EXHIBIT E

   VARALAKSHMI BASAWAPATNA'S NON-COMPETE AND PROPRIETARY TECHNOLOGY EXCEPTIONS


The following current business areas of Asvan form exceptions to the non-compete
and proprietary technology aspects of the Agreement insofar as it relates to the
activities of Varalakshmi Basawapatna, and to any other employment agreement
between the Company and Ms. Basawapatna (but they are exceptions only if and to
the extent that such business areas do not involve, as end item products,
oscillators, amplifiers, filters, mixers, couplers or modulators):

     1.  Circuit, system, manufacturing technology, software, hardware and
         associated concepts related to the design, manufacture, and marketing
         of RF and microwave instrumentation related products including but not
         limited to Spectrum and Signal Analyzers, Scalar and Vector Network
         Analyzers, Frequency Synthesizers, and Sweep Signal Generators.

     2.  Circuit, system, manufacturing technology, software, hardware and
         associated concepts related to the design, manufacture, and marketing
         of Satellite, Wireless or Cable transmission and delivery of Voice,
         Video and Data.

     3.  Circuit, system, manufacturing technology, software, hardware and
         associated concepts related to Cable and alternative media related set
         top hardware and software technology and marketing.

Asvan Technology is continuously pursuing new business areas. As required by the
Agreement, when any of these new business areas become subject to any
proprietary development, Varalakshmi Basawapatna will exclude herself from any
substantive involvement as an employee of the Company in the development,
enhancement, modification or production of similar, comparable or directly
competitive technology of the Company and shall promptly inform the Company in
writing that such new areas should form additional exceptions to the proprietary
technology and non compete provisions of the Agreement and to any other
employment agreement between her and the Company. Nothing herein shall modify or
limit Ms. Basawapatna's obligation not to disclose, publish or use Confidential
Information of the Company pursuant to her employee non-disclosure agreement
with the Company.



                                       22

EX-10.16

                                                                   EXHIBIT 10.16


                SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT

         This Amendment, dated as of February 8, 2002, is made by and between
VARI-L COMPANY, INC., a Colorado corporation (the "Borrower"), and WELLS FARGO
BUSINESS CREDIT, INC., a Minnesota corporation (the "Lender").

                                    Recitals

         The Borrower and the Lender are parties to a Credit and Security
Agreement dated as of June 28, 2001 (the "Original Credit Agreement"), as
amended by the First Amendment to Credit and Security Agreement dated as of
September 17, 2001 (as so amended, the "Credit Agreement"). Capitalized terms
used in these recitals have the meanings given to them in the Credit Agreement
unless otherwise specified.

         The Borrower has requested that certain amendments be made to the
Credit Agreement, which the Lender is willing to make pursuant to the terms and
conditions set forth herein.

         NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:

         1. Capitalized terms used in this Amendment which are defined in the
Credit Agreement shall have the same meanings as defined therein, unless
otherwise defined herein. In addition, Section 1.1 of the Credit Agreement is
amended by adding or amending, as the case may be, the following definitions:

                  "Availability" means the difference of (i) the Borrowing Base
         and (ii) the sum of (A) the outstanding principal balance of the
         Revolving Note and (B) the L/C Amount.

                  "Borrowing Base" means, at any time the lesser of:

                  (a) the Maximum Line; or

                  (b) subject to change from time to time in the Lender's sole
         discretion, upon three (3) business days notice to the Borrower, the
         sum of:

                           (i) 80% of Eligible Accounts, plus

                           (ii) the lesser of (A) 0.00% (zero percent) of
         Eligible Inventory or (B) $0.00 (zero dollars).

                  "Collateral" means all of the Borrower's Accounts,
         Receivables, chattel paper, deposit accounts, documents, Equipment,
         General Intangibles, goods, instruments, Inventory, Investment
         Property, letter-of-credit rights, letters of credit, all sums on
         deposit in any Collateral Account, and any items in any






         Lockbox; together with (i) all substitutions and replacements for and
         products of any of the foregoing; (ii) in the case of all goods, all
         accessions; (iii) all accessories, attachments, parts, equipment and
         repairs now or hereafter attached or affixed to or used in connection
         with any goods; (iv) all warehouse receipts, bills of lading and other
         documents of title now or hereafter covering such goods; (v) all
         collateral subject to the lien of any Security Document; (vi) any
         money, or other assets of the Borrower that now or hereafter come into
         the possession, custody, or control of the Lender; (vii) all sums on
         deposit in the Special Account; and (viii) proceeds of any and all of
         the foregoing.

                  "Commitment" means the Lender's commitment to make Advances
         to, and to cause the Issuer to issue Letters of Credit for the account
         of, the Borrower pursuant to Article II.

                  "Issuer" means the issuer of any Letter of Credit.

                  "L/C Amount" means the sum of (i) the aggregate face amount of
         any issued and outstanding Letters of Credit and (ii) the unpaid amount
         of the Obligation of Reimbursement.

                  "L/C Application" means an application and agreement for
         letters of credit in a form acceptable to the Issuer and the Lender.

                  "Letter of Credit" has the meaning specified in Section 2.17.

                  "Loan Documents" means this Agreement, the Notes, the Security
         Documents and any L/C Application.

                  "Maximum Line" means $4,000,000, unless said amount is reduced
         pursuant to Section 2.10, in which event it means the amount to which
         said amount is reduced.

                  "Obligation of Reimbursement" has the meaning specified in
         Section 2.19(a).

                  "Obligations" means each Note, the Obligation of Reimbursement
         and each and every other debt, liability and obligation of every type
         and description which the Borrower may now or at any time hereafter owe
         to the Lender, whether such debt, liability or obligation now exists or
         is hereafter created or incurred, whether it arises in a transaction
         involving the Lender alone or in a transaction involving other
         creditors of the Borrower, and whether it is direct or indirect, due or
         to become due, absolute or contingent, primary or secondary, liquidated
         or unliquidated, or sole, joint, several or joint and several, and
         including all indebtedness of the Borrower arising under any Loan
         Document or guaranty between the Borrower and the Lender, whether now
         in effect or hereafter entered into.



                                      -2-



                  "Revolving Floating Rate" means (i) from the Funding Date to
         and including January 31, 2002, an annual rate equal to the sum of the
         Prime Rate plus one half of one percent (0.50%) and (ii) from February
         1, 2002 to the Termination Date, an annual rate equal to the sum of the
         Prime Rate plus one percent (1.00%); which annual rate shall change
         when and as the Prime Rate changes.

                  "Special Account" means a specified cash collateral account
         maintained by Wells Fargo Bank West N.A. in connection with Letters of
         Credit, as contemplated by Section 2.18.

                  "Term Floating Rate" means (i) from the Funding Date to and
         including January 31, 2002, an annual rate equal to the sum of the
         Prime Rate plus one percent (1.00%) and (ii) from February 1, 2002 to
         the Termination Date, an annual rate equal to the sum of the Prime Rate
         plus two and one half percent (2.50%); which annual rate shall change
         when and as the Prime Rate changes.

         2. Section 2.3 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 2.3 Payment of Term Note. The outstanding principal
         balance of the Term Note shall be due and payable as follows:

                  (a) (i) Beginning on the first day of the month following each
         Term Advance, and on the first day of each month thereafter, to and
         including February 2002, in substantially equal monthly installments
         equal to an amount sufficient to fully amortize the principal balance
         of the Term Note over an assumed term ending on the seventh anniversary
         of the date of each Term Advance and (ii) Beginning on the first day of
         March 2002 and on the first day of each month thereafter, in equal
         monthly installments of $43,434; and

                  (b) On the Termination Date, the entire unpaid principal
         balance of the Term Note, and all unpaid interest accrued thereon,
         shall in any event be due and payable."

         3. Section 2.4 of the Credit Agreement is hereby amended by changing
the dollar amount in romanette (i) of the first paragraph from $1,500,000 to
$0.00 (zero dollars).

         4. Section 2.7 of the Credit Agreement is hereby amended by amending
and restating Section 2.7(b) in its entirety and by adding new Sections 2.7(e)
and (f) to read as follows:

                  "(b) Unused Line Fee. For the purposes of this Section 2.7(b),
         "Unused Amount" means the Maximum Line reduced by outstanding Revolving
         Advances and the outstanding L/C Amount. The Borrower agrees to pay to
         the Lender an unused line fee at the rate of one quarter of one percent
         (0.25%) per annum on the average daily Unused Amount from the date of
         this Agreement to and including



                                      -3-



         the Termination Date, due and payable monthly in arrears on the first
         day of the month and on the Termination Date.

                  (e) Letter of Credit Fees. The Borrower agrees to pay to the
         Lender on the date of the issuance of each Letter of Credit issued
         hereunder a fully earned and non-refundable Letter of Credit fee equal
         to two and one half percent (2.50%) of the face amount of each Letter
         of Credit issued hereunder, plus any processing and administrative
         fees.

                  (f) Letter of Credit Administrative Fees. The Borrower agrees
         to pay the Lender, on written demand, the administrative fees charged
         by the Issuer in connection with the honoring of drafts under any
         Letter of Credit, amendments thereto, transfers thereof and all other
         activity with respect to the Letters of Credit at the then-current
         rates published by the Issuer for such services rendered on behalf of
         customers of the Issuer generally."

         5. Section 2.9 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 2.9 Increased Costs; Capital Adequacy. If the Lender
         determines at any time that its Return has been reduced as a result of
         any Rule Change, the Lender may so notify the Borrower and require the
         Borrower, beginning fifteen (15) days after such notice, to pay it the
         amount necessary to restore its Return to what it would have been had
         there been no Rule Change. For purposes of this Section 2.9:

                  (a) "Capital Adequacy Rule" means any law, rule, regulation,
         guideline, directive, requirement or request regarding capital
         adequacy, or the interpretation or administration thereof by any
         governmental or regulatory authority, central bank or comparable
         agency, whether or not having the force of law, that applies to any
         Related Lender, including rules requiring financial institutions to
         maintain total capital in amounts based upon percentages of outstanding
         loans, binding loan commitments and letters of credit.

                  (b) "L/C Rule" means any law, rule, regulation, guideline,
         directive, requirement or request regarding letters of credit, or the
         interpretation or administration thereof by any governmental or
         regulatory authority, central bank or comparable agency, whether or not
         having the force of law, that applies to any Related Lender, including
         those that impose taxes, duties or other similar charges, or mandate
         reserves, special deposits or similar requirements against assets of,
         deposits with or for the account of, or credit extended by any Related
         Lender, on letters of credit.

                  (c) "Related Lender" includes (but is not limited to) the
         Lender, any parent of the Lender, any assignee of any interest of the
         Lender hereunder and any participant in the Credit Facility.



                                      -4-



                  (d) "Return", for any period, means the percentage determined
         by dividing (i) the sum of interest and ongoing fees earned by the
         Lender under this Agreement during such period, by (ii) the average
         capital the Lender is required to maintain during such period as a
         result of its being a party to this Agreement, as determined by the
         Lender based upon its total capital requirements and a reasonable
         attribution formula that takes account of the Capital Adequacy Rules
         and L/C Rules then in effect, costs of issuing or maintaining any
         Advance or Letter of Credit and amounts received or receivable under
         this Agreement or the Note with respect to any Advance or Letter of
         Credit. Return may be calculated for each calendar quarter and for the
         shorter period between the end of a calendar quarter and the date of
         termination in whole of this Agreement.

                  (e) "Rule Change" means any change in any Capital Adequacy
         Rule or L/C Rule occurring after the date of this Agreement, or any
         change in the interpretation or administration thereof by any
         governmental or regulatory authority, but the term does not include any
         changes that at the Funding Date are scheduled to take place under the
         existing Capital Adequacy Rules or L/C Rules or any increases in the
         capital that the Lender is required to maintain to the extent that the
         increases are required due to a regulatory authority's assessment of
         that Lender's financial condition.

                  The initial notice sent by the Lender shall be sent as
         promptly as practicable after the Lender learns that its Return has
         been reduced, shall include a demand for payment of the amount
         necessary to restore the Lender's Return for the quarter in which the
         notice is sent, and shall state in reasonable detail the cause for the
         reduction in its Return and its calculation of the amount of such
         reduction. Thereafter, the Lender may send a new notice during each
         calendar quarter setting forth the calculation of the reduced Return
         for that quarter and including a demand for payment of the amount
         necessary to restore its Return for that quarter. The Lender's
         calculation in any such notice shall be conclusive and binding absent
         demonstrable error."

         6. Section 2.12 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 2.12 Mandatory Prepayment. Without notice or demand,
         if the outstanding principal balance of the Revolving Advances plus the
         L/C Amount shall at any time exceed the Borrowing Base, the Borrower
         shall (i) first, immediately prepay the Revolving Advances to the
         extent necessary to eliminate such excess; and (ii) if prepayment in
         full of the Revolving Advances is insufficient to eliminate such
         excess, pay to the Lender in immediately available funds for deposit in
         the Special Account an amount equal to the remaining excess. Any
         payment received by the Lender under this Section 2.12 or under Section
         2.10 may be applied to the Obligations, in such order and in such
         amounts as the Lender, in its discretion, may from time to time
         determine; provided that any prepayment



                                      -5-



         under Section 2.10 which the Borrower designates as a partial
         prepayment of the Term Note or the CapEx Note, as the case may be,
         shall be applied to principal installments of the Term Note or the
         CapEx Note, as the case may be, in inverse order of maturity."

         7. The Credit Agreement is hereby amended by adding a new Section 2.17
to read as follows:

         "Section 2.17 Letters of Credit.

                  (a) The Lender agrees, on the terms and subject to the
         conditions herein set forth, to cause an Issuer to issue, from the
         Funding Date to the Termination Date, one or more irrevocable standby
         or documentary letters of credit (each, a "Letter of Credit") for the
         Borrower's account by guaranteeing payment of the Borrower's
         obligations or being a co-applicant. The Lender shall have no
         obligation to cause an Issuer to issue any Letter of Credit if the face
         amount of the Letter of Credit to be issued would exceed the lesser of:

                           (i) $250,000 less the L/C Amount, or

                           (ii) Availability.

                  Each Letter of Credit, if any, shall be issued pursuant to a
         separate L/C Application entered into between the Borrower and the
         Lender for the benefit of the Issuer, completed in a manner
         satisfactory to the Lender and the Issuer. The terms and conditions set
         forth in each such L/C Application shall supplement the terms and
         conditions hereof, but if the terms of any such L/C Application and the
         terms of this Agreement are inconsistent, the terms hereof shall
         control.

                  (b) No Letter of Credit shall be issued with an expiry date
         later than the Termination Date in effect as of the date of issuance.

                  (c) Any request to cause an Issuer to issue a Letter of Credit
         shall be deemed to be a representation by the Borrower that the
         conditions set forth in Section 4.2 have been satisfied as of the date
         of the request."

         8. The Credit Agreement is hereby amended by adding a new Section 2.18
to read as follows:

                  "Section 2.18 Special Account. If the Credit Facility is
         terminated for any reason while any Letter of Credit is outstanding,
         the Borrower shall thereupon pay the Lender in immediately available
         funds for deposit in the Special Account an amount equal to the L/C
         Amount. The Special Account shall be an interest bearing account
         maintained for the Lender by Wells Fargo Bank West N.A. Any interest
         earned on amounts deposited in the Special Account shall be credited to
         the Special Account. The Lender may apply amounts on deposit in the
         Special



                                      -6-



         Account at any time or from time to time to the Obligations in the
         Lender's sole discretion. The Borrower may not withdraw any amounts on
         deposit in the Special Account as long as the Lender maintains a
         security interest therein. The Lender agrees to transfer any balance in
         the Special Account to the Borrower when the Lender is required to
         release its security interest in the Special Account under applicable
         law."

         9. The Credit Agreement is hereby amended by adding a new Section 2.19
to read as follows:

                  "Section 2.19 Payment of Amounts Drawn Under Letters of
         Credit; Obligation of Reimbursement. The Borrower acknowledges that the
         Lender, as co-applicant, will be liable to the Issuer for reimbursement
         of any and all draws under Letters of Credit and for all other amounts
         required to be paid under the applicable L/C Application. Accordingly,
         the Borrower shall pay to the Lender any and all amounts required to be
         paid under the applicable L/C Application, when and as required to be
         paid thereby, and the amounts designated below, when and as designated:

                  (a) The Borrower shall pay to the Lender on the day a draft is
         honored under any Letter of Credit a sum equal to all amounts drawn
         under such Letter of Credit plus any and all reasonable charges and
         expenses that the Issuer or the Lender may pay or incur relative to
         such draw and the applicable L/C Application, plus interest on all such
         amounts, charges and expenses as set forth below (the Borrower's
         obligation to pay all such amounts is herein referred to as the
         "Obligation of Reimbursement").

                  (b) Whenever a draft is submitted under a Letter of Credit,
         the Borrower authorizes the Lender to make a Revolving Advance in the
         amount of the Obligation of Reimbursement and to apply the proceeds of
         such Revolving Advance thereto. Such Revolving Advance shall be
         repayable in accordance with and be treated in all other respects as a
         Revolving Advance hereunder.

                  (c) If a draft is submitted under a Letter of Credit when the
         Borrower is unable, because a Default Period exists or for any other
         reason, to obtain a Revolving Advance to pay the Obligation of
         Reimbursement, the Borrower shall pay to the Lender on demand and in
         immediately available funds, the amount of the Obligation of
         Reimbursement together with interest, accrued from the date of the
         draft until payment in full at the Default Rate. Notwithstanding the
         Borrower's inability to obtain a Revolving Advance for any reason, the
         Lender is irrevocably authorized, in its sole discretion, to make a
         Revolving Advance in an amount sufficient to discharge the Obligation
         of Reimbursement and all accrued but unpaid interest thereon.



                                      -7-



                  (d) The Borrower's obligation to pay any Revolving Advance
         made under this Section 2.19, shall be evidenced by the Revolving Note
         and shall bear interest as provided in Section 2.6."

         10. The Credit Agreement is hereby amended by adding a new Section 2.20
to read as follows:

                  "Section 2.20 Obligations Absolute. The Borrower's obligations
         arising under Section 2.19 shall be absolute, unconditional and
         irrevocable, and shall be paid strictly in accordance with the terms of
         Section 2.19, under all circumstances whatsoever, including (without
         limitation) the following circumstances:

                  (a) any lack of validity or enforceability of any Letter of
         Credit or any other agreement or instrument relating to any Letter of
         Credit (collectively the "Related Documents");

                  (b) any amendment or waiver of or any consent to departure
         from all or any of the Related Documents;

                  (c) the existence of any claim, setoff, defense or other right
         which the Borrower may have at any time, against any beneficiary or any
         transferee of any Letter of Credit (or any persons or entities for whom
         any such beneficiary or any such transferee may be acting), or other
         person or entity, whether in connection with this Agreement, the
         transactions contemplated herein or in the Related Documents or any
         unrelated transactions;

                  (d) any statement or any other document presented under any
         Letter of Credit proving to be forged, fraudulent, invalid or
         insufficient in any respect or any statement therein being untrue or
         inaccurate in any respect whatsoever;

                  (e) payment by or on behalf of the Issuer under any Letter of
         Credit against presentation of a draft or certificate which does not
         strictly comply with the terms of such Letter of Credit; or

                  (f) any other circumstance or happening whatsoever, whether or
         not similar to any of the foregoing."

         11. Section 4.1 of the Credit Agreement is hereby amended by amending
and restating the introductory paragraph in Section 4.1 and by amending and
restating Section 4.1(r) to read as follows:

                  "Section 4.1 Conditions Precedent to the Initial Revolving,
         Term and CapEx Advances and Letter of Credit. The Lender's obligation
         to make the initial Revolving, Term and CapEx Advances or to cause any
         Letters of Credit to be issued hereunder shall be subject to the
         condition precedent that the Lender shall have received all of the
         following, each in form and substance satisfactory to the Lender:



                                      -8-




                  (r) Payment of the fees and commissions due through the date
         of the initial Advance or Letter of Credit under Section 2.7 and
         expenses incurred by the Lender through such date and required to be
         paid by the Borrower under Section 9.6, including all legal expenses
         incurred through the date of this Agreement."

         12. Section 4.2 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 4.2 Conditions Precedent to All Advances and Letters
         of Credit. The Lender's obligation to make each Advance and to cause
         each Letter of Credit to be issued shall be subject to the further
         conditions precedent that on such date:

                  (a) the representations and warranties contained in Article V
         are correct on and as of the date of such Advance or issuance of a
         Letter of Credit as though made on and as of such date, except to the
         extent that such representations and warranties relate solely to an
         earlier date; and

                  (b) no event has occurred and is continuing, or would result
         from such Advance or issuance of a Letter of Credit which constitutes a
         Default or an Event of Default."

         13. Section 6.12 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 6.12 Minimum Book Net Worth. The Borrower will
         maintain, during each period described below, its Book Net Worth,
         determined as at the end of each month, at an amount not less than the
         amount set forth opposite such period:



            PERIOD                                                      MINIMUM BOOK
                                                                         NET WORTH
                                                                    
The month ending January 31, 2002                                      $ 11,400,000
The month ending February 28, 2002                                     $ 11,400,000
The month ending March 31, 2002                                        $ 11,025,000
The month ending April 30, 2002                                        $ 10,900,000
The month ending May 31, 2002                                          $ 10,650,000
The month ending June 30, 2002 and thereafter                          $ 11,025,000"


         14. Section 6.13 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 6.13 Minimum Net Income. The Borrower will achieve
         during each period described below, Net Income of not less than, or a
         Net Loss not greater than (excluding any impact of the settlement of
         the private shareholder class actions settled by



                                      -9-



         payment by the Borrower of shares of the Borrower), the amount set
         forth opposite such period (number appearing between "()" are
         negative):



                                    PERIOD                             MINIMUM NET INCOME
                                                                    
                  The nine months ending March 31, 2002                  ($2,900,000)
                  The twelve months ending June 30, 2002                 ($2,900,000)"


         15. Section 6.14 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 6.14 "Intentionally Omitted.""

         16. Section 6.15 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 6.15 New Covenants. On or before June 30, 2002, the
         Borrower and the Lender shall agree on new covenant levels for Section
         6.12, Section 6.13 and Section 7.10 for periods after such date. The
         new covenant levels will be based on the Borrower's projections for
         such periods and shall be no less stringent than the present levels,
         but if the Borrower and the Lender do not agree, the Lender may
         designate the required amounts in its sole discretion and the failure
         by the Borrower to maintain the designated amounts shall constitute an
         Event of Default."

         17. Section 7.10 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 7.10 Capital Expenditures. The Borrower will not
         incur or contract to incur Unfinanced Capital Expenditures of more than
         (i) $1,000,000 during the period from July 1, 2001 through February 28,
         2002; and (ii) $2,000,000 during the period from July 1, 2001 through
         June 30, 2002."

         18. Section 8.2 of the Credit Agreement is hereby amended by adding a
new Section 8.2(g) to read as follows:

                  "(g) the Lender may make demand upon the Borrower and,
         forthwith upon such demand, the Borrower will pay to the Lender in
         immediately available funds for deposit in the Special Account pursuant
         to Section 2.18 an amount equal to the aggregate maximum amount
         available to be drawn under all Letters of Credit then outstanding,
         assuming compliance with all conditions for drawing thereunder."

         19. Section 9.6 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:



                                      -10-



                  "Section 9.6 Costs and Expenses. The Borrower agrees to pay on
         demand all costs and expenses, including (without limitation)
         attorneys' fees, incurred by the Lender in connection with the
         Obligations, this Agreement, the Loan Documents, any Letter of Credit
         and any other document or agreement related hereto or thereto, and the
         transactions contemplated hereby, including without limitation all such
         costs, expenses and fees incurred in connection with the negotiation,
         preparation, execution, amendment, administration, performance,
         collection and enforcement of the Obligations and all such documents
         and agreements and the creation, perfection, protection, satisfaction,
         foreclosure or enforcement of the Security Interest."

         20. Exhibit D of the Credit Agreement is hereby amended and restated in
its entirety and replaced with Exhibit D attached hereto.

         21. No Other Changes. Except as explicitly amended by this Amendment,
all of the terms and conditions of the Credit Agreement shall remain in full
force and effect and shall apply to any advance or letter of credit thereunder.

         22. Amendment Fee. The Borrower shall pay the Lender as of the date
hereof a fully earned, non-refundable fee in the amount of $50,000 in
consideration of the Lender's execution and delivery of this Amendment, and in
full satisfaction of any fees which may have otherwise been due and owing to the
date hereof.

         23. Conditions Precedent. This Amendment shall be effective when the
Lender shall have received an executed original hereof, together with (i)
payment of the fee described in Paragraph 22 and (ii) such other matters as the
Lender may require, each in substance and form acceptable to the Lender in its
sole discretion.

         24. Representations and Warranties. The Borrower hereby represents and
warrants to the Lender as follows:

                  (a) The Borrower has all requisite power and authority to
         execute this Amendment and to perform all of its obligations hereunder,
         and this Amendment has been duly executed and delivered by the Borrower
         and constitutes the legal, valid and binding obligation of the
         Borrower, enforceable in accordance with its terms.

                  (b) The execution, delivery and performance by the Borrower of
         this Amendment have been duly authorized by all necessary corporate
         action and do not (i) require any authorization, consent or approval by
         any governmental department, commission, board, bureau, agency or
         instrumentality, domestic or foreign, (ii) violate any provision of any
         law, rule or regulation or of any order, writ, injunction or decree
         presently in effect, having applicability to the Borrower, or the
         articles of incorporation or by-laws of the Borrower, or (iii) result
         in a breach of or constitute a default under any indenture or loan or
         credit agreement or any other agreement, lease or instrument to which
         the Borrower is a party or by which it or its properties may be bound
         or affected.



                                      -11-



                  (c) All of the representations and warranties contained in
         Article V of the Credit Agreement are correct on and as of the date
         hereof as though made on and as of such date, except to the extent that
         such representations and warranties relate solely to an earlier date.

         25. References. All references in the Credit Agreement to "this
Agreement" shall be deemed to refer to the Credit Agreement as amended hereby;
and any and all references in the Security Documents to the Credit Agreement
shall be deemed to refer to the Credit Agreement as amended hereby.

         26. No Waiver. The execution of this Amendment and acceptance of any
documents related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement or breach, default or event of
default under any Security Document or other document held by the Lender,
whether or not known to the Lender and whether or not existing on the date of
this Amendment.

         27. Release. The Borrower hereby absolutely and unconditionally
releases and forever discharges the Lender, and any and all participants, parent
corporations, subsidiary corporations, affiliated corporations, insurers,
indemnitors, successors and assigns thereof, together with all of the present
and former directors, officers, agents and employees of any of the foregoing,
from any and all claims, demands or causes of action of any kind, nature or
description, whether arising in law or equity or upon contract or tort or under
any state or federal law or otherwise, which the Borrower has had, now has or
has made claim to have against any such person for or by reason of any act,
omission, matter, cause or thing whatsoever arising from the beginning of time
to and including the date of this Amendment, whether such claims, demands and
causes of action are matured or unmatured or known or unknown.

         28. Costs and Expenses. The Borrower hereby reaffirms its agreement
under the Credit Agreement to pay or reimburse the Lender on demand for all
costs and expenses incurred by the Lender in connection with the Loan Documents,
including without limitation all reasonable fees and disbursements of legal
counsel. Without limiting the generality of the foregoing, the Borrower
specifically agrees to pay all fees and disbursements of counsel to the Lender
for the services performed by such counsel in connection with the preparation of
this Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, make a loan to the
Borrower under the Credit Agreement, or apply the proceeds of any loan, for the
purpose of paying any such fees, disbursements, costs and expenses and the fee
required under paragraph 22 hereof.

         29. Miscellaneous. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute one and
the same instrument.



                                      -12-




         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.


WELLS FARGO BUSINESS CREDIT, INC.           VARI-L COMPANY, INC.


By /s/ TIMOTHY P. ULRICH                    By /s/ RICHARD P. DUTKIEWICZ
  ---------------------------------           ---------------------------------
  Timothy P. Ulrich                           Richard P. Dutkiewicz
  Its:  Vice President                        Its: Vice President of Finance
                                                   and Chief Financial Officer



                                      -13-







                   EXHIBIT D TO CREDIT AND SECURITY AGREEMENT


                             COMPLIANCE CERTIFICATE



To:               Timothy P. Ulrich
                  Wells Fargo Business Credit, Inc.

Date:             __________________, 200__
Subject:          Vari-L Company, Inc.
                  Financial Statements


         In accordance with our Credit and Security Agreement dated as of June
28, 2001, as amended by (i) the First Amendment to Credit and Security Agreement
dated as of September 17, 2001 and (ii) the Second Amendment to Credit and
Security Agreement dated as of February 8, 2002 (as so amended, the "Credit
Agreement"), attached are the financial statements of Vari-L Company, Inc. (the
"Borrower") as of and for ________________, 20__ (the "Reporting Date") and the
year-to-date period then ended (the "Current Financials"). All terms used in
this certificate have the meanings given in the Credit Agreement.

         I certify that the Current Financials have been prepared in accordance
with GAAP, subject to year-end audit adjustments, and fairly present the
Borrower's financial condition and the results of its operations as of the date
thereof.

         Events of Default. (Check one):

         [ ] The undersigned does not have knowledge of the occurrence of a
Default or Event of Default under the Credit Agreement.

         [ ] The undersigned has knowledge of the occurrence of a Default or
Event of Default under the Credit Agreement and attached hereto is a statement
of the facts with respect to thereto.

         I hereby certify to the Lender as follows:

         [ ] The Reporting Date does not mark the end of one of the Borrower's
fiscal quarters, hence I am completing only paragraph __ below.

         [ ] The Reporting Date marks the end of one of the Borrower's fiscal
quarters, hence I am completing all paragraphs below except paragraph __.

         [ ] The Reporting Date marks the end of the Borrower's fiscal year,
hence I am completing all paragraphs below.




1.       Minimum Book Net Worth. Pursuant to Section 6.12 of the Credit
         Agreement, as of the Reporting Date, the Borrower's Book Net Worth was
         $____________ which [ ] satisfies [ ] does not satisfy the requirement
         that such amount be not less than as set forth in table below:



                                                                       MINIMUM BOOK
           PERIOD                                                        NET WORTH
                                                                    
The month ending January 31, 2002                                      $ 11,400,000
The month ending February 28, 2002                                     $ 11,400,000
The month ending March 31, 2002                                        $ 11,025,000
The month ending April 30, 2002                                        $ 10,900,000
The month ending May 31, 2002                                          $ 10,650,000
The month ending June 30, 2002 and thereafter                          $ 11,025,000


2.       Minimum Net Income. Pursuant to Section 6.13 of the Credit Agreement,
         the Borrower's Net Income (excluding any impact of the settlement of
         the private shareholder class actions settled by payment by the
         Borrower of shares of the Borrower) for the ________ period ending on
         the Reporting Date, was $____________, which [ ] satisfies [ ] does not
         satisfy the requirement that such amount be not less than, or such loss
         shall not be greater than, $_____________ during such period as set
         forth in table below:



                              PERIOD                             MINIMUM NET INCOME
                                                              
            The nine months ending March 31, 2002                  ($2,900,000)
            The twelve months ending June 30, 2002                 ($2,900,000)


3.       Capital Expenditures. Pursuant to Section 7.10 of the Credit Agreement,
         for the year-to-date period ending on the Reporting Date, the Borrower
         has expended or contracted to expend during the _____ month period
         ending _________________, for Capital Expenditures, $__________________
         in the aggregate, which [ ] satisfies [ ] does not satisfy the
         requirement that such expenditures not exceed $____________ in the
         aggregate during such period.

4.       Salaries. As of the Reporting Date, the Borrower [ ] is [ ] is not in
         compliance with Section 7.17 of the Credit Agreement concerning
         salaries.

         Attached hereto are all relevant facts in reasonable detail to
evidence, and the computations of the financial covenants referred to above.
These computations were made in accordance with GAAP.

                                         VARI-L COMPANY, INC.


                                         By:
                                            -----------------------------------
                                         Its:    Chief Financial Officer

EX-10.17

                                                                   EXHIBIT 10.17


                              VARI-L COMPANY, INC.
                            (A COLORADO CORPORATION)

                            INDEMNIFICATION AGREEMENT

This Indemnification Agreement ("AGREEMENT") is entered into as of
___________________ by and between VARI-L COMPANY, INC., a Colorado corporation
(the "COMPANY") and _________________________ ("INDEMNITEE").

                                    RECITALS

         A. The Company and Indemnitee recognize the significant increases in
the cost of liability insurance for the Company's directors, officers,
employees, agents and fiduciaries.

         B. The Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance has been severely
limited.

         C. Indemnitee does not regard the current protection available as
adequate under the present circumstances, and Indemnitee and other directors,
officers, employees, agents and fiduciaries of the Company may not be willing to
continue to serve in such capacities without additional protection.

         D. The Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and, in part, in
order to induce Indemnitee to continue to provide services to the Company,
wishes to provide for the indemnification and advancing of expenses to
Indemnitee to the maximum extent permitted by law.

         E. In view of the considerations set forth above, the Company desires
that Indemnitee be indemnified by the Company as set forth herein.

         NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

         1. INDEMNIFICATION.

                  (a) Indemnification of Expenses. The Company shall indemnify
Indemnitee to the fullest extent permitted by law if Indemnitee was or is or
becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, any threatened, pending or
completed action, suit, proceeding or alternative dispute resolution mechanism,
or any hearing, inquiry or investigation that Indemnitee in good faith believes
might lead to the institution of any such action, suit, proceeding or
alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (hereinafter a "CLAIM") by reason of (or
arising in part out of) any event or occurrence related to the fact that
Indemnitee is or was a director, officer, employee, agent or fiduciary of the
Company, or any







subsidiary of the Company, or is or was serving at the request of the Company as
a director, officer, employee, agent or fiduciary of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of any
action or inaction on the part of Indemnitee while serving in such capacity
(hereinafter an "INDEMNIFIABLE EVENT") against any and all expenses (including
attorneys' fees and all other costs, expenses and obligations incurred in
connection with investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or participate
in, any such action, suit, proceeding, alternative dispute resolution mechanism,
hearing, inquiry or investigation), judgments, fines, penalties and amounts paid
in settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) of such Claim and any federal,
state, local or foreign taxes imposed on Indemnitee as a result of the actual or
deemed receipt of any payments under this Agreement (collectively, hereinafter
"EXPENSES"), including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses. Such payment of
Expenses shall be made by the Company as soon as practicable but in any event no
later than five days after written demand by Indemnitee therefor is presented to
the Company.

                  (b) Reviewing Party. Notwithstanding the foregoing, (i) the
obligations of the Company under Section 1(a) shall be subject to the condition
that the Reviewing Party (as described in Section 10(e) hereof) shall not have
determined (in a written opinion, in any case in which the Independent Legal
Counsel referred to in Section 1(c) hereof is involved) that Indemnitee would
not be permitted to be indemnified under applicable law, and (ii) the obligation
of the Company to make an advance payment of Expenses to Indemnitee pursuant to
Section 2(a) (an "EXPENSE ADVANCE") shall be subject to the condition that, if,
when and to the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Reviewing Party
that Indemnitee would not be permitted to be indemnified under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial determination is made
with respect thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). Indemnitee's obligation to reimburse the Company for any
Expense Advance shall be unsecured and no interest shall be charged thereon. If
there has not been a Change in Control (as defined in Section 10(c) hereof), the
Reviewing Party shall be selected by the Board of Directors, and if there has
been such a Change in Control (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), the Reviewing Party shall be the
Independent Legal Counsel referred to in Section 1(c) hereof. If there has been
no determination by the Reviewing Party or if the Reviewing Party determines
that Indemnitee substantively would not be permitted to be indemnified in whole
or in part under applicable law, Indemnitee shall have the right to commence
litigation seeking an initial determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof, including the legal
or factual bases therefor, and the Company hereby consents to service of process
and to




appear in any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and Indemnitee.

                  (c) Change in Control. The Company agrees that if there is a
Change in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control) then, with respect to all matters
thereafter arising concerning the rights of Indemnitees to payments of Expenses
and Expense Advances under this Agreement or any other agreement or under the
Company's Articles of Incorporation or Bylaws as now or hereafter in effect,
Independent Legal Counsel (as defined in Section 10(d) hereof) shall be selected
by Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would be permitted to be indemnified under applicable law and the
Company agrees to abide by such opinion. The Company agrees to pay the
reasonable fees of the Independent Legal Counsel referred to above and to fully
indemnify such counsel against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to this Agreement or
its engagement pursuant hereto.

                  (d) Mandatory Payment of Expenses. Notwithstanding any other
provision of this Agreement other than Section 9 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
action, suit, proceeding, inquiry or investigation referred to in Section (1)(a)
hereof or in the defense of any claim, issue or matter therein, Indemnitee shall
be indemnified against all Expenses incurred by Indemnitee in connection
therewith.

         2. EXPENSES; INDEMNIFICATION PROCEDURE.

                  (a) Advancement of Expenses. The Company shall advance all
Expenses incurred by Indemnitee. The advances to be made hereunder shall be paid
by the Company to Indemnitee as soon as practicable but in any event no later
than five days after written demand by Indemnitee therefor to the Company.

                  (b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to Indemnitees' right to be indemnified under this
Agreement, give the Company notice in writing as soon as practicable of any
Claim made against Indemnitee for which indemnification will or could be sought
under this Agreement. Notice to the Company shall be directed to the Chief
Executive Officer of the Company at the address shown on the signature page of
this Agreement (or such other address as the Company shall designate in writing
to Indemnitee). In addition, Indemnitee shall give the Company such information
and cooperation as it may reasonably require and as shall be within Indemnitee's
power.

                  (c) No Presumptions; Burden of Proof. For purposes of this
Agreement, the termination of any Claim by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by applicable





law. In addition, neither the failure of the Reviewing Party to have made a
determination as to whether Indemnitee has met any particular standard of
conduct or had any particular belief, nor an actual determination by the
Reviewing Party that Indemnitee has not met such standard of conduct or did not
have such belief, prior to the commencement of legal proceedings by Indemnitee
to secure a judicial determination that Indemnitee should be indemnified under
applicable law, shall be a defense to Indemnitee's claim or create a presumption
that Indemnitee has not met any particular standard of conduct or did not have
any particular belief. In connection with any determination by the Reviewing
Party or otherwise as to whether Indemnitee is entitled to be indemnified
hereunder, the burden of proof shall be on the Company to establish that
Indemnitee is not so entitled.

                  (d) Notice to Insurers. If, at the time of the receipt by the
Company of a notice of a Claim pursuant to Section 2(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of Indemnitee, all amounts payable as a result of such action, suit,
proceeding, inquiry or investigation in accordance with the terms of such
policies.

                  (e) Selection of Counsel. In the event the Company shall be
obligated hereunder to pay the Expenses of any Claim, the Company shall be
entitled to assume the defense of such Claim with counsel approved by
Indemnitee, which approval shall not be unreasonably withheld, upon the delivery
to Indemnitee of written notice of its election so to do. After delivery of such
notice, approval of such counsel by Indemnitee and the retention of such counsel
by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees of counsel subsequently incurred by Indemnitee with
respect to the same Claim; provided that, (i) Indemnitee shall have the right to
employ Indemnitee's counsel in any such Claim at Indemnitee's expense and (ii)
if (A) the employment of counsel by Indemnitee has been previously authorized by
the Company, (B) Indemnitee shall have reasonably concluded that there is a
conflict of interest between the Company and Indemnitee in the conduct of any
such defense, or (C) the Company shall not continue to retain such counsel to
defend such Claim, then the fees and expenses of Indemnitee's counsel shall be
at the expense of the Company. The Company shall have the right to conduct such
defense as it sees fit in its sole discretion, including the right to settle any
claim against Indemnitee without the consent of Indemnitee.

         3. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.

                  (a) Scope. The Company hereby agrees to indemnify Indemnitee
to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of this
Agreement, the Company's Articles of Incorporation, the Company's Bylaws or by
statute. In the event of any change after the date of this Agreement in any
applicable law, statute or rule which expands the right of a Colorado
corporation to indemnify a member of its Board of Directors or an officer,
employee, agent or fiduciary, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits afforded by such
change. In the event of any change in any applicable law, statute or rule which
narrows the right of a Colorado corporation to indemnify a member of its Board
of Directors or




an officer, employee, agent or fiduciary, such change, to the extent not
otherwise required by such law, statute or rule to be applied to this Agreement,
shall have no effect on this Agreement or the parties' rights and obligations
hereunder except as set forth in Section 8(a) hereof.

                  (b) Nonexclusivity. The indemnification provided by this
Agreement shall be in addition to any rights to which Indemnitee may be entitled
under the Company's Articles of Incorporation, its Bylaws, any agreement, any
vote of shareholders or disinterested directors, the Colorado Business
Corporation Act, or otherwise. The indemnification provided under this Agreement
shall continue as to Indemnitee for any action Indemnitee took or did not take
while serving in an indemnified capacity even though Indemnitee may have ceased
to serve in such capacity.

         4. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, the Articles of Incorporation, Bylaws or otherwise)
of the amounts otherwise indemnifiable hereunder.

         5. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however, for
all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is so entitled.

         6. MUTUAL ACKNOWLEDGEMENT. Both the Company and Indemnitee acknowledge
that in certain instances, Federal law or applicable law or public policy may
prohibit the Company from indemnifying its directors, officers, employees,
agents or fiduciaries under this Agreement or otherwise. Indemnitee understands
and acknowledges that the Company has undertaken or may be required in the
future to undertake with the Securities and Exchange Commission to submit the
question of indemnification to a court in certain circumstances for a
determination of the Company's right under public policy to indemnify
Indemnitee.

         7. LIABILITY INSURANCE. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.

         8. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

                  (a) Excluded Actions or Omissions. (i) To indemnify Indemnitee
for Indemnitee's acts, omissions or transactions for which Indemnitee may not be
indemnified under




applicable law; or (ii) to indemnify Indemnitee for Indemnitee's intentional
acts or transactions in violation of the Company's policies;

                  (b) Claims Initiated by Indemnitee. To indemnify or advance
expenses to Indemnitee with respect to Claims initiated or brought voluntarily
by Indemnitee and not by way of defense, except (i) with respect to actions or
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other agreement or insurance policy or under the Company's
Articles of Incorporation or Bylaws now or hereafter in effect relating to
Claims for Indemnifiable Events, or (ii) in specific cases if the Board of
Directors has approved the initiation or bringing of such Claim, advance expense
payment or insurance recovery, as the case may be;

                  (c) Lack of Good Faith. To indemnify Indemnitee for any
expenses incurred by Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by Indemnitee
in such proceeding was not made in good faith or was frivolous; or

                  (d) Claims Under Section 16(b). To indemnify Indemnitee for
expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.

         9. PERIOD OF LIMITATIONS. No legal action shall be brought and no cause
of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.

         10. CONSTRUCTION OF CERTAIN PHRASES.

                  (a) For purposes of this Agreement, references to the
"COMPANY" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees,
agents or fiduciaries, so that if Indemnitee is or was a director, officer,
employee, agent or fiduciary of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director, officer,
employee, agent or fiduciary of another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise, Indemnitee shall stand in the
same position under the provisions of this Agreement with respect to the
resulting or surviving corporation as Indemnitee would have with respect to such
constituent corporation if its separate existence had continued.

                  (b) For purposes of this Agreement, references to "OTHER
ENTERPRISES" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on




Indemnitee with respect to an employee benefit plan; and references to "serving
at the request of the Company" shall include any service as a director, officer,
employee, agent or fiduciary of the Company which imposes duties on, or involves
services by, such director, officer, employee, agent or fiduciary with respect
to an employee benefit plan, its participants or its beneficiaries; and if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to in this Agreement.

                  (c) For purposes of this Agreement a "CHANGE IN CONTROL" shall
be deemed to have occurred if (i) any "PERSON" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than
a trustee or other fiduciary holding securities under an employee benefit plan
of the Company or a corporation owned directly or indirectly by the shareholders
of the Company in substantially the same proportions as their ownership of stock
of the Company, (A) who is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 10% or more of the
combined voting power of the Company's then outstanding Voting Securities,
increases his beneficial ownership of such securities by 5% or more over the
percentage so owned by such person, or (B) becomes the "BENEFICIAL OWNER" (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing more than 20% of the total voting power represented by
the Company's then outstanding Voting Securities, (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, or (iii) the shareholders of the Company approve
a merger or consolidation of the Company with any other corporation other than a
merger or consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the shareholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of (in one transaction or a series of
transactions) all or substantially all of the Company's assets.

                  (d) For purposes of this Agreement, "INDEPENDENT LEGAL
COUNSEL" shall mean an attorney or firm of attorneys, selected in accordance
with the provisions of Section 1(c) hereof, who shall not have otherwise
performed services for the Company or Indemnitee within the last three years
(other than with respect to matters concerning the rights of Indemnitee under
this Agreement, or of other indemnitees under similar indemnity agreements).

                  (e) For purposes of this Agreement, a "REVIEWING PARTY" shall
mean any appropriate person or body consisting of a member or members of the
Company's Board of Directors or any other person or body appointed by the Board
of Directors who is not a party to




the particular Claim for which Indemnitee is seeking indemnification, or
Independent Legal Counsel.

                  (f) For purposes of this Agreement, "VOTING SECURITIES" shall
mean any securities of the Company that vote generally in the election of
directors.

         11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.

         12. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, spouses, heirs,
and personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all, substantially all, or a substantial part, of the business
and/or assets of the Company, by written agreement in form and substance
satisfactory to Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. This Agreement shall
continue in effect with respect to Claims relating to Indemnifiable Events
regardless of whether Indemnitee continues to serve as a director, officer,
employee, agent or fiduciary of the Company or of any other enterprise at the
Company's request.

         13. ATTORNEYS' FEES. In the event that any action is instituted by
Indemnitee under this Agreement or under any liability insurance policies
maintained by the Company to enforce or interpret any of the terms hereof or
thereof, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee with respect to such action and shall be entitled to the advancement
of Expenses with respect to such action, unless, as a part of such action, a
court of competent jurisdiction over such action determines that each of the
material assertions made by Indemnitee as a basis for such action was not made
in good faith or was frivolous. In the event of an action instituted by or in
the name of the Company under this Agreement to enforce or interpret any of the
terms of this Agreement, Indemnitee shall be entitled to be paid all Expenses
incurred by Indemnitee in defense of such action (including costs and expenses
incurred with respect to Indemnitee counterclaims and cross-claims made in such
action), and shall be entitled to the advancement of Expenses with respect to
such action, unless, as a part of such action, a court having jurisdiction over
such action determines that each of Indemnitee's material defenses to such
action was made in bad faith or was frivolous.

         14. NOTICE. All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given (a) five (5) days after deposit with the U.S. Postal
Service or other applicable postal service, if delivered by first class mail,
postage prepaid, (b) upon delivery, if delivered by hand, (c) one business day
after the business day of deposit with Federal Express or similar overnight
courier, freight prepaid, or (d) one day after the business day of delivery by
facsimile transmission, if delivered by facsimile transmission, with copy by
first class mail, postage prepaid, and shall be addressed if to Indemnitee, at
Indemnitee's address as set forth beneath Indemnitee's signature to




this Agreement and if to the Company at the address of its principal corporate
offices (attention: Secretary) or at such other address as such party may
designate by ten days' advance written notice to the other party hereto.

         15. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Colorado
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the City and
County of Denver of the State of Colorado, which shall be the exclusive and only
proper forum for adjudicating such a claim.

         16. SEVERABILITY. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.

         17. CHOICE OF LAW. This Agreement shall be governed by and its
provisions construed and enforced in accordance with the laws of the State of
Colorado, as applied to contracts between Colorado residents, entered into and
to be performed entirely within the State of Colorado, without regard to the
conflict of laws principles thereof.

         18. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.

         19. AMENDMENT AND TERMINATION. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless it is in writing
signed by both the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.

         20. INTEGRATION AND ENTIRE AGREEMENT. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.

         21. NO CONSTRUCTION AS EMPLOYMENT AGREEMENT. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries.







         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

                                      VARI-L COMPANY, INC.


                                      /s/ Charles R. Bland
                                      ------------------------------------------
                                      By:  Charles R. Bland
                                      Chief Executive Officer


                                      AGREED TO AND ACCEPTED BY:

                                      Signature:


                                      ------------------------------------------

EX-10.18

                                                                   EXHIBIT 10.18


                              VARI-L COMPANY, INC.
                         EXECUTIVE EMPLOYMENT AGREEMENT


         This agreement (the "AGREEMENT"), effective August 1, 2002, is made and
entered into by and between VARI-L COMPANY, INC. (the "COMPANY") and Charles R.
Bland (the "EMPLOYEE").

         WHEREAS, the Company wishes to engage Employee as the Company's
President and Chief Executive Officer to manage the Company's overall operations
as part of the Company's continuing efforts to build shareholder value; and

         WHEREAS, the Company's Board of Directors, comprised solely of
disinterested directors, has determined to provide Employee with this employment
agreement, including the severance package and other benefits provided hereby,
for the purpose of inducing Employee to accept the President and Chief Executive
Officer position with the Company and to provide diligent and efficacious
services to the Company during his employment.

         NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:

         I. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby
accepts employment, upon the terms and conditions hereinafter set forth.

         II. TERM. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement is for a period commencing August 1, 2002,
and expiring July 31, 2003 (the "Initial Term"). On August 1st of each year,
beginning in 2003, the term of this Agreement shall be automatically extended
for an additional year without any further action on the part of the Company or
Employee unless terminated under the provisions of Section VIII of this
Agreement.

         III. DUTIES. Employee is engaged as President and Chief Executive
Officer of the Company, to have complete responsibility for and authority over
the management of the operations of the Company, including, but not limited to,
overall management of the Company's Sales, Marketing, Research, Development and
Engineering, Finance, Administration, Manufacturing, Operations, Human Resources
and Quality Assurance departments or functions and supervision of the Vice
Presidents or other officers or managers assigned to those departments, areas or
functions, and to have full authority and responsibility, subject only to the
general direction and control of the Board of Directors, for administering those
operations of the Company in all respects. His power shall include authority to
hire and fire personnel of the Company and to retain consultants when he deems
necessary to implement the Company's policies. If Employee is elected or
appointed a director of the Company during the term of this Agreement, Employee
shall serve in such capacity or capacities without further compensation; but
nothing herein shall be construed as requiring the Company, or anyone else, to
cause the election or appointment of Employee as a director.

         IV. EXTENT OF SERVICES. Employee shall faithfully, industriously, and
to the best of his ability, experience, and talents, perform all of the duties
that may be required of and from him pursuant to this Agreement. Nothing herein
shall be construed as preventing Employee







from (a) investing his assets in such form or manner as will not require any
services on the part of Employee, unless employee discloses in writing to the
Company's Board of Directors the extent of such services and receives prior
written authorization to provide such services, in the operations or the affairs
of the companies in which such investments are made or (b) serving as a
director, advisor, or consultant; provided, however, that such investments or
services may not be in connection with a business which is in competition with
the Company (excluding (i) indirect investments through mutual funds or other
broad based investment vehicles, (ii) investments in debt instruments, and (iii)
investments in less than 5% of the stock of any publicly held business). For
purposes hereof, "in competition with the Company" shall be construed
consistently with Section VII hereof.

         V. COMPENSATION AND EMPLOYEE BENEFITS.

            A. ANNUAL BASE SALARY. For all services rendered by Employee under
this Agreement, the Company shall pay Employee an annual base salary, payable in
equal bi-weekly installments. The amount of such base salary shall be reviewed
at least once each fiscal year by the Compensation Committee of the Company's
Board of Directors.

            B. STOCK OPTIONS. Employee shall be eligible for future stock option
grants at the same time and based on the same criteria as other executive
officers of the Company.

            C. BONUS COMPENSATION. Employee may receive bonuses, payable in cash
or shares of the Company's stock, as may be determined from time to time by the
Board of Directors or the Compensation Committee of the Board of Directors, in
its sole discretion, on the basis of: (i) Employee's success in meeting his
personal performance goals, as established by the Compensation Committee of the
Board of Directors; (ii) Employee's merit, including but not limited to the
quality of the services provided by Employee and his industriousness and
diligence in performing such services; and (iii) the Company's financial success
and progress in the prior fiscal year. Employee's annual bonus opportunity (the
"BONUS OPPORTUNITY") is equal to forty percent (40%) of his current annual base
salary.

            D. VACATION. Employee shall be entitled to four (4) weeks of paid
vacation each year. Any accrued but unused vacation time shall be paid to
Employee at or before the termination of his employment, in accordance with
Company policy, in addition to any amounts due and payable to Employee under
Section VIII hereof. Employee shall be required to take at least two (2) weeks
vacation per year, including in at least one case, a vacation lasting no less
than five (5) consecutive business days.

            E. EMPLOYEE BENEFITS. Employee shall be entitled to receive all of
the rights, benefits, and privileges of an employee and an executive officer
under any generally applicable retirement, pension, profit-sharing, insurance,
health and hospital, or other employee benefit plans which may be now in effect
or hereafter adopted by the Company.

            F. WORKING FACILITIES. Employee shall be furnished with a private
office, business tools, and such other facilities and services suitable to
Employee's position and adequate for the performance of the duties required by
this Agreement.



                                       2



            G. EXPENSES. Subject to limits which may be imposed by the Board of
Directors, including any committee thereof, Employee is authorized to incur
reasonable expenses in connection with his responsibilities in conducting the
business of the Company, including expenses for entertainment, travel, and
similar items. The Company will reimburse Employee for all such expenses upon
the presentation by Employee, in a timely manner of an itemized account of such
expenditures, including receipts or other adequate documentation, or Employee
may pay such expenses with a Company credit card, if a Company credit card is
issued to Employee, and Employee shall appropriately document the business
purpose of such expenditures. Employee's expenses must be submitted to and
approved by the Audit Committee or another officer or employee designated by the
Audit Committee to review and approve such expenses.

            H. AUTOMOBILE ALLOWANCE. The Company will pay Employee an automobile
allowance for the expense of leasing or financing an automobile, as well as for
insurance, maintenance, fuel and repairs associated with such automobile. Any
automobile for which Employee accepts this allowance must be suitable for the
Company's use in performing services for the Company. Specifically, such
automobile must have four doors. The automobile allowance shall be payable in
equal bi-weekly installments and shall be $10,000.00 per year. If and to the
extent that the automobile is not considered by the Board of Directors to have
been used for business purposes, based upon documentation submitted to the Board
of Directors at the Board's request, the value of the non-business use of the
automobile and other reimbursements made in connection therewith on Employee's
Form W-2 or 1099 as income for each year such personal benefit is received.

            I. EDUCATIONAL EXPENSES. Employee shall be entitled to receive
reimbursement for educational expenses consistent with the company's policy on
educational reimbursement.

         VI. PROPRIETARY INTERESTS OF COMPANY.

            Employee and the Company recognize that the Company is in a highly
competitive business in a highly technical industry. The parties acknowledge
that the success or failure of the Company depends largely on the development
and use of certain proprietary and confidential information and trade secrets,
including without limitation, information concerning any of the Company's
patented components, research and development projects and in patent process
components, and personal relationships with present and potential customers,
suppliers, contractors, and governmental agencies as well as technology,
procedures, systems, and techniques relating to the products developed or
distributed by the Company (hereinafter collectively referred to as
"CONFIDENTIAL INFORMATION"). Confidential Information is a substantial asset of
the Company. Confidential Information will be disclosed to Employee in the
normal course of operation. Employee acknowledges that Confidential Information
is extremely valuable to the Company and must be protected from unauthorized use
by the Company's competitors or other persons. Therefore, Employee agrees not to
disclose or use, whether for the benefit of Employee or any other person or
entity, at any time during or after his employment, any Confidential Information
to any person or entity other than the Company or persons authorized by the
Company to receive such Confidential Information.




                                       3




            Employee recognizes that, during the term of his employment with the
Company, he may develop new products, technology, processes, devices,
inventions, or methods of production, including but not limited to computer
hardware, software or "firmware," and may enhance, improve or perfect existing
products, technology, processes, devices, inventions or methods of production
(hereinafter collectively referred to as "INVENTIONS"). As partial consideration
for the salary and other benefits provided by the Company to Employee, Employee
hereby agrees that his entire work product while in the employment of the
Company, including any Inventions, is the exclusive property of the Company
unless Employee has received prior written authorization from the Board of
Directors for the exclusion of such work from this agreement. Employee also
agrees to cooperate fully with the Company and to do whatever acts are
reasonably necessary in order to obtain United States or foreign letters patent
or copyrights, or both, and to vest the entire right and title thereto in the
Company. Employee further agrees that the Company shall have the royalty-free
right to use in its business, and to make, use, and sell such Inventions whether
or not patentable, regardless of whether they are conceived or made by Employee
during the hours which he is employed by the Company or with the use of or
assistance of the Company's facilities, materials or personnel.

            Except as required in his duties to the Company, Employee will not,
directly or indirectly, use, disseminate, disclose, lecture upon, or publish
articles concerning any Confidential Information without the prior written
consent of the Board of Directors.

            Upon termination of his employment with the Company, all documents,
records, notebooks, and similar repositories of or containing Confidential
Information, including copies thereof, then in Employee's possession, whether
prepared by Employee or others, will be left with the Company, and no copies
thereof will be retained by Employee.

            It is agreed that any breach of this section of the Agreement will
cause immediate irreparable harm to the Company and monetary damages would be
difficult if not impossible to ascertain. Therefore, the parties agree that,
upon any breach of any covenant in this Section VI, that the Company may obtain
from the district court for the City and County of Denver, Colorado, or any
other court of competent jurisdiction, an appropriate restraining order,
preliminary injunction or other form of equitable relief with respect thereto.
Nothing contained herein shall be construed as prohibiting the Company from
pursuing any other available remedies for such breach, including the recovery of
damages, costs, and attorney fees.

         VII. NONCOMPETE AND NONSOLICITATION. During the term of this Agreement
and for a period of the greater of (a) one year after termination or expiration
of this Agreement or (b) the period during which a Severance Amount or
consulting arrangement is being paid to Employee by the Company (the "NONCOMPETE
PERIOD"), Employee will not, directly or indirectly, own, manage, operate,
control, provide services to, be employed by, participate in, or be connected in
any manner with the ownership, management, operation, or control of any business
which develops, manufactures, distributes or sells the same type of products as
the Company, or products which are the functional equivalent of the Company's
products or currently planned products, within and to the same market as the
Company's market at the time of Employee's proposed activity or, after the
termination of this Agreement, at or prior to the time of such termination.
Employee certifies that his employment with the Company will not breach a
previous employment agreement. Employee agrees not to engage in the unauthorized
use of the




                                       4



proprietary assets of others during the term of his employment by the Company.
Employee agrees not to enter into any other employment agreement, oral or
written, which will run concurrently, in whole or in part, with Employee's
employment by the Company without the prior written approval of the Board of
Directors. Employee agrees not to solicit other Company employees during the
non-compete period. It is agreed that any breach of this section of the
Agreement will cause immediate irreparable harm to the Company and that monetary
damages for such breach would be difficult if not impossible to ascertain.
Therefore, the parties agree that upon any breach of the covenants of this
section the Company may obtain from the district court for the City and County
of Denver, Colorado, or any other court of competent jurisdiction, an
appropriate restraining order, preliminary injunction or other form of equitable
relief with respect thereto. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other available remedies for such
breach, including the recovery of damages, costs, and attorney fees.

            The foregoing agreement not to compete shall not be held invalid
because of the scope of the territory or the actions restricted thereby, or the
period of time within which such agreement is operative; but any judgment by a
court of competent jurisdiction may define the maximum territory and actions
subject to, and restricted by, this paragraph and the period of time during
which such agreement is enforceable.

            Notwithstanding the foregoing, in the event of a Change of Control,
as hereinafter defined, not recommended by a majority of the Board of Directors
of the Company as constituted prior to the date of such Change of Control, this
non-compete agreement shall terminate upon the date of such Change of Control.

         VIII. TERMINATION OF EMPLOYMENT.

            A. TERMINATION BY MUTUAL AGREEMENT. The Company and Employee may
agree to terminate this Agreement on terms and conditions mutually acceptable to
them as of the date of termination.

            B. DEATH. In the event of Employee's death, the Company shall pay to
any beneficiary designated by Employee or, if no such beneficiary has been
designated, to his estate, an amount equal to the then annual base salary for
the greater of (a) one (1) year or (b) the remaining term of this Agreement
without additional extensions, together with any bonuses which the Company's
Board of Directors shall determine in its sole discretion to be due and payable
to Employee. If Employee's beneficiary or estate receives any proceeds from any
life insurance policies the premiums of which were being paid for by the Company
at the time of Employee's death other than the Group Life Insurance referred to
in Section IX.A hereof, then the payments of annual base salary and bonuses
shall be reduced by the amount of such proceeds from such life insurance
policies.

            C. DISABILITY. If Employee becomes Disabled during the term of
employment, the Board of Directors may, at its option, by written notice to
Employee or Employee's personal representative, terminate the Employee. Employee
shall thereafter be eligible to receive disability benefits under the Company's
standard employee disability insurance policy like any other employee.



                                       5



            D. VOLUNTARY OR INVOLUNTARY TERMINATION. Upon a Voluntary or
Involuntary Termination as defined herein, Employee shall continue to render his
services to the Company, if and to the extent required by the Company, up to the
date of such Voluntary or Involuntary Termination as referenced in the written
notice of termination submitted to Employee by the Company, or vice versa, and
shall be paid (i) the unpaid amount of the then applicable annual base salary up
to the date of such Voluntary or Involuntary Termination, (ii) any bonuses which
the Company's Board of Directors may determine, in its sole discretion, to be
due and payable to Employee, and (iii) the Severance Amount as defined herein.
In the event of a Voluntary Termination, as a condition to Employee's receipt of
the foregoing payments to Employee, during the time between the submission of a
notice of termination by Employee and the effective date of termination set
forth in such notice, Employee shall continue to diligently provide the Company
with such services as the Company may request. In the event of an Involuntary
Termination, all unvested stock options and stock appreciation rights that have
previously been granted to Employee will fully vest and remain exercisable for
three (3) months after such termination.

            E. DEFINITIONS. All the terms defined in this Section shall have the
meanings given below throughout this Agreement.

               1. "CHANGE IN DUTIES, COMPENSATION, OR BENEFITS" shall mean any
one or more of the following:

                  a. a significant and detrimental change in the nature or scope
of Employee's authority, responsibilities or duties from those currently
applicable to him;

                  b. a reduction in Employee's annual base salary from that
currently provided to him;

                  c. a diminution in Employee's eligibility to participate in
bonus, stock option, incentive award or any other compensation plan which
provides opportunities to receive compensation from those currently applicable
to him, except for: (i) changes in the eligibility requirements for plans that
are applicable to employees generally; (ii) changes in plans that are applicable
to all executives and result in a diminution of Employee's benefits under such
plan that is fair and proportional as compared to the diminution of benefits for
all executives; and (iii) changes that are required by applicable law;

                  d. a material diminution in employee benefits (including but
not limited to medical, dental or life insurance and long-term disability plans)
and perquisites currently applicable to Employee, except for: (i) changes in the
eligibility requirements for benefits that are applicable to employees
generally; (ii) changes in benefits and perquisites that are applicable to all
executives and result in a diminution of Employee's benefits that is fair and
proportional as compared to the diminution for all executives; and (iii) changes
that are required by applicable law;

                  e. a change in the location of Employee's principal place of
employment by the Company (including its subsidiaries) by more than fifty (50)
miles from the




                                       6



location where he was principally employed immediately prior to the date on
which a Change of Control occurs; or

                  f. a reasonable determination by a majority of those persons
comprising the Board of Directors of the Company prior to a Change of Control
(even if such determination is made after such Change of Control) that, as a
result of a Change of Control and a change in circumstances thereafter
significantly affecting his position, Employee is unable to exercise the
functions or duties attached to his position immediately prior to the date on
which a Change of Control occurs.

               2. "CHANGE OF CONTROL" shall be deemed to have occurred if:

                  a. any "person," including a "group" as determined in
accordance with Section 13(d)(3) of the Securities Exchange Act of 1934 (the
"EXCHANGE ACT"), is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power
of the Company's then outstanding securities;

                  b. as a result of, or in connection with, any tender offer or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions (a
"TRANSACTION"), the persons who were directors of the Company before the
Transaction shall cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company;

                  c. the Company is merged or consolidated with another
corporation or entity and, as a result of the merger or consolidation, less than
80% of the outstanding voting securities of the surviving corporation or entity
is then owned in the aggregate by the former stockholders of the Company;

                  d. a tender offer or exchange offer is made and consummated
for the ownership of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding voting securities; or

                  e. the Company transfers all or substantially all of its
assets to another corporation which is not a wholly owned subsidiary of the
Company.

               3. "DISABLED" OR "DISABILITY" shall mean mental or physical
illness or condition rendering Employee incapable of performing any portion of
Employee's normal duties with the Company even after the Company's reasonable
accommodation of any such disability in accordance with the Americans with
Disabilities Act and the Colorado Nondiscrimination statute.

               4. "INVOLUNTARY TERMINATION" shall mean any termination except:

                  a. Voluntary Termination;

                  b. Termination by mutual agreement;

                                       7



                  c. Termination as a result of death; or

                  d. Employee's voluntary retirement from employment or
mandatory retirement from employment pursuant to a retirement plan to which
Employee was subject prior to any Change of Control. ("RETIREMENT").


A resignation by Employee not more than thirty (30) days after a Change in
Compensation, Duties or Benefits is an Involuntary Termination.

               5. "SEVERANCE AMOUNT" is equal to:

                  a. In the event of an Involuntary Termination which does not
occur less than (12) months after a Change of Control, the Severance Amount
shall be: (i) one (1) year's base salary based on Employee's base salary prior
to the Change in Duties, Compensation and Benefits, paid on the Company's
regular payroll dates, (ii) one (1) year's automobile allowance; and (iii) the
same portion of Employee's Bonus Opportunity for the one (1) year following such
Involuntary Termination as the average portion of the respective Bonus
Opportunity paid to other executive officers during such year, paid on the same
dates as such other executives' bonuses.

                  b. In the event of Voluntary Termination, no Severance Amount
is payable unless Employee has completed one (1) year of service with the
Company. After one year of service, the Severance Amount shall be equal to one
(1) month's salary for every year of service completed, including the first
year, up to a maximum of three (3) months, payable ratably on the Company's
regular payroll dates.

                  c. In the event of an Involuntary Termination during the
twelve month period immediately following the effective date of the Change in
Control, the entire Severance Amount shall be paid to Employee in a lump sum not
more than thirty (30) days after such Involuntary Termination and the Severance
Amount shall be equal to: (i) two (2) years' base salary based on Employee's
base salary immediately prior to the Change of Control; (ii) an amount equal to
two (2) years' automobile allowance; and (iii) Employee's entire Bonus
Opportunity, determined by reference to the base salary in effect immediately
prior to the Change of Control, for the two (2) years following such Involuntary
Termination.

                  d. In the event of termination resulting from Retirement, the
Severance Amount shall be equal to one (1) month's salary for every year of
service completed to the Company up to a maximum of twelve (12) months.

                  e. In the event of termination resulting from Employee's
death, the Severance Amount shall be the amounts set forth in Section VIII.B
above

                  f. If any Involuntary Termination follows a finding by the
Board of Directors or a committee of disinterested members of the Board of
Directors that Employee engaged in willful misconduct in the performance of his
duties, including but not limited to an intentional act of fraud, embezzlement,
self-dealing or misappropriation of Company property, then the Severance Amount
will be reduced to six (6) months' annual base



                                       8



salary minus the Company's out of pocket loss, including attorneys fees and
other costs, resulting from such willful misconduct.

                  g. In the case of a Voluntary Termination or an Involuntary
Termination resulting from Employee's resignation following a Change in Duties,
Compensation or Benefits, Employee must give the Company proper notice of such
Termination in order to receive the Severance Amount. For purposes hereof,
proper notice is defined as written notice received by the Board of Directors
not less than thirty (30) business days prior to the date of termination of
employment.

                  h. In the case of an Involuntary Termination by the Company,
the Board of Directors must give Employee not less than thirty (30) business
days prior written notice of such termination, provided, however, that the
Company may, in its sole discretion, elect to have Employee provide different
services during such notice period than those provided prior to such notice.

                  i. Notwithstanding any other provision of this Agreement, in
the event that Employee is found to have violated the non-compete provisions of
Section VII of this Agreement by a court of competent jurisdiction ("BREACH"),
all Severance Amounts due and owing under this Agreement shall be terminated
upon the effective date of the Breach and Employee shall reimburse the Company
for any portion of the Severance Amount previously paid to Employee.

               6. "VOLUNTARY TERMINATION" shall mean any termination which
results from a resignation by Employee other than a resignation which occurs
within thirty (30) days of a Change in Duties, Compensation, or Benefits.

               7. "VOTING SECURITIES" shall mean any securities which ordinarily
possess the power to vote in the election of directors without the occurrence of
any pre-condition or contingency other than the passage of time.

               8. "BENEFICIALLY OWNED" shall mean beneficial ownership by
Employee, Employee's spouse, or a trust or similar arrangement established by or
for the benefit of Employee, Employee's spouse, or Employee's minor children as
well as the meaning of such term under Section 13 or Section 16 of the Exchange
Act.

            F. SECTION 280G PAYMENT. In the unlikely event that the Severance
Amount payments under this Agreement are determined by an independent accounting
firm retained by Employee (but paid for by the Company) to constitute "excess
parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended, (the "CODE") and any regulations thereunder, such
Severance Amount shall be reduced by the amount necessary to avoid such
classification.

            G. MEDICAL AND DENTAL BENEFITS. If Employee's employment by the
Company or any subsidiary or successor of the Company is terminated because of
Death, Disability, or Involuntary Termination, then to the extent that Employee
or any of Employee's dependents may be covered under the terms of any medical
and dental plans of the Company (or any subsidiary) immediately prior to the
termination, the Company will provide Employee and



                                       9



those dependents with the same or equivalent coverages until three (3) months
after any such termination of employment. The Company may, at its election,
procure such coverages apart from, and outside of the terms of, the plans
applicable to other employees. The Company's obligation to provide such
coverages will be limited by the requirement that Employee and Employee's
dependents comply with all of the conditions of the medical or dental plans
applicable to employees generally and the Company is under no obligation to
obtain special coverages for Employee which would not be covered by the plans
applicable to employees generally. In consideration for these benefits, Employee
must make contributions equal to those required from time to time from other
employees for equivalent coverages under the medical or dental plans. If and to
the extent that Employee is eligible to participate in a medical, dental or
other health insurance plan of another employer after the termination of his
employment by the Company, then the benefit provided by this section shall be
eliminated or commensurately diminished.

         IX. LIFE INSURANCE.

            A. GROUP LIFE INSURANCE. The Company shall provide Employee with
personal life insurance under the Company's group life insurance policy as in
effect from time to time which shall be payable to a beneficiary designated by
Employee in addition to, and not as a substitute for, any Severance Amount
payable under Section VIII.B above. Employee acknowledges that, while the
Company currently maintains group life insurance which provides for a death
benefit equal to three (3) times an officer's annual base salary at the time of
death, with a maximum payment of $500,000, as well as an accidental death and
dismemberment policy (the "AD&D Policy") which also provides for an additional
benefit in the same amount as the group life insurance if the cause of death is
covered by the AD&D Policy, such coverages may be altered or amended in the
future on a Company-wide basis, provided, however, that under no circumstances
will such coverages be reduced unless other officers of comparable rank within
the Company are correspondingly reduced.

            B. KEY MAN LIFE INSURANCE. Employee hereby consents to the purchase
by the Company, at the Company's option, of one or more "key man" life insurance
policies on Employee's life naming the Company or its designee as beneficiary
(the "Key Man Policies"); provided, however, that the Company shall not be
required to obtain such insurance. Employee agrees that he shall take any
reasonable actions which may be requested by the Board, and otherwise fully
cooperate with the Company, in its efforts to purchase and maintain the Key Man
Policies. The Key Man Policies will be owned by the Company and the proceeds
made payable to the Company or its designee. If purchased by the Company, the
Key Man Policies shall be for the purpose of providing funds necessary to obtain
a replacement for Employee and for any other reasonable business purpose as may
be determined by the Board in amounts sufficient to accomplish their intended
purposes.

         X. DIRECTORS AND OFFICERS INSURANCE.  The Company shall maintain and
keep in force directors and officers liability insurance coverage on all
directors and officers in such an amount as the Company deems reasonable and
necessary under the circumstances but in no event less than $7.5 million of
aggregate coverage.


                                       10



         XI. POST-TERMINATION CONSULTING. In the event of Employee's Involuntary
or Voluntary Termination, Employee agrees to provide services to the Company as
a consultant for a period of ninety (90) days following the completion of all
severance payments (the "Consulting Period"), in exchange for cash compensation
at the rate of $100 per hour. Employee shall have the right to decline to
provide any consulting services requested by the Company after an Involuntary
Termination or Voluntary Termination but such refusal during the period when
severance payments are being made by the Company will result in the forfeiture
of Employee's right to the Severance Amount hereunder. If Employee does elect to
provide consulting services following the completion of the severance period,
Employee shall be obligated to provide no more than ten (10) hours of consulting
services per week during the Consulting Period, if and to the extent requested
by the Company. Employee may determine to cease providing such consulting
services to the Company at any time during the Consulting Period by providing
the Company with ten days written notice.

         XII. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered in person or sent by
registered or certified mail to Employee's residence as indicated in Employee's
personnel file at in the Company's records in the case of Employee or to its
principal office in the case of the Company.

         XIII. WAIVER. The waiver of any provision of this Agreement shall not
operate or be construed as a waiver of any other provision of this Agreement. No
waiver shall be valid unless in writing and executed by the party to be charged
therewith.

         XIV. SEVERABILITY/MODIFICATION. In the event that any clause or
provision of this Agreement shall be determined to be invalid, illegal or
unenforceable, such clause or provision may be severed or modified to the extent
necessary, and, as severed and/or modified, this Agreement shall remain in full
force and effect.

         XV. ASSIGNMENT. Except for a transfer by will or by the laws of descent
or distribution, Employee's right to receive payments or benefits under this
Agreement shall not be assignable or transferable, whether by pledge, creation
of a security interest or otherwise. In the event of any attempted assignment or
transfer contrary to this paragraph, the Company shall have no liability to pay
any amount so attempted to be assigned or transferred. Employee acknowledges
that the services to be rendered under this Agreement are unique and personal.
Accordingly, Employee may not assign such duties or obligations under this
Agreement.

         XVI. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors and assigns (including, without
limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or other
disposition of all or substantially all of its assets unless either (i) the
person or entity acquiring the assets or a substantial portion of the assets
shall expressly assume by an instrument in writing all duties and obligations of
the Company under this Agreement or (ii) the Company shall provide, through the
establishment of a separate reserve or otherwise, for the payment in full of all
amounts which are or may reasonably be expected to become payable to Employee
under this Agreement.


                                       11



         XVII. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
concerning the employment arrangement between the parties and shall, as of the
effective date hereof, supersede all other such agreements between the parties,
provided, however, that nothing in this Agreement shall prevent the Company from
granting additional or special compensation or benefits to Employee after the
date of execution of this Agreement. This Agreement may not be amended except by
an agreement in writing signed by both parties.

         XVIII. GOVERNING LAW AND JURISDICTION. This Agreement shall be
interpreted, construed, and enforced under the laws of the State of Colorado.
The courts of the State of Colorado shall have sole jurisdiction and venue over
all controversies which may arise with respect to this Agreement.

         XIX. TIME. In comparing any period of time prescribed or allowed by
this Agreement, the day of the act, event or default from which the designated
period of time begins to run shall not be included. Time accounting shall begin
upon midnight of the following calendar day. All periods of time shall be
assumed to be specified in calendar days unless otherwise noted. In the case of
fractional days of time, the appropriate equivalent hours can be calculated and
accounted for against midnight of the calendar day in which the period of time
started. For purposes of calculating the duration of the covenant not to compete
the time period of such covenant shall be extended by one day for each day that
Employee competes with Company in violation of such covenant.

         XX. COUNTERPARTS. This Agreement may be signed in one or more
counterparts which, taken together, shall constitute a single binding agreement
between the parties. Photocopies or telecopies of the parties' original
signatures hereto may be relied upon as originals for all purposes.

         IN WITNESS WHEREOF, the parties have executed this Agreement the date
and year indicated above.


                                      THE COMPANY:

                                      VARI-L COMPANY, INC.


                                      By: /s/ David Lisowski
                                         ---------------------------------------
                                         David Lisowski
                                         Chairman Compensation Committee



                                      EMPLOYEE:



                                      /s/ Charles R. Bland
                                      ------------------------------------------
                                      Charles R. Bland







                                       12

EX-10.19

                                                                   EXHIBIT 10.19


                              VARI-L COMPANY, INC.
                         EXECUTIVE EMPLOYMENT AGREEMENT


         THIS AGREEMENT, effective August 1, 2002, is made and entered into by
and between VARI-L COMPANY, INC. (the "Company") and Russell M. Crouch
("Employee").

         WHEREAS, the Company wishes to engage Employee as the Company's Vice
President- Design Engineering to manage the Company's Design Engineering as part
of the Company's continuing efforts to build shareholder value; and

         WHEREAS, the Company's Board of Directors, comprised solely of
disinterested directors, has determined to provide Employee with this employment
agreement, including the severance package and other benefits provided hereby,
for the purpose of inducing Employee to accept the Vice President Design
Engineering position with the Company and to provide diligent and efficacious
services to the Company during his employment.

         NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:

         I. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby
accepts employment, upon the terms and conditions hereinafter set forth.

         II. TERM. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement is for a period commencing August 1, 2002,
and expiring July 31, 2003 (the "Initial Term"). On August 1, of each year,
beginning in 2003, the term of this Agreement shall be automatically extended
for an additional year without any further action on the part of the Company or
Employee unless terminated under the provisions of Section VIII of this
Agreement.

         III. DUTIES. Employee is engaged as Vice President Design Engineering
of the Company, to have complete responsibility for and authority over the
management of Design Engineering and shall have full authority and
responsibility, subject only to the direction of the Company's Chief Executive
Officer or President and the Board of Directors, for administering those
operations of the Company in all respects.

         IV. EXTENT OF SERVICES. Employee shall faithfully, industriously, and
to the best of his ability, experience, and talents, perform all of the duties
that may be required of and from him pursuant to this Agreement. Nothing herein
shall be construed as preventing Employee from (a) investing his assets in such
form or manner as will not require any services on the part of Employee, unless
employee discloses in writing to the company the extent of such services and
receives written authorization to provide such services, in the operations or
the affairs of the companies in which such investments are made or (b) serving
as a director, advisor, or consultant; provided, however, that such investments
or services may not be in connection with a business which is in competition
with the Company (excluding (i) indirect investments through mutual funds or
other broad based investment vehicles, (ii) investments in debt instruments, and
(iii) investments in less than 5% of the stock of any publicly held





business). For purposes hereof, "in competition with the Company" shall be
construed consistently with Section VII hereof.

         V. COMPENSATION AND EMPLOYEE BENEFITS.

                  A. ANNUAL BASE SALARY. For all services rendered by Employee
under this Agreement, the Company shall pay Employee an annual base salary ,
payable in equal bi-weekly installments. The amount of such base salary shall be
reviewed at least once each fiscal year by the Compensation Committee of the
Company's Board of Directors.

                  B. STOCK OPTIONS. Employee shall be eligible for future stock
option grants at the same time and based on the same criteria as other executive
officers of the Company.

                  C. BONUS COMPENSATION. Employee may receive bonuses, payable
in cash or shares of the Company's stock, as may be determined from time to time
by the Board of Directors or the Compensation Committee of the Board of
Directors, in its sole discretion, on the basis of: (i) Employee's success in
meeting his personal performance goals, as established by the Compensation
Committee of the Board of Directors; (ii) Employee's merit, including but not
limited to the quality of the services provided by Employee and his
industriousness and diligence in performing such services; and (iii) the
Company's financial success and progress in the prior fiscal year. Employee's
annual bonus opportunity is equal to thirty five percent (35%) of his current
annual base salary.

                  D. VACATION. Employee shall be entitled to accrue four (4)
weeks of paid vacation for each year of service provided. Any accrued but unused
vacation time shall be paid to Employee at or before the termination of his
employment, in accordance with Company policy, in addition to any amounts due
and payable to Employee under Section VIII hereof. Employee shall be required to
take at least two (2) weeks vacation per year, including in at least one case, a
vacation lasting no less than five (5) consecutive business days.

                  E. EMPLOYEE BENEFITS. Employee shall be entitled to receive
all of the rights, benefits, and privileges of an employee and an executive
officer under any generally applicable retirement, pension, profit-sharing,
insurance, health and hospital, or other employee benefit plans which may be now
in effect or hereafter adopted by the COMPANY.

                  F. WORKING FACILITIES. Employee shall be furnished with a
private office, business tools, and such other facilities and services suitable
to Employee's position and adequate for the performance of the duties required
by this Agreement.

                  G. EXPENSES. Subject to limits which may be imposed by the
Chief Executive Officer, President or the Board of Directors, including any
committee thereof, Employee is authorized to incur reasonable expenses in
connection with his responsibilities in conducting the business of the Company,
including expenses for entertainment, travel, and similar items. The Company
will reimburse Employee for all such expenses upon the presentation by Employee,
in a timely manner of an itemized account of such expenditures, including
receipts or other adequate documentation, or Employee may pay such expenses with
a Company credit card, if a Company credit card is issued to Employee, and
Employee shall



                                       2

appropriately document the business purpose of such expenditures. Employee's
expenses must be submitted to and approved by the Audit Committee or another
officer or employee designated by the Audit Committee to review and approve such
expenses.

                  H. AUTOMOBILE ALLOWANCE. The Company will pay Employee an
automobile allowance for the expense of leasing or financing an automobile, as
well as for insurance, maintenance, fuel and repairs associated with such
automobile. Any automobile for which Employee accepts this allowance must be
suitable for the Company's use in performing services for the Company.
Specifically, such automobile must have four doors. The automobile allowance
shall be payable in equal bi-weekly installments and shall be $10,000.00 per
year. If and to the extent that the automobile is not considered by the Company
to have been used for business purposes, based upon documentation submitted to
the Company at the Company's request, the Company will include the value of the
non-business use of the automobile and other reimbursements made in connection
therewith on Employee's Form W-2 or 1099 as income for each year such personal
benefit is received.

                  I. EDUCATIONAL EXPENSES. Employee shall be entitled to receive
reimbursement for educational expenses consistent with the company's policy on
educational reimbursement.

         VI. PROPRIETARY INTERESTS OF COMPANY.

                    Employee and the Company recognize that the Company is in a
highly competitive business in a highly technical industry. The parties
acknowledge that the success or failure of the Company depends largely on the
development and use of certain proprietary and confidential information and
trade secrets, including without limitation, information concerning any of the
Company's patented components, research and development projects and in patent
process components, and personal relationships with present and potential
customers, suppliers, contractors, and governmental agencies as well as
technology, procedures, systems, and techniques relating to the products
developed or distributed by the Company (hereinafter collectively referred to as
"CONFIDENTIAL INFORMATION"). Confidential Information is a substantial asset of
the Company. Confidential Information will be disclosed to Employee in the
normal course of operation. Employee acknowledges that Confidential Information
is extremely valuable to the Company and must be protected from unauthorized use
by the Company's competitors or other persons. Therefore, Employee agrees not to
disclose or use, whether for the benefit of Employee or any other person or
entity, at any time during or after his employment, any Confidential Information
to any person or entity other than the Company or persons authorized by the
Company to receive such Confidential Information.

                    Employee recognizes that, during the term of his employment
with the Company, he may develop new products, technology, processes, devices,
inventions, or methods of production, including but not limited to computer
hardware, software or "firmware," and may enhance, improve or perfect existing
products, technology, processes, devices, inventions or methods of production
(hereinafter collectively referred to as "INVENTIONS"). As partial consideration
for the salary and other benefits provided by the Company to Employee, Employee
hereby agrees that his entire work product while in the employ of the Company,
including any Inventions, is the exclusive property of the Company



                                       3


unless Employee has received written authorization from the Company for the
exclusion of such work from this agreement. Employee also agrees to cooperate
fully with the Company and to do whatever acts are reasonably necessary in order
to obtain United States or foreign letters patent or copyrights, or both, and to
vest the entire right and title thereto in the Company. Employee further agrees
that the Company shall have the royalty-free right to use in its business, and
to make, use, and sell such Inventions whether or not patentable, regardless of
whether they are conceived or made by Employee during the hours which he is
employed by the Company or with the use of or assistance of the Company's
facilities, materials or personnel.

                    Except as required in his duties to the Company, Employee
will not, directly or indirectly, use, disseminate, disclose, lecture upon, or
publish articles concerning any Confidential Information without the prior
written consent of the Company.

                    Upon termination of his employment with the Company, all
documents, records, notebooks, and similar repositories of or containing
Confidential Information, including copies thereof, then in Employee's
possession, whether prepared by Employee or others, will be left with the
Company, and no copies thereof will be retained by Employee.

                    It is agreed that any breach of this section of the
Agreement will cause immediate irreparable harm to the Company and monetary
damages would be difficult if not impossible to ascertain. Therefore, the
parties agree that, upon any breach of any covenant in this Section VI, that the
Company may obtain from the district court for the City and County of Denver,
Colorado, or any other court of competent jurisdiction, an appropriate
restraining order, preliminary injunction or other form of equitable relief with
respect thereto. Nothing contained herein shall be construed as prohibiting the
Company from pursuing any other available remedies for such breach, including
the recovery of damages, costs, and attorney fees.

         VII. NONCOMPETE AND NONSOLICITATION. During the term of this Agreement
and for a period of the greater of (a) one year after termination or expiration
of this Agreement or (b) the period during which a Severance Amount or
consulting arrangement is being paid to Employee by the Company (the "NONCOMPETE
PERIOD"), Employee will not, directly or indirectly, own, manage, operate,
control, provide services to, be employed by, participate in, or be connected in
any manner with the ownership, management, operation, or control of any business
which develops, manufactures, distributes or sells the same type of products as
the Company, or products which are the functional equivalent of the Company's
products or currently planned products, within and to the same market as the
Company's market at the time of Employee's proposed activity or, after the
termination of this Agreement, at or prior to the time of such termination.
Employee certifies that his employment with the Company will not breach a
previous employment agreement. Employee agrees not to engage in the unauthorized
use of the proprietary assets of others during the term of his employment by the
Company. Employee agrees not to enter into any other employment agreement, oral
or written, which will run concurrently, in whole or in part, with Employee's
employment by the Company without the prior written approval of the CEO of the
Company. It is agreed that any breach of this section of the Agreement will
cause immediate irreparable harm to the Company and that monetary damages for
such breach would be difficult if not impossible to ascertain.



                                       4


Therefore, the parties agree that upon any breach of the covenants of this
section the Company may obtain from the district court for the City and County
of Denver, Colorado, or any other court of competent jurisdiction, an
appropriate restraining order, preliminary injunction or other form of equitable
relief with respect thereto. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other available remedies for such
breach, including the recovery of damages, costs, and attorney fees.

                    The foregoing agreement not to compete shall not be held
invalid because of the scope of the territory or the actions restricted thereby,
or the period of time within which such agreement is operative; but any judgment
by a court of competent jurisdiction may define the maximum territory and
actions subject to, and restricted by, this paragraph and the period of time
during which such agreement is enforceable.

                    Notwithstanding the foregoing, in the event of a Change of
Control, as hereinafter defined, not recommended by a majority of the Board of
Directors of the Company as constituted prior to the date of such Change of
Control, this non-compete agreement shall terminate upon the date of such Change
of Control.

         VIII. TERMINATION OF EMPLOYMENT.

                  A. TERMINATION BY MUTUAL AGREEMENT. The Company and Employee
may agree to terminate this Agreement on terms and conditions mutually
acceptable to them as of the date of termination.

                  B. DEATH. In the event of Employee's death during the term of
this Agreement, including the Consulting Period, if any, the Company shall pay
to Employee's estate any unpaid wages or other amounts owing at the time of
death and shall pay, in addition to and not as a substitute for the proceeds
from any life insurance policies on Employee's life paid for by the Company, an
amount equal to the Severance Amount which would have been payable to Employee
if there had been a Voluntary Termination on the date of Employee's death and
all notice and other requirements for the payment of such Severance Amount had
been satisfied.

                  C. DISABILITY. If Employee becomes Disabled during the term of
employment, the Company may, at its option, by written notice to Employee or
Employee's personal representative, terminate the employment. Employee shall
thereafter be eligible to receive disability benefits under the Company's
standard employee disability insurance policy like any other employee.

                  D. VOLUNTARY OR INVOLUNTARY TERMINATION. Upon a Voluntary or
Involuntary Termination as defined herein, Employee shall continue to render his
services to the Company, if and to the extent required by the Company, up to the
date of such Voluntary or Involuntary Termination as referenced in the written
notice of termination submitted to Employee by the Company, or vice versa, and
shall be paid (i) the unpaid amount of the then applicable annual base salary up
to the date of such Voluntary or Involuntary Termination, (ii) any bonuses which
the Company's Board of Directors may determine, in its sole discretion, to be
due and payable to Employee, and (iii) the Severance Amount as defined herein.
In the



                                       5


event of a Voluntary Termination, as a condition to Employee's receipt of the
foregoing payments to Employee, during the time between the submission of a
notice of termination by Employee and the effective date of termination set
forth in such notice, Employee shall continue to diligently provide the Company
with such services as the Company may request. In the event of an Involuntary
Termination, all unvested stock options and stock appreciation rights that have
previously been granted to Employee will fully vest and remain exercisable for
three (3) months after such termination.

                  E. DEFINITIONS. All the terms defined in this Section shall
have the meanings given below throughout this Agreement.

                           1. "CHANGE IN DUTIES, COMPENSATION, OR BENEFITS"
shall mean any one or more of the following:

                                    a. a significant and detrimental change in
the nature or scope of Employee's authority, responsibilities or duties from
those currently applicable to him;

                                    b. a reduction in Employee's annual base
salary from that currently provided to him;

                                    c. a diminution in Employee's eligibility to
participate in bonus, stock option, incentive award or any other compensation
plan which provides opportunities to receive compensation from those currently
applicable to him, except for: (i) changes in the eligibility requirements for
plans that are applicable to employees generally; (ii) changes in plans that are
applicable to all executives and result in a diminution of Employee's benefits
under such plan that is fair and proportional as compared to the diminution of
benefits for all executives; and (iii) changes that are required by applicable
law;

                                    d. a material diminution in employee
benefits (including but not limited to medical, dental or life insurance and
long-term disability plans) and perquisites currently applicable to Employee,
except for: (i) changes in the eligibility requirements for benefits that are
applicable to employees generally; (ii) changes in benefits and perquisites that
are applicable to all executives and result in a diminution of Employee's
benefits that is fair and proportional as compared to the diminution for all
executives; and (iii) changes that are required by applicable law;

                                    e. a change in the location of Employee's
principal place of employment by the Company (including its subsidiaries) by
more than fifty (50) miles from the location where he was principally employed
immediately prior to the date on which a Change of Control occurs; or

                                    f. a reasonable determination by a majority
of those persons comprising the Board of Directors of the Company prior to a
Change of Control (even if such determination is made after such Change of
Control) that, as a result of a Change of Control and a change in circumstances
thereafter significantly affecting his position, Employee is unable to exercise
the functions or duties attached to his position immediately prior to the date
on which a Change of Control occurs.



                                       6

                           2. "CHANGE OF CONTROL" shall be deemed to have
occurred if:

                                    a. any "person," including a "group" as
determined in accordance with Section 13(d)(3) of the Securities Exchange Act of
1934 (the "EXCHANGE ACT"), is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities;

                                    b. as a result of, or in connection with,
any tender offer or exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the foregoing
transactions (a "TRANSACTION"), the persons who were directors of the Company
before the Transaction shall cease to constitute a majority of the Board of
Directors of the Company or any successor to the Company;

                                    c. the Company is merged or consolidated
with another corporation or entity and, as a result of the merger or
consolidation, less than 80% of the outstanding voting securities of the
surviving corporation or entity is then owned in the aggregate by the former
stockholders of the Company;

                                    d. a tender offer or exchange offer is made
and consummated for the ownership of securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding voting
securities; or

                                    e. the Company transfers all or
substantially all of its assets to another corporation which is not a wholly
owned subsidiary of the Company.

                           3. "DISABLED" OR "DISABILITY" shall mean mental or
physical illness or condition rendering Employee incapable of performing any
portion of Employee's normal duties with the Company even after the Company's
reasonable accommodation of any such disability in accordance with the Americans
with Disabilities Act and the Colorado Nondiscrimination statute.

                           4. "INVOLUNTARY TERMINATION" shall mean any
termination except:

                                    a. VOLUNTARY TERMINATION;

                                    b. termination by mutual agreement;

                                    c. termination as a result of death; or

                                    d. Employee's voluntary retirement from
employment or mandatory retirement from employment pursuant to a retirement plan
to which Employee was subject prior to any Change of Control. ("RETIREMENT").

                           5. "SEVERANCE AMOUNT" is equal to:

                                    a. in the case of a Change in Control,
employee may unilaterally elect to terminate this agreement within six months
after the Change of Control has



                                       7


occurred. Employee's election will be treated as an Involuntary Termination and
he will receive a lump sum Severance Payment, payable within thirty days of his
election, equal to his then current base salary, plus one hundred percent of his
annual bonus opportunity and continuation of his car allowance for one year. In
the case of a Change in Duties Compensation and Benefits, employee may
unilaterally elect to terminate this agreement. Employee's election will be
treated as an Involuntary Termination and employee will receive a Severance
Payment equal to (6) six months of his then current base salary paid on the
company's regular payroll dates and his pro-rata share of the incentive earned
over the six months following his separation date paid on the company's then
regularly scheduled incentive payment dates and continuation of his car
allowance for six months. In the case of an Involuntary Termination, not
following a Change in Control or a Change in Duties, Compensation and Benefits,
employee will receive a Severance Payment equal to (6) six months of his then
current base salary paid on the company's regular payroll dates and his pro-rata
share of the incentive earned over the six months following his separation date
paid on the company's then regularly scheduled incentive payment dates and
continuation of his car allowance for six months. In the event of Voluntary
Termination, no Severance Amount shall be payable until employee has completed
one (1) year of service with the company and his Severance Amount will be equal
to one (1) month's salary for every year of service completed up to a maximum of
three (3) months, payable ratably on the Company's regular payroll dates.

                                    b. In the case of a Voluntary Termination or
an Involuntary Termination resulting from Employee's resignation following a
Change in Duties, Compensation or Benefits, Employee must give the Company
proper notice of such Termination in order to receive the Severance Amount. For
purposes hereof, proper notice is defined as written notice received by the
Company not less than thirty (30) business days prior to the date of termination
of employment.

                                    c. In the case of an Involuntary Termination
by the Company, the Company must give Employee not less than thirty (30)
business days prior written notice of such termination, provided, however, that
the Company may, in its sole discretion, elect to have Employee provide
different services during such notice period than those provided prior to such
notice.

                                    d. Notwithstanding any other provision of
this Agreement, in the event that Employee is found to have violated the
non-compete provisions of Section VII of this Agreement by a court of competent
jurisdiction ("BREACH"), all Severance Amounts due and owing under this
Agreement shall be terminated upon the effective date of the Breach and Employee
shall reimburse the Company for any portion of the Severance Amount previously
paid to Employee.

                           6. "VOLUNTARY TERMINATION" shall mean any termination
which results from a resignation by Employee other than a resignation following
a Change in Duties, Compensation, or Benefits as defined herein.

                           7. "VOTING SECURITIES" shall mean any securities
which ordinarily possess the power to vote in the election of directors without
the occurrence of any pre-condition or contingency other than the passage of
time.



                                       8


                           8. "BENEFICIALLY OWNED" shall mean beneficial
ownership by Employee, Employee's spouse, or a trust or similar arrangement
established by or for the benefit of Employee, Employee's spouse, or Employee's
minor children as well as the meaning of such term under Section 13 or Section
16 of the Exchange Act.

                  F. SECTION 280G PAYMENT. In the unlikely event that the
Severance Amount payments under this Agreement are determined by an independent
accounting firm retained by Employee (but paid for by the Company) to constitute
"excess parachute payments" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended, (the "CODE") and any regulations thereunder,
such Severance Amount shall be reduced by the amount necessary to avoid such
classification.

                  G. MEDICAL AND DENTAL BENEFITS. If Employee's employment by
the Company or any subsidiary or successor of the Company is terminated because
of Death, Disability, or Involuntary Termination, then to the extent that
Employee or any of Employee's dependents may be covered under the terms of any
medical and dental plans of the Company (or any subsidiary) immediately prior to
the termination, the Company will provide Employee and those dependents with the
same or equivalent coverages until three (3) months after any such termination
of employment. The Company may, at its election, procure such coverages apart
from, and outside of the terms of, the plans applicable to other employees. The
Company's obligation to provide such coverages will be limited by the
requirement that Employee and Employee's dependents comply with all of the
conditions of the medical or dental plans applicable to employees generally and
the Company is under no obligation to obtain special coverages for Employee
which would not be covered by the plans applicable to employees generally. In
consideration for these benefits, Employee must make contributions equal to
those required from time to time from other employees for equivalent coverages
under the medical or dental plans. If and to the extent that Employee is
eligible to participate in a medical, dental or other health insurance plan of
another employer after the termination of his employment by the Company, then
the benefit provided by this section shall be eliminated or commensurately
diminished.

         IX. LIFE INSURANCE.

                  A. GROUP LIFE INSURANCE. The Company shall provide Employee
with personal life insurance under the Company's group life insurance policy as
in effect from time to time which shall be payable to a beneficiary designated
by Employee in addition to, and not as a substitute for, any Severance Amount
payable under Section VIII.B above. Employee acknowledges that, while the
Company currently maintains group life insurance which provides for a death
benefit equal to three (3) times an officer's annual base salary at the time of
death, with a maximum payment of $500,000, as well as an accidental death and
dismemberment policy (the "AD&D Policy") which also provides for an additional
benefit in the same amount as the group life insurance if the cause of death is
covered by the AD&D Policy, such coverages may be altered or amended in the
future on a Company-wide basis, provided, however, that under no circumstances
will such coverages be reduced unless other officers of comparable rank within
the Company are correspondingly reduced.



                                       9


                  B. KEY MAN LIFE INSURANCE. Employee hereby consents to the
purchase by the Company, at the Company's option, of one or more "key man" life
insurance policies on Employee's life naming the Company or its designee as
beneficiary (the "Key Man Policies"); provided, however, that the Company shall
not be required to obtain such insurance. Employee agrees that he shall take any
reasonable actions which may be requested by the Company, and otherwise fully
cooperate with the Company, in its efforts to purchase and maintain the Key Man
Policies. The Key Man Policies will be owned by the Company and the proceeds
made payable to the Company or its designee. If purchased by the Company, the
Key Man Policies shall be for the purpose of providing funds necessary to obtain
a replacement for Employee and for any other reasonable business purpose as may
be determined by the Company in amounts sufficient to accomplish their intended
purposes.

         X. DIRECTORS AND OFFICERS INSURANCE. The Company shall maintain and
keep in force directors and officers liability insurance coverage on all
directors and officers in such an amount as the Company deems reasonable and
necessary under the circumstances but in no event less than $7.5 million of
aggregate coverage.

         XI. POST-TERMINATION CONSULTING. In the event of Employee's Involuntary
or Voluntary Termination, Employee agrees to provide services to the Company as
a consultant for a period of ninety (90) days following the completion of all
severance payments (the "Consulting Period"), in exchange for cash compensation
at the rate of $100 per hour. Employee shall have the right to decline to
provide any consulting services requested by the Company after an Involuntary
Termination or Voluntary Termination but such refusal during the period when
severance payments are being made by the Company will result in the forfeiture
of Employee's right to the Severance Amount hereunder. If Employee does elect to
provide consulting services following the completion of the severance period,
Employee shall be obligated to provide no more than ten (10) hours of consulting
services per week during the Consulting Period, if and to the extent requested
by the Company. Employee may determine to cease providing such consulting
services to the Company at any time during the Consulting Period by providing
the Company with ten days written notice.

         XII. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered in person or sent by
registered or certified mail to Employee's residence as indicated in Employee's
personnel file at in the Company's records in the case of Employee or to its
principal office in the case of the Company.

         XIII. WAIVER. The waiver of any provision of this Agreement shall not
operate or be construed as a waiver of any other provision of this Agreement. No
waiver shall be valid unless in writing and executed by the party to be charged
therewith.

         XIV. SEVERABILITY/MODIFICATION. In the event that any clause or
provision of this Agreement shall be determined to be invalid, illegal or
unenforceable, such clause or provision may be severed or modified to the extent
necessary, and, as severed and/or modified, this Agreement shall remain in full
force and effect.

         XV. ASSIGNMENT. Except for a transfer by will or by the laws of descent
or distribution, Employee's right to receive payments or benefits under this
Agreement shall not



                                       10


be assignable or transferable, whether by pledge, creation of a security
interest or otherwise. In the event of any attempted assignment or transfer
contrary to this paragraph, the Company shall have no liability to pay any
amount so attempted to be assigned or transferred. Employee acknowledges that
the services to be rendered under this Agreement are unique and personal.
Accordingly, Employee may not assign such duties or obligations under this
Agreement.

         XVI. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors and assigns (including, without
limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or other
disposition of all or substantially all of its assets unless either (i) the
person or entity acquiring the assets or a substantial portion of the assets
shall expressly assume by an instrument in writing all duties and obligations of
the Company under this Agreement or (ii) the Company shall provide, through the
establishment of a separate reserve or otherwise, for the payment in full of all
amounts which are or may reasonably be expected to become payable to Employee
under this Agreement.

         XVII. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
concerning the employment arrangement between the parties and shall, as of the
effective date hereof, supersede all other such agreements between the parties,
provided, however, that nothing in this Agreement shall prevent the Company from
granting additional or special compensation or benefits to Employee after the
date of execution of this Agreement. This Agreement may not be amended except by
an agreement in writing signed by both parties.

         XVIII. GOVERNING LAW AND JURISDICTION. This Agreement shall be
interpreted, construed, and enforced under the laws of the State of Colorado.
The courts of the State of Colorado shall have sole jurisdiction and venue over
all controversies which may arise with respect to this Agreement.

         XIX. TIME. In comparing any period of time prescribed or allowed by
this Agreement, the day of the act, event or default from which the designated
period of time begins to run shall not be included. Time accounting shall begin
upon midnight of the following calendar day. All periods of time shall be
assumed to be specified in calendar days unless otherwise noted. In the case of
fractional days of time, the appropriate equivalent hours can be calculated and
accounted for against midnight of the calendar day in which the period of time
started. For purposes of calculating the duration of the covenant not to compete
the time period of such covenant shall be extended by one day for each day that
Employee competes with Company in violation of such covenant.

         XX. COUNTERPARTS. This Agreement may be signed in one or more
counterparts which, taken together, shall constitute a single binding agreement
between the parties. Photocopies or telecopies of the parties' original
signatures hereto may be relied upon as originals for all purposes.



                                       11


         IN WITNESS WHEREOF, the parties have executed this Agreement the date
and year indicated above.

                                       THE COMPANY:

                                       VARI-L COMPANY, INC.



                                       By: /s/ CHARLES R. BLAND
                                          --------------------------------------
                                          Charles R. Bland, President


                                       EMPLOYEE:



                                       /s/ RUSSELL M. CROUCH
                                       -----------------------------------------
                                       Russell M. Crouch



                                       12

EX-10.20

                                                                   EXHIBIT 10.20

                              VARI-L COMPANY, INC.
                         EXECUTIVE EMPLOYMENT AGREEMENT


         THIS AGREEMENT, effective August 1 2002, is made and entered into by
and between VARI-L COMPANY, INC. (the "Company") and Richard P. Dutkiewicz
("Employee").

         WHEREAS, the Company wishes to engage Employee as the Company's Vice
President- of Finance and Chief Financial Officer to manage the Company's
finance and accounting as part of the Company's continuing efforts to build
shareholder value; and

         WHEREAS, the Company's Board of Directors, comprised solely of
disinterested directors, has determined to provide Employee with this employment
agreement, including the severance package and other benefits provided hereby,
for the purpose of inducing Employee to accept the Vice President of Finance and
Chief Financial Officer position with the Company and to provide diligent and
efficacious services to the Company during his employment.

         NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:

         I. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby
accepts employment, upon the terms and conditions hereinafter set forth.

         II. TERM. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement is for a period commencing August 1, 2002,
and expiring July 31, 2003, (the "Initial Term"). On August 1, of each year,
beginning in 2003, the term of this Agreement shall be automatically extended
for an additional year without any further action on the part of the Company or
Employee unless terminated under the provisions of Section VIII of this
Agreement.

         III. DUTIES. Employee is engaged as Vice President of Finance and Chief
Financial Officer of the Company, to have complete responsibility for and
authority over the management of finance and accounting and shall have full
authority and responsibility, subject only to the direction of the Company's
Chief Executive Officer or President and the Board of Directors, for
administering those operations of the Company in all respects.

         IV. EXTENT OF SERVICES. Employee shall faithfully, industriously, and
to the best of his ability, experience, and talents, perform all of the duties
that may be required of and from him pursuant to this Agreement. Nothing herein
shall be construed as preventing Employee from (a) investing his assets in such
form or manner as will not require any services on the part of Employee, unless
employee discloses in writing to the company the extent of such services and
receives written authorization to provide such services, in the operations or
the affairs of the companies in which such investments are made or (b) serving
as a director, advisor, or consultant; provided, however, that such investments
or services may not be in connection with a business which is in competition
with the Company (excluding (i) indirect investments through mutual funds or
other broad based investment vehicles, (ii) investments in





debt instruments, and (iii) investments in less than 5% of the stock of any
publicly held business). For purposes hereof, "in competition with the Company"
shall be construed consistently with Section VII hereof.

         V. COMPENSATION AND EMPLOYEE BENEFITS.

                  A. ANNUAL BASE SALARY. For all services rendered by Employee
under this Agreement, the Company shall pay Employee an annual base salary ,
payable in equal bi-weekly installments. The amount of such base salary shall be
reviewed at least once each fiscal year by the Compensation Committee of the
Company's Board of Directors.

                  B. STOCK OPTIONS. Employee shall be eligible for future stock
option grants at the same time and based on the same criteria as other executive
officers of the Company.

                  C. BONUS COMPENSATION. Employee may receive bonuses, payable
in cash or shares of the Company's stock, as may be determined from time to time
by the Board of Directors or the Compensation Committee of the Board of
Directors, in its sole discretion, on the basis of: (i) Employee's success in
meeting his personal performance goals, as established by the Compensation
Committee of the Board of Directors; (ii) Employee's merit, including but not
limited to the quality of the services provided by Employee and his
industriousness and diligence in performing such services; and (iii) the
Company's financial success and progress in the prior fiscal year. Employee's
annual bonus opportunity is equal to thirty five percent (35%) of his current
annual base salary.

                  D. VACATION. Employee shall be entitled to accrue four (4)
weeks of paid vacation for each year of service provided. Any accrued but unused
vacation time shall be paid to Employee at or before the termination of his
employment, in accordance with Company policy, in addition to any amounts due
and payable to Employee under Section VIII hereof. Employee shall be required to
take at least two (2) weeks vacation per year, including in at least one case, a
vacation lasting no less than five (5) consecutive business days.

                  E. EMPLOYEE BENEFITS. Employee shall be entitled to receive
all of the rights, benefits, and privileges of an employee and an executive
officer under any generally applicable retirement, pension, profit-sharing,
insurance, health and hospital, or other employee benefit plans which may be now
in effect or hereafter adopted by the Company.

                  F. WORKING FACILITIES. Employee shall be furnished with a
private office, business tools, and such other facilities and services suitable
to Employee's position and adequate for the performance of the duties required
by this Agreement.

                  G. EXPENSES. Subject to limits which may be imposed by the
Chief Executive Officer, President or the Board of Directors, including any
committee thereof, Employee is authorized to incur reasonable expenses in
connection with his responsibilities in conducting the business of the Company,
including expenses for entertainment, travel, and similar items. The Company
will reimburse Employee for all such expenses upon the presentation by Employee,
in a timely manner of an itemized account of such expenditures, including
receipts or other adequate documentation, or Employee may pay such expenses with



                                       2


a Company credit card, if a Company credit card is issued to Employee, and
Employee shall appropriately document the business purpose of such expenditures.
Employee's expenses must be submitted to and approved by the Audit Committee or
another officer or employee designated by the Audit Committee to review and
approve such expenses.

                  H. AUTOMOBILE ALLOWANCE. The Company will pay Employee an
automobile allowance for the expense of leasing or financing an automobile, as
well as for insurance, maintenance, fuel and repairs associated with such
automobile. Any automobile for which Employee accepts this allowance must be
suitable for the Company's use in performing services for the Company.
Specifically, such automobile must have four doors. The automobile allowance
shall be payable in equal bi-weekly installments and shall be $10,000.00 per
year. If and to the extent that the automobile is not considered by the Company
to have been used for business purposes, based upon documentation submitted to
the Company at the Company's request, the Company will include the value of the
non-business use of the automobile and other reimbursements made in connection
therewith on Employee's Form W-2 or 1099 as income for each year such personal
benefit is received.

                  I. EDUCATIONAL EXPENSES. Employee shall be entitled to receive
reimbursement for educational expenses consistent with the company's policy on
educational reimbursement.

         VI. PROPRIETARY INTERESTS OF COMPANY.

                    Employee and the Company recognize that the Company is in a
highly competitive business in a highly technical industry. The parties
acknowledge that the success or failure of the Company depends largely on the
development and use of certain proprietary and confidential information and
trade secrets, including without limitation, information concerning any of the
Company's patented components, research and development projects and in patent
process components, and personal relationships with present and potential
customers, suppliers, contractors, and governmental agencies as well as
technology, procedures, systems, and techniques relating to the products
developed or distributed by the Company (hereinafter collectively referred to as
"CONFIDENTIAL INFORMATION"). Confidential Information is a substantial asset of
the Company. Confidential Information will be disclosed to Employee in the
normal course of operation. Employee acknowledges that Confidential Information
is extremely valuable to the Company and must be protected from unauthorized use
by the Company's competitors or other persons. Therefore, Employee agrees not to
disclose or use, whether for the benefit of Employee or any other person or
entity, at any time during or after his employment, any Confidential Information
to any person or entity other than the Company or persons authorized by the
Company to receive such Confidential Information.

                    Employee recognizes that, during the term of his employment
with the Company, he may develop new products, technology, processes, devices,
inventions, or methods of production, including but not limited to computer
hardware, software or "firmware," and may enhance, improve or perfect existing
products, technology, processes, devices, inventions or methods of production
(hereinafter collectively referred to as "INVENTIONS"). As partial consideration
for the salary and other benefits provided by the Company to Employee, Employee
hereby agrees that his entire work product while in the



                                       3


employ of the Company, including any Inventions, is the exclusive property of
the Company unless Employee has received written authorization from the Company
for the exclusion of such work from this agreement. Employee also agrees to
cooperate fully with the Company and to do whatever acts are reasonably
necessary in order to obtain United States or foreign letters patent or
copyrights, or both, and to vest the entire right and title thereto in the
Company. Employee further agrees that the Company shall have the royalty-free
right to use in its business, and to make, use, and sell such Inventions whether
or not patentable, regardless of whether they are conceived or made by Employee
during the hours which he is employed by the Company or with the use of or
assistance of the Company's facilities, materials or personnel.

                    Except as required in his duties to the Company, Employee
will not, directly or indirectly, use, disseminate, disclose, lecture upon, or
publish articles concerning any Confidential Information without the prior
written consent of the Company.

                    Upon termination of his employment with the Company, all
documents, records, notebooks, and similar repositories of or containing
Confidential Information, including copies thereof, then in Employee's
possession, whether prepared by Employee or others, will be left with the
Company, and no copies thereof will be retained by Employee.

                    It is agreed that any breach of this section of the
Agreement will cause immediate irreparable harm to the Company and monetary
damages would be difficult if not impossible to ascertain. Therefore, the
parties agree that, upon any breach of any covenant in this Section VI, that the
Company may obtain from the district court for the City and County of Denver,
Colorado, or any other court of competent jurisdiction, an appropriate
restraining order, preliminary injunction or other form of equitable relief with
respect thereto. Nothing contained herein shall be construed as prohibiting the
Company from pursuing any other available remedies for such breach, including
the recovery of damages, costs, and attorney fees.

         VII. NONCOMPETE AND NONSOLICITATION. During the term of this Agreement
and for a period of the greater of (a) one year after termination or expiration
of this Agreement or (b) the period during which a Severance Amount or
consulting arrangement is being paid to Employee by the Company (the "NONCOMPETE
PERIOD"), Employee will not, directly or indirectly, own, manage, operate,
control, provide services to, be employed by, participate in, or be connected in
any manner with the ownership, management, operation, or control of any business
which develops, manufactures, distributes or sells the same type of products as
the Company, or products which are the functional equivalent of the Company's
products or currently planned products, within and to the same market as the
Company's market at the time of Employee's proposed activity or, after the
termination of this Agreement, at or prior to the time of such termination.
Employee certifies that his employment with the Company will not breach a
previous employment agreement. Employee agrees not to engage in the unauthorized
use of the proprietary assets of others during the term of his employment by the
Company. Employee agrees not to enter into any other employment agreement, oral
or written, which will run concurrently, in whole or in part, with Employee's
employment by the Company without the prior written approval of the CEO of the
Company. It is agreed that any breach of this section of the Agreement will
cause immediate irreparable harm to the Company



                                       4


and that monetary damages for such breach would be difficult if not impossible
to ascertain. Therefore, the parties agree that upon any breach of the covenants
of this section the Company may obtain from the district court for the City and
County of Denver, Colorado, or any other court of competent jurisdiction, an
appropriate restraining order, preliminary injunction or other form of equitable
relief with respect thereto. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other available remedies for such
breach, including the recovery of damages, costs, and attorney fees.

                    The foregoing agreement not to compete shall not be held
invalid because of the scope of the territory or the actions restricted thereby,
or the period of time within which such agreement is operative; but any judgment
by a court of competent jurisdiction may define the maximum territory and
actions subject to, and restricted by, this paragraph and the period of time
during which such agreement is enforceable.

                    Notwithstanding the foregoing, in the event of a Change of
Control, as hereinafter defined, not recommended by a majority of the Board of
Directors of the Company as constituted prior to the date of such Change of
Control, this non-compete agreement shall terminate upon the date of such Change
of Control.

         VIII. TERMINATION OF EMPLOYMENT.

                  A. TERMINATION BY MUTUAL AGREEMENT. The Company and Employee
may agree to terminate this Agreement on terms and conditions mutually
acceptable to them as of the date of termination.

                  B. DEATH. In the event of Employee's death during the term of
this Agreement, including the Consulting Period, if any, the Company shall pay
to Employee's estate any unpaid wages or other amounts owing at the time of
death and shall pay, in addition to and not as a substitute for the proceeds
from any life insurance policies on Employee's life paid for by the Company, an
amount equal to the Severance Amount which would have been payable to Employee
if there had been a Voluntary Termination on the date of Employee's death and
all notice and other requirements for the payment of such Severance Amount had
been satisfied.

                  C. DISABILITY. If Employee becomes Disabled during the term of
employment, the Company may, at its option, by written notice to Employee or
Employee's personal representative, terminate the employment. Employee shall
thereafter be eligible to receive disability benefits under the Company's
standard employee disability insurance policy like any other employee.

                  D. VOLUNTARY OR INVOLUNTARY TERMINATION. Upon a Voluntary or
Involuntary Termination as defined herein, Employee shall continue to render his
services to the Company, if and to the extent required by the Company, up to the
date of such Voluntary or Involuntary Termination as referenced in the written
notice of termination submitted to Employee by the Company, or vice versa, and
shall be paid (i) the unpaid amount of the then applicable annual base salary up
to the date of such Voluntary or Involuntary Termination, (ii) any bonuses which
the Company's Board of Directors may determine, in its sole discretion, to



                                       5


be due and payable to Employee, and (iii) the Severance Amount as defined
herein. In the event of a Voluntary Termination, as a condition to Employee's
receipt of the foregoing payments to Employee, during the time between the
submission of a notice of termination by Employee and the effective date of
termination set forth in such notice, Employee shall continue to diligently
provide the Company with such services as the Company may request. In the event
of an Involuntary Termination, all unvested stock options and stock appreciation
rights that have previously been granted to Employee will fully vest and remain
exercisable for three (3) months after such termination.

                  E. DEFINITIONS. All the terms defined in this Section shall
have the meanings given below throughout this Agreement.

                           1. "CHANGE IN DUTIES, COMPENSATION, OR BENEFITS"
shall mean any one or more of the following:

                                    a. a significant and detrimental change in
the nature or scope of Employee's authority, responsibilities or duties from
those currently applicable to him;

                                    b. a reduction in Employee's annual base
salary from that currently provided to him;

                                    c. a diminution in Employee's eligibility to
participate in bonus, stock option, incentive award or any other compensation
plan which provides opportunities to receive compensation from those currently
applicable to him, except for: (i) changes in the eligibility requirements for
plans that are applicable to employees generally; (ii) changes in plans that are
applicable to all executives and result in a diminution of Employee's benefits
under such plan that is fair and proportional as compared to the diminution of
benefits for all executives; and (iii) changes that are required by applicable
law;

                                    d. a material diminution in employee
benefits (including but not limited to medical, dental or life insurance and
long-term disability plans) and perquisites currently applicable to Employee,
except for: (i) changes in the eligibility requirements for benefits that are
applicable to employees generally; (ii) changes in benefits and perquisites that
are applicable to all executives and result in a diminution of Employee's
benefits that is fair and proportional as compared to the diminution for all
executives; and (iii) changes that are required by applicable law;

                                    e. a change in the location of Employee's
principal place of employment by the Company (including its subsidiaries) by
more than fifty (50) miles from the location where he was principally employed
immediately prior to the date on which a Change of Control occurs; or

                                    f. a reasonable determination by a majority
of those persons comprising the Board of Directors of the Company prior to a
Change of Control (even if such determination is made after such Change of
Control) that, as a result of a Change of Control and a change in circumstances
thereafter significantly affecting his position, Employee is



                                       6


unable to exercise the functions or duties attached to his position immediately
prior to the date on which a Change of Control occurs.

                           2. "CHANGE OF CONTROL" shall be deemed to have
occurred if:

                                    a. any "person," including a "group" as
determined in accordance with Section 13(d)(3) of the Securities Exchange Act of
1934 (the "EXCHANGE ACT"), is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities;

                                    b. as a result of, or in connection with,
any tender offer or exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the foregoing
transactions (a "TRANSACTION"), the persons who were directors of the Company
before the Transaction shall cease to constitute a majority of the Board of
Directors of the Company or any successor to the Company;

                                    c. the Company is merged or consolidated
with another corporation or entity and, as a result of the merger or
consolidation, less than 80% of the outstanding voting securities of the
surviving corporation or entity is then owned in the aggregate by the former
stockholders of the Company;

                                    d. a tender offer or exchange offer is made
and consummated for the ownership of securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding voting
securities; or

                                    e. the Company transfers all or
substantially all of its assets to another corporation which is not a wholly
owned subsidiary of the Company.

                           3. "DISABLED" OR "DISABILITY" shall mean mental or
physical illness or condition rendering Employee incapable of performing any
portion of Employee's normal duties with the Company even after the Company's
reasonable accommodation of any such disability in accordance with the Americans
with Disabilities Act and the Colorado Nondiscrimination statute.

                           4. "INVOLUNTARY TERMINATION" shall mean any
termination except:

                                    a. VOLUNTARY TERMINATION;

                                    b. termination by mutual agreement;

                                    c. termination as a result of death; or

                                    d. Employee's voluntary retirement from
employment or mandatory retirement from employment pursuant to a retirement plan
to which Employee was subject prior to any Change of Control. ("RETIREMENT").



                                       7

                           5. "SEVERANCE AMOUNT" is equal to:

                                    a. in the case of a Change in Control,
employee may unilaterally elect to terminate this agreement within six months
after the Change of Control has occurred. Employee's election will be treated as
an Involuntary Termination and he will receive a lump sum Severance Payment,
payable within thirty days of his election, equal to his then current base
salary, plus one hundred percent of his annual bonus opportunity and
continuation of his car allowance for one year. In the case of a Change in
Duties Compensation and Benefits, employee may unilaterally elect to terminate
this agreement. Employee's election will be treated as an Involuntary
Termination and employee will receive a Severance Payment equal to (6) six
months of his then current base salary paid on the company's regular payroll
dates and his pro-rata share of the incentive earned over the six months
following his separation date paid on the company's then regularly scheduled
incentive payment dates and continuation of his car allowance for six months. In
the case of an Involuntary Termination, not following a Change in Control or a
Change in Duties, Compensation and Benefits, employee will receive a Severance
Payment equal to (6) six months of his then current base salary paid on the
company's regular payroll dates and his pro-rata share of the incentive earned
over the six months following his separation date paid on the company's then
regularly scheduled incentive payment dates and continuation of his car
allowance for six months. In the event of Voluntary Termination, no Severance
Amount shall be payable until employee has completed one (1) year of service
with the company and his Severance Amount will be equal to one (1) month's
salary for every year of service completed up to a maximum of three (3) months,
payable ratably on the Company's regular payroll dates.

                                    b. In the case of a Voluntary Termination or
an Involuntary Termination resulting from Employee's resignation following a
Change in Duties, Compensation or Benefits, Employee must give the Company
proper notice of such Termination in order to receive the Severance Amount. For
purposes hereof, proper notice is defined as written notice received by the
Company not less than thirty (30) business days prior to the date of termination
of employment.

                                    c. In the case of an Involuntary Termination
by the Company, the Company must give Employee not less than thirty (30)
business days prior written notice of such termination, provided, however, that
the Company may, in its sole discretion, elect to have Employee provide
different services during such notice period than those provided prior to such
notice.

                                    d. Notwithstanding any other provision of
this Agreement, in the event that Employee is found to have violated the
non-compete provisions of Section VII of this Agreement by a court of competent
jurisdiction ("BREACH"), all Severance Amounts due and owing under this
Agreement shall be terminated upon the effective date of the Breach and Employee
shall reimburse the Company for any portion of the Severance Amount previously
paid to Employee.

                           6. "VOLUNTARY TERMINATION" shall mean any termination
which results from a resignation by Employee other than a resignation following
a Change in Duties, Compensation, or Benefits as defined herein.



                                       8


                           7. "VOTING SECURITIES" shall mean any securities
which ordinarily possess the power to vote in the election of directors without
the occurrence of any pre-condition or contingency other than the passage of
time.

                           8. "BENEFICIALLY OWNED" shall mean beneficial
ownership by Employee, Employee's spouse, or a trust or similar arrangement
established by or for the benefit of Employee, Employee's spouse, or Employee's
minor children as well as the meaning of such term under Section 13 or Section
16 of the Exchange Act.

                  F. SECTION 280G PAYMENT. In the unlikely event that the
Severance Amount payments under this Agreement are determined by an independent
accounting firm retained by Employee (but paid for by the Company) to constitute
"excess parachute payments" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended, (the "CODE") and any regulations thereunder,
such Severance Amount shall be reduced by the amount necessary to avoid such
classification.

                  G. MEDICAL AND DENTAL BENEFITS. If Employee's employment by
the Company or any subsidiary or successor of the Company is terminated because
of Death, Disability, or Involuntary Termination, then to the extent that
Employee or any of Employee's dependents may be covered under the terms of any
medical and dental plans of the Company (or any subsidiary) immediately prior to
the termination, the Company will provide Employee and those dependents with the
same or equivalent coverages until three (3) months after any such termination
of employment. The Company may, at its election, procure such coverages apart
from, and outside of the terms of, the plans applicable to other employees. The
Company's obligation to provide such coverages will be limited by the
requirement that Employee and Employee's dependents comply with all of the
conditions of the medical or dental plans applicable to employees generally and
the Company is under no obligation to obtain special coverages for Employee
which would not be covered by the plans applicable to employees generally. In
consideration for these benefits, Employee must make contributions equal to
those required from time to time from other employees for equivalent coverages
under the medical or dental plans. If and to the extent that Employee is
eligible to participate in a medical, dental or other health insurance plan of
another employer after the termination of his employment by the Company, then
the benefit provided by this section shall be eliminated or commensurately
diminished.

         IX. LIFE INSURANCE.

                  A. GROUP LIFE INSURANCE. The Company shall provide Employee
with personal life insurance under the Company's group life insurance policy as
in effect from time to time which shall be payable to a beneficiary designated
by Employee in addition to, and not as a substitute for, any Severance Amount
payable under Section VIII.B above. Employee acknowledges that, while the
Company currently maintains group life insurance which provides for a death
benefit equal to three (3) times an officer's annual base salary at the time of
death, with a maximum payment of $500,000, as well as an accidental death and
dismemberment policy (the "AD&D Policy") which also provides for an additional
benefit in the same amount as the group life insurance if the cause of death is
covered by the AD&D Policy, such coverages may be altered or amended in the
future on a Company-wide basis,



                                       9


provided, however, that under no circumstances will such coverages be reduced
unless other officers of comparable rank within the Company are correspondingly
reduced.

                  B. KEY MAN LIFE INSURANCE. Employee hereby consents to the
purchase by the Company, at the Company's option, of one or more "key man" life
insurance policies on Employee's life naming the Company or its designee as
beneficiary (the "Key Man Policies"); provided, however, that the Company shall
not be required to obtain such insurance. Employee agrees that he shall take any
reasonable actions which may be requested by the Company, and otherwise fully
cooperate with the Company, in its efforts to purchase and maintain the Key Man
Policies. The Key Man Policies will be owned by the Company and the proceeds
made payable to the Company or its designee. If purchased by the Company, the
Key Man Policies shall be for the purpose of providing funds necessary to obtain
a replacement for Employee and for any other reasonable business purpose as may
be determined by the Company in amounts sufficient to accomplish their intended
purposes.

         X. DIRECTORS AND OFFICERS INSURANCE. The Company shall maintain and
keep in force directors and officers liability insurance coverage on all
directors and officers in such an amount as the Company deems reasonable and
necessary under the circumstances but in no event less than $7.5 million of
aggregate coverage.

         XI. POST-TERMINATION CONSULTING. In the event of Employee's Involuntary
or Voluntary Termination, Employee agrees to provide services to the Company as
a consultant for a period of ninety (90) days following the completion of all
severance payments (the "Consulting Period"), in exchange for cash compensation
at the rate of $100 per hour. Employee shall have the right to decline to
provide any consulting services requested by the Company after an Involuntary
Termination or Voluntary Termination but such refusal during the period when
severance payments are being made by the Company will result in the forfeiture
of Employee's right to the Severance Amount hereunder. If Employee does elect to
provide consulting services following the completion of the severance period,
Employee shall be obligated to provide no more than ten (10) hours of consulting
services per week during the Consulting Period, if and to the extent requested
by the Company. Employee may determine to cease providing such consulting
services to the Company at any time during the Consulting Period by providing
the Company with ten days written notice.

         XII. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered in person or sent by
registered or certified mail to Employee's residence as indicated in Employee's
personnel file at in the Company's records in the case of Employee or to its
principal office in the case of the Company.

         XIII. WAIVER. The waiver of any provision of this Agreement shall not
operate or be construed as a waiver of any other provision of this Agreement. No
waiver shall be valid unless in writing and executed by the party to be charged
therewith.

         XIV. SEVERABILITY/MODIFICATION. In the event that any clause or
provision of this Agreement shall be determined to be invalid, illegal or
unenforceable, such clause or provision may be severed or modified to the extent
necessary, and, as severed and/or modified, this Agreement shall remain in full
force and effect.



                                       10


         XV. ASSIGNMENT. Except for a transfer by will or by the laws of descent
or distribution, Employee's right to receive payments or benefits under this
Agreement shall not be assignable or transferable, whether by pledge, creation
of a security interest or otherwise. In the event of any attempted assignment or
transfer contrary to this paragraph, the Company shall have no liability to pay
any amount so attempted to be assigned or transferred. Employee acknowledges
that the services to be rendered under this Agreement are unique and personal.
Accordingly, Employee may not assign such duties or obligations under this
Agreement.

         XVI. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors and assigns (including, without
limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or other
disposition of all or substantially all of its assets unless either (i) the
person or entity acquiring the assets or a substantial portion of the assets
shall expressly assume by an instrument in writing all duties and obligations of
the Company under this Agreement or (ii) the Company shall provide, through the
establishment of a separate reserve or otherwise, for the payment in full of all
amounts which are or may reasonably be expected to become payable to Employee
under this Agreement.

         XVII. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
concerning the employment arrangement between the parties and shall, as of the
effective date hereof, supersede all other such agreements between the parties,
provided, however, that nothing in this Agreement shall prevent the Company from
granting additional or special compensation or benefits to Employee after the
date of execution of this Agreement. This Agreement may not be amended except by
an agreement in writing signed by both parties.

         XVIII. GOVERNING LAW AND JURISDICTION. This Agreement shall be
interpreted, construed, and enforced under the laws of the State of Colorado.
The courts of the State of Colorado shall have sole jurisdiction and venue over
all controversies which may arise with respect to this Agreement.

         XIX. TIME. In comparing any period of time prescribed or allowed by
this Agreement, the day of the act, event or default from which the designated
period of time begins to run shall not be included. Time accounting shall begin
upon midnight of the following calendar day. All periods of time shall be
assumed to be specified in calendar days unless otherwise noted. In the case of
fractional days of time, the appropriate equivalent hours can be calculated and
accounted for against midnight of the calendar day in which the period of time
started. For purposes of calculating the duration of the covenant not to compete
the time period of such covenant shall be extended by one day for each day that
Employee competes with Company in violation of such covenant.

         XX. COUNTERPARTS. This Agreement may be signed in one or more
counterparts which, taken together, shall constitute a single binding agreement
between the parties. Photocopies or telecopies of the parties' original
signatures hereto may be relied upon as originals for all purposes.



                                       11


         IN WITNESS WHEREOF, the parties have executed this Agreement the date
and year indicated above.

                                       THE COMPANY:

                                       VARI-L COMPANY, INC.



                                       By: /s/ CHARLES R. BLAND
                                          --------------------------------------
                                          Charles R. Bland, President


                                       EMPLOYEE:



                                       /s/ RICHARD P. DUTKIEWICZ
                                       -----------------------------------------
                                       Richard P. Dutkiewicz



                                       12

EX-10.21

                                                                   EXHIBIT 10.21

                              VARI-L COMPANY, INC.
                         EXECUTIVE EMPLOYMENT AGREEMENT


         THIS AGREEMENT, effective August 1, 2002, is made and entered into by
and between VARI-L COMPANY, INC. (the "Company") and Ernest C. Hafersat
("Employee").

         WHEREAS, the Company wishes to engage Employee as the Company's Vice
President- of Manufacturing to manage the Company's manufacturing operation part
of the Company's continuing efforts to build shareholder value; and

         WHEREAS, the Company's Board of Directors, comprised solely of
disinterested directors, has determined to provide Employee with this employment
agreement, including the severance package and other benefits provided hereby,
for the purpose of inducing Employee to accept the Vice President of
Manufacturing position with the Company and to provide diligent and efficacious
services to the Company during his employment.

         NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:

         I. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby
accepts employment, upon the terms and conditions hereinafter set forth.

         II. TERM. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement is for a period commencing August 1, 2002,
and expiring July 31, 2003 the "Initial Term"). On August 1, of each year,
beginning in 2003, the term of this Agreement shall be automatically extended
for an additional year without any further action on the part of the Company or
Employee unless terminated under the provisions of Section VIII of this
Agreement.

         III. DUTIES. Employee is engaged as Vice President of Manufacturing of
the Company, to have complete responsibility for and authority over the
management of manufacturing and shall have full authority and responsibility,
subject only to the direction of the Company's Chief Executive Officer or
President and the Board of Directors, for administering those operations of the
Company in all respects.

         IV. EXTENT OF SERVICES. Employee shall faithfully, industriously, and
to the best of his ability, experience, and talents, perform all of the duties
that may be required of and from him pursuant to this Agreement. Nothing herein
shall be construed as preventing Employee from (a) investing his assets in such
form or manner as will not require any services on the part of Employee, unless
employee discloses in writing to the company the extent of such services and
receives written authorization to provide such services, in the operations or
the affairs of the companies in which such investments are made or (b) serving
as a director, advisor, or consultant; provided, however, that such investments
or services may not be in connection with a business which is in competition
with the Company (excluding (i) indirect investments through mutual funds or
other broad based investment vehicles, (ii) investments in debt instruments, and
(iii) investments in less than 5% of the stock of any publicly held





business). For purposes hereof, "in competition with the Company" shall be
construed consistently with Section VII hereof.

         V. COMPENSATION AND EMPLOYEE BENEFITS.

                  A. ANNUAL BASE SALARY. For all services rendered by Employee
under this Agreement, the Company shall pay Employee an annual base salary ,
payable in equal bi-weekly installments. The amount of such base salary shall be
reviewed at least once each fiscal year by the Compensation Committee of the
Company's Board of Directors.

                  B. STOCK OPTIONS. Employee shall be eligible for future stock
option grants at the same time and based on the same criteria as other executive
officers of the Company.

                  C. BONUS COMPENSATION. Employee may receive bonuses, payable
in cash or shares of the Company's stock, as may be determined from time to time
by the Board of Directors or the Compensation Committee of the Board of
Directors, in its sole discretion, on the basis of: (i) Employee's success in
meeting his personal performance goals, as established by the Compensation
Committee of the Board of Directors; (ii) Employee's merit, including but not
limited to the quality of the services provided by Employee and his
industriousness and diligence in performing such services; and (iii) the
Company's financial success and progress in the prior fiscal year. Employee's
annual bonus opportunity is equal to thirty five percent (35%) of his current
annual base salary.

                  D. VACATION. Employee shall be entitled to accrue four (4)
weeks of paid vacation for each year of service provided. Any accrued but unused
vacation time shall be paid to Employee at or before the termination of his
employment, in accordance with Company policy, in addition to any amounts due
and payable to Employee under Section VIII hereof. Employee shall be required to
take at least two (2) weeks vacation per year, including in at least one case, a
vacation lasting no less than five (5) consecutive business days.

                  E. EMPLOYEE BENEFITS. Employee shall be entitled to receive
all of the rights, benefits, and privileges of an employee and an executive
officer under any generally applicable retirement, pension, profit-sharing,
insurance, health and hospital, or other employee benefit plans which may be now
in effect or hereafter adopted by the Company.

                  F. WORKING FACILITIES. Employee shall be furnished with a
private office, business tools, and such other facilities and services suitable
to Employee's position and adequate for the performance of the duties required
by this Agreement.

                  G. EXPENSES. Subject to limits which may be imposed by the
Chief Executive Officer, President or the Board of Directors, including any
committee thereof, Employee is authorized to incur reasonable expenses in
connection with his responsibilities in conducting the business of the Company,
including expenses for entertainment, travel, and similar items. The Company
will reimburse Employee for all such expenses upon the presentation by Employee,
in a timely manner of an itemized account of such expenditures, including
receipts or other adequate documentation, or Employee may pay such expenses with
a Company credit card, if a Company credit card is issued to Employee, and
Employee shall



                                       2


appropriately document the business purpose of such expenditures. Employee's
expenses must be submitted to and approved by the Audit Committee or another
officer or employee designated by the Audit Committee to review and approve such
expenses.

                  H. AUTOMOBILE ALLOWANCE. The Company will pay Employee an
automobile allowance for the expense of leasing or financing an automobile, as
well as for insurance, maintenance, fuel and repairs associated with such
automobile. Any automobile for which Employee accepts this allowance must be
suitable for the Company's use in performing services for the Company.
Specifically, such automobile must have four doors. The automobile allowance
shall be payable in equal bi-weekly installments and shall be $10,000.00 per
year. If and to the extent that the automobile is not considered by the Company
to have been used for business purposes, based upon documentation submitted to
the Company at the Company's request, the Company will include the value of the
non-business use of the automobile and other reimbursements made in connection
therewith on Employee's Form W-2 or 1099 as income for each year such personal
benefit is received.

                  I. EDUCATIONAL EXPENSES. Employee shall be entitled to receive
reimbursement for educational expenses consistent with the company's policy on
educational reimbursement.

         VI. PROPRIETARY INTERESTS OF COMPANY.

                    Employee and the Company recognize that the Company is in a
highly competitive business in a highly technical industry. The parties
acknowledge that the success or failure of the Company depends largely on the
development and use of certain proprietary and confidential information and
trade secrets, including without limitation, information concerning any of the
Company's patented components, research and development projects and in patent
process components, and personal relationships with present and potential
customers, suppliers, contractors, and governmental agencies as well as
technology, procedures, systems, and techniques relating to the products
developed or distributed by the Company (hereinafter collectively referred to as
"CONFIDENTIAL INFORMATION"). Confidential Information is a substantial asset of
the Company. Confidential Information will be disclosed to Employee in the
normal course of operation. Employee acknowledges that Confidential Information
is extremely valuable to the Company and must be protected from unauthorized use
by the Company's competitors or other persons. Therefore, Employee agrees not to
disclose or use, whether for the benefit of Employee or any other person or
entity, at any time during or after his employment, any Confidential Information
to any person or entity other than the Company or persons authorized by the
Company to receive such Confidential Information.

                    Employee recognizes that, during the term of his employment
with the Company, he may develop new products, technology, processes, devices,
inventions, or methods of production, including but not limited to computer
hardware, software or "firmware," and may enhance, improve or perfect existing
products, technology, processes, devices, inventions or methods of production
(hereinafter collectively referred to as "INVENTIONS"). As partial consideration
for the salary and other benefits provided by the Company to Employee, Employee
hereby agrees that his entire work product while in the employ of the Company,
including any Inventions, is the exclusive property of the Company



                                       3


unless Employee has received written authorization from the Company for the
exclusion of such work from this agreement. Employee also agrees to cooperate
fully with the Company and to do whatever acts are reasonably necessary in order
to obtain United States or foreign letters patent or copyrights, or both, and to
vest the entire right and title thereto in the Company. Employee further agrees
that the Company shall have the royalty-free right to use in its business, and
to make, use, and sell such Inventions whether or not patentable, regardless of
whether they are conceived or made by Employee during the hours which he is
employed by the Company or with the use of or assistance of the Company's
facilities, materials or personnel.

                    Except as required in his duties to the Company, Employee
will not, directly or indirectly, use, disseminate, disclose, lecture upon, or
publish articles concerning any Confidential Information without the prior
written consent of the Company.

                    Upon termination of his employment with the Company, all
documents, records, notebooks, and similar repositories of or containing
Confidential Information, including copies thereof, then in Employee's
possession, whether prepared by Employee or others, will be left with the
Company, and no copies thereof will be retained by Employee.

                    It is agreed that any breach of this section of the
Agreement will cause immediate irreparable harm to the Company and monetary
damages would be difficult if not impossible to ascertain. Therefore, the
parties agree that, upon any breach of any covenant in this Section VI, that the
Company may obtain from the district court for the City and County of Denver,
Colorado, or any other court of competent jurisdiction, an appropriate
restraining order, preliminary injunction or other form of equitable relief with
respect thereto. Nothing contained herein shall be construed as prohibiting the
Company from pursuing any other available remedies for such breach, including
the recovery of damages, costs, and attorney fees.

         VII. NONCOMPETE AND NONSOLICITATION. During the term of this Agreement
and for a period of the greater of (a) one year after termination or expiration
of this Agreement or (b) the period during which a Severance Amount or
consulting arrangement is being paid to Employee by the Company (the "NONCOMPETE
PERIOD"), Employee will not, directly or indirectly, own, manage, operate,
control, provide services to, be employed by, participate in, or be connected in
any manner with the ownership, management, operation, or control of any business
which develops, manufactures, distributes or sells the same type of products as
the Company, or products which are the functional equivalent of the Company's
products or currently planned products, within and to the same market as the
Company's market at the time of Employee's proposed activity or, after the
termination of this Agreement, at or prior to the time of such termination.
Employee certifies that his employment with the Company will not breach a
previous employment agreement. Employee agrees not to engage in the unauthorized
use of the proprietary assets of others during the term of his employment by the
Company. Employee agrees not to enter into any other employment agreement, oral
or written, which will run concurrently, in whole or in part, with Employee's
employment by the Company without the prior written approval of the CEO of the
Company. It is agreed that any breach of this section of the Agreement will
cause immediate irreparable harm to the Company and that monetary damages for
such breach would be difficult if not impossible to ascertain.



                                       4


Therefore, the parties agree that upon any breach of the covenants of this
section the Company may obtain from the district court for the City and County
of Denver, Colorado, or any other court of competent jurisdiction, an
appropriate restraining order, preliminary injunction or other form of equitable
relief with respect thereto. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other available remedies for such
breach, including the recovery of damages, costs, and attorney fees.

                    The foregoing agreement not to compete shall not be held
invalid because of the scope of the territory or the actions restricted thereby,
or the period of time within which such agreement is operative; but any judgment
by a court of competent jurisdiction may define the maximum territory and
actions subject to, and restricted by, this paragraph and the period of time
during which such agreement is enforceable.

                    Notwithstanding the foregoing, in the event of a Change of
Control, as hereinafter defined, not recommended by a majority of the Board of
Directors of the Company as constituted prior to the date of such Change of
Control, this non-compete agreement shall terminate upon the date of such Change
of Control.

         VIII. TERMINATION OF EMPLOYMENT.

                  A. TERMINATION BY MUTUAL AGREEMENT. The Company and Employee
may agree to terminate this Agreement on terms and conditions mutually
acceptable to them as of the date of termination.

                  B. DEATH. In the event of Employee's death during the term of
this Agreement, including the Consulting Period, if any, the Company shall pay
to Employee's estate any unpaid wages or other amounts owing at the time of
death and shall pay, in addition to and not as a substitute for the proceeds
from any life insurance policies on Employee's life paid for by the Company, an
amount equal to the Severance Amount which would have been payable to Employee
if there had been a Voluntary Termination on the date of Employee's death and
all notice and other requirements for the payment of such Severance Amount had
been satisfied.

                  C. DISABILITY. If Employee becomes Disabled during the term of
employment, the Company may, at its option, by written notice to Employee or
Employee's personal representative, terminate the employment. Employee shall
thereafter be eligible to receive disability benefits under the Company's
standard employee disability insurance policy like any other employee.

                  D. VOLUNTARY OR INVOLUNTARY TERMINATION. Upon a Voluntary or
Involuntary Termination as defined herein, Employee shall continue to render his
services to the Company, if and to the extent required by the Company, up to the
date of such Voluntary or Involuntary Termination as referenced in the written
notice of termination submitted to Employee by the Company, or vice versa, and
shall be paid (i) the unpaid amount of the then applicable annual base salary up
to the date of such Voluntary or Involuntary Termination, (ii) any bonuses which
the Company's Board of Directors may determine, in its sole discretion, to be
due and payable to Employee, and (iii) the Severance Amount as defined herein.
In the



                                       5


event of a Voluntary Termination, as a condition to Employee's receipt of the
foregoing payments to Employee, during the time between the submission of a
notice of termination by Employee and the effective date of termination set
forth in such notice, Employee shall continue to diligently provide the Company
with such services as the Company may request. In the event of an Involuntary
Termination, all unvested stock options and stock appreciation rights that have
previously been granted to Employee will fully vest and remain exercisable for
three (3) months after such termination.

                  E. DEFINITIONS. All the terms defined in this Section shall
have the meanings given below throughout this Agreement.

                           1. "CHANGE IN DUTIES, COMPENSATION, OR BENEFITS"
shall mean any one or more of the following:

                                    a. a significant and detrimental change in
the nature or scope of Employee's authority, responsibilities or duties from
those currently applicable to him;

                                    b. a reduction in Employee's annual base
salary from that currently provided to him;

                                    c. a diminution in Employee's eligibility to
participate in bonus, stock option, incentive award or any other compensation
plan which provides opportunities to receive compensation from those currently
applicable to him, except for: (i) changes in the eligibility requirements for
plans that are applicable to employees generally; (ii) changes in plans that are
applicable to all executives and result in a diminution of Employee's benefits
under such plan that is fair and proportional as compared to the diminution of
benefits for all executives; and (iii) changes that are required by applicable
law;

                                    d. a material diminution in employee
benefits (including but not limited to medical, dental or life insurance and
long-term disability plans) and perquisites currently applicable to Employee,
except for: (i) changes in the eligibility requirements for benefits that are
applicable to employees generally; (ii) changes in benefits and perquisites that
are applicable to all executives and result in a diminution of Employee's
benefits that is fair and proportional as compared to the diminution for all
executives; and (iii) changes that are required by applicable law;

                                    e. a change in the location of Employee's
principal place of employment by the Company (including its subsidiaries) by
more than fifty (50) miles from the location where he was principally employed
immediately prior to the date on which a Change of Control occurs; or

                                    f. a reasonable determination by a majority
of those persons comprising the Board of Directors of the Company prior to a
Change of Control (even if such determination is made after such Change of
Control) that, as a result of a Change of Control and a change in circumstances
thereafter significantly affecting his position, Employee is unable to exercise
the functions or duties attached to his position immediately prior to the date
on which a Change of Control occurs.



                                       6


                           2. "CHANGE OF CONTROL" shall be deemed to have
occurred if:

                                    a. any "person," including a "group" as
determined in accordance with Section 13(d)(3) of the Securities Exchange Act of
1934 (the "EXCHANGE ACT"), is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities;

                                    b. as a result of, or in connection with,
any tender offer or exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the foregoing
transactions (a "TRANSACTION"), the persons who were directors of the Company
before the Transaction shall cease to constitute a majority of the Board of
Directors of the Company or any successor to the Company;

                                    c. the Company is merged or consolidated
with another corporation or entity and, as a result of the merger or
consolidation, less than 80% of the outstanding voting securities of the
surviving corporation or entity is then owned in the aggregate by the former
stockholders of the Company;

                                    d. a tender offer or exchange offer is made
and consummated for the ownership of securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding voting
securities; or

                                    e. the Company transfers all or
substantially all of its assets to another corporation which is not a wholly
owned subsidiary of the Company.

                           3. "DISABLED" OR "DISABILITY" shall mean mental or
physical illness or condition rendering Employee incapable of performing any
portion of Employee's normal duties with the Company even after the Company's
reasonable accommodation of any such disability in accordance with the Americans
with Disabilities Act and the Colorado Nondiscrimination statute.

                           4. "INVOLUNTARY TERMINATION" shall mean any
termination except:

                                    a. VOLUNTARY TERMINATION;

                                    b. termination by mutual agreement;

                                    c. termination as a result of death; or

                                    d. Employee's voluntary retirement from
employment or mandatory retirement from employment pursuant to a retirement plan
to which Employee was subject prior to any Change of Control. ("RETIREMENT").

                           5. "SEVERANCE AMOUNT" is equal to:

                                    a. in the case of a Change in Control,
employee may unilaterally elect to terminate this agreement within six months
after the Change of Control has



                                       7

occurred. Employee's election will be treated as an Involuntary Termination and
he will receive a lump sum Severance Payment, payable within thirty days of his
election, equal to his then current base salary, plus one hundred percent of his
annual bonus opportunity and continuation of his car allowance for one year. In
the case of a Change in Duties Compensation and Benefits, employee may
unilaterally elect to terminate this agreement. Employee's election will be
treated as an Involuntary Termination and employee will receive a Severance
Payment equal to (6) six months of his then current base salary paid on the
company's regular payroll dates and his pro-rata share of the incentive earned
over the six months following his separation date paid on the company's then
regularly scheduled incentive payment dates and continuation of his car
allowance for six months. In the case of an Involuntary Termination, not
following a Change in Control or a Change in Duties, Compensation and Benefits,
employee will receive a Severance Payment equal to (6) six months of his then
current base salary paid on the company's regular payroll dates and his pro-rata
share of the incentive earned over the six months following his separation date
paid on the company's then regularly scheduled incentive payment dates and
continuation of his car allowance for six months. In the event of Voluntary
Termination, no Severance Amount shall be payable until employee has completed
one (1) year of service with the company and his Severance Amount will be equal
to one (1) month's salary for every year of service completed up to a maximum of
three (3) months, payable ratably on the Company's regular payroll dates.

                                    b. In the case of a Voluntary Termination or
an Involuntary Termination resulting from Employee's resignation following a
Change in Duties, Compensation or Benefits, Employee must give the Company
proper notice of such Termination in order to receive the Severance Amount. For
purposes hereof, proper notice is defined as written notice received by the
Company not less than thirty (30) business days prior to the date of termination
of employment.

                                    c. In the case of an Involuntary Termination
by the Company, the Company must give Employee not less than thirty (30)
business days prior written notice of such termination, provided, however, that
the Company may, in its sole discretion, elect to have Employee provide
different services during such notice period than those provided prior to such
notice.

                                    d. Notwithstanding any other provision of
this Agreement, in the event that Employee is found to have violated the
non-compete provisions of Section VII of this Agreement by a court of competent
jurisdiction ("BREACH"), all Severance Amounts due and owing under this
Agreement shall be terminated upon the effective date of the Breach and Employee
shall reimburse the Company for any portion of the Severance Amount previously
paid to Employee.

                           6. "VOLUNTARY TERMINATION" shall mean any termination
which results from a resignation by Employee other than a resignation following
a Change in Duties, Compensation, or Benefits as defined herein.

                           7. "VOTING SECURITIES" shall mean any securities
which ordinarily possess the power to vote in the election of directors without
the occurrence of any pre-condition or contingency other than the passage of
time.



                                       8


                           8. "BENEFICIALLY OWNED" shall mean beneficial
ownership by Employee, Employee's spouse, or a trust or similar arrangement
established by or for the benefit of Employee, Employee's spouse, or Employee's
minor children as well as the meaning of such term under Section 13 or Section
16 of the Exchange Act.

                  F. SECTION 280G PAYMENT. In the unlikely event that the
Severance Amount payments under this Agreement are determined by an independent
accounting firm retained by Employee (but paid for by the Company) to constitute
"excess parachute payments" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended, (the "CODE") and any regulations thereunder,
such Severance Amount shall be reduced by the amount necessary to avoid such
classification.

                  G. MEDICAL AND DENTAL BENEFITS. If Employee's employment by
the Company or any subsidiary or successor of the Company is terminated because
of Death, Disability, or Involuntary Termination, then to the extent that
Employee or any of Employee's dependents may be covered under the terms of any
medical and dental plans of the Company (or any subsidiary) immediately prior to
the termination, the Company will provide Employee and those dependents with the
same or equivalent coverages until three (3) months after any such termination
of employment. The Company may, at its election, procure such coverages apart
from, and outside of the terms of, the plans applicable to other employees. The
Company's obligation to provide such coverages will be limited by the
requirement that Employee and Employee's dependents comply with all of the
conditions of the medical or dental plans applicable to employees generally and
the Company is under no obligation to obtain special coverages for Employee
which would not be covered by the plans applicable to employees generally. In
consideration for these benefits, Employee must make contributions equal to
those required from time to time from other employees for equivalent coverages
under the medical or dental plans. If and to the extent that Employee is
eligible to participate in a medical, dental or other health insurance plan of
another employer after the termination of his employment by the Company, then
the benefit provided by this section shall be eliminated or commensurately
diminished.

         IX. LIFE INSURANCE.

                  A. GROUP LIFE INSURANCE. The Company shall provide Employee
with personal life insurance under the Company's group life insurance policy as
in effect from time to time which shall be payable to a beneficiary designated
by Employee in addition to, and not as a substitute for, any Severance Amount
payable under Section VIII.B above. Employee acknowledges that, while the
Company currently maintains group life insurance which provides for a death
benefit equal to three (3) times an officer's annual base salary at the time of
death, with a maximum payment of $500,000, as well as an accidental death and
dismemberment policy (the "AD&D Policy") which also provides for an additional
benefit in the same amount as the group life insurance if the cause of death is
covered by the AD&D Policy, such coverages may be altered or amended in the
future on a Company-wide basis, provided, however, that under no circumstances
will such coverages be reduced unless other officers of comparable rank within
the Company are correspondingly reduced.



                                       9


                  B. KEY MAN LIFE INSURANCE. Employee hereby consents to the
purchase by the Company, at the Company's option, of one or more "key man" life
insurance policies on Employee's life naming the Company or its designee as
beneficiary (the "Key Man Policies"); provided, however, that the Company shall
not be required to obtain such insurance. Employee agrees that he shall take any
reasonable actions which may be requested by the Company, and otherwise fully
cooperate with the Company, in its efforts to purchase and maintain the Key Man
Policies. The Key Man Policies will be owned by the Company and the proceeds
made payable to the Company or its designee. If purchased by the Company, the
Key Man Policies shall be for the purpose of providing funds necessary to obtain
a replacement for Employee and for any other reasonable business purpose as may
be determined by the Company in amounts sufficient to accomplish their intended
purposes.

         X. DIRECTORS AND OFFICERS INSURANCE. The Company shall maintain and
keep in force directors and officers liability insurance coverage on all
directors and officers in such an amount as the Company deems reasonable and
necessary under the circumstances but in no event less than $7.5 million of
aggregate coverage.

         XI. POST-TERMINATION CONSULTING. In the event of Employee's Involuntary
or Voluntary Termination, Employee agrees to provide services to the Company as
a consultant for a period of ninety (90) days following the completion of all
severance payments (the "Consulting Period"), in exchange for cash compensation
at the rate of $100 per hour. Employee shall have the right to decline to
provide any consulting services requested by the Company after an Involuntary
Termination or Voluntary Termination but such refusal during the period when
severance payments are being made by the Company will result in the forfeiture
of Employee's right to the Severance Amount hereunder. If Employee does elect to
provide consulting services following the completion of the severance period,
Employee shall be obligated to provide no more than ten (10) hours of consulting
services per week during the Consulting Period, if and to the extent requested
by the Company. Employee may determine to cease providing such consulting
services to the Company at any time during the Consulting Period by providing
the Company with ten days written notice.

         XII. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered in person or sent by
registered or certified mail to Employee's residence as indicated in Employee's
personnel file at in the Company's records in the case of Employee or to its
principal office in the case of the Company.

         XIII. WAIVER. The waiver of any provision of this Agreement shall not
operate or be construed as a waiver of any other provision of this Agreement. No
waiver shall be valid unless in writing and executed by the party to be charged
therewith.

         XIV. SEVERABILITY/MODIFICATION. In the event that any clause or
provision of this Agreement shall be determined to be invalid, illegal or
unenforceable, such clause or provision may be severed or modified to the extent
necessary, and, as severed and/or modified, this Agreement shall remain in full
force and effect.

         XV. ASSIGNMENT. Except for a transfer by will or by the laws of descent
or distribution, Employee's right to receive payments or benefits under this
Agreement shall not



                                       10


be assignable or transferable, whether by pledge, creation of a security
interest or otherwise. In the event of any attempted assignment or transfer
contrary to this paragraph, the Company shall have no liability to pay any
amount so attempted to be assigned or transferred. Employee acknowledges that
the services to be rendered under this Agreement are unique and personal.
Accordingly, Employee may not assign such duties or obligations under this
Agreement.

         XVI. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors and assigns (including, without
limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or other
disposition of all or substantially all of its assets unless either (i) the
person or entity acquiring the assets or a substantial portion of the assets
shall expressly assume by an instrument in writing all duties and obligations of
the Company under this Agreement or (ii) the Company shall provide, through the
establishment of a separate reserve or otherwise, for the payment in full of all
amounts which are or may reasonably be expected to become payable to Employee
under this Agreement.

         XVII. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
concerning the employment arrangement between the parties and shall, as of the
effective date hereof, supersede all other such agreements between the parties,
provided, however, that nothing in this Agreement shall prevent the Company from
granting additional or special compensation or benefits to Employee after the
date of execution of this Agreement. This Agreement may not be amended except by
an agreement in writing signed by both parties.

         XVIII. GOVERNING LAW AND JURISDICTION. This Agreement shall be
interpreted, construed, and enforced under the laws of the State of Colorado.
The courts of the State of Colorado shall have sole jurisdiction and venue over
all controversies which may arise with respect to this Agreement.

         XIX. TIME. In comparing any period of time prescribed or allowed by
this Agreement, the day of the act, event or default from which the designated
period of time begins to run shall not be included. Time accounting shall begin
upon midnight of the following calendar day. All periods of time shall be
assumed to be specified in calendar days unless otherwise noted. In the case of
fractional days of time, the appropriate equivalent hours can be calculated and
accounted for against midnight of the calendar day in which the period of time
started. For purposes of calculating the duration of the covenant not to compete
the time period of such covenant shall be extended by one day for each day that
Employee competes with Company in violation of such covenant.

         XX. COUNTERPARTS. This Agreement may be signed in one or more
counterparts which, taken together, shall constitute a single binding agreement
between the parties. Photocopies or telecopies of the parties' original
signatures hereto may be relied upon as originals for all purposes.



                                       11


         IN WITNESS WHEREOF, the parties have executed this Agreement the date
and year indicated above.

                                       THE COMPANY:

                                       VARI-L COMPANY, INC.



                                       By: /s/ CHARLES R. BLAND
                                          --------------------------------------
                                          Charles R. Bland, President


                                       EMPLOYEE:



                                       /s/ ERNEST C. HAFERSAT
                                       -----------------------------------------
                                       Ernest C. Hafersat



                                       12

EX-10.22

                                                                   EXHIBIT 10.22

                              VARI-L COMPANY, INC.
                         EXECUTIVE EMPLOYMENT AGREEMENT


         THIS AGREEMENT, effective August 1, 2002, made and entered into by and
between VARI-L COMPANY, INC. (the "Company") and Janice E. Hyland ("Employee").

         WHEREAS, the Company wishes to engage Employee as the Company's Vice
President- of Quality Assurance to manage the Company's quality assurance as
part of the Company's continuing efforts to build shareholder value; and

         WHEREAS, the Company's Board of Directors, comprised solely of
disinterested directors, has determined to provide Employee with this employment
agreement, including the severance package and other benefits provided hereby,
for the purpose of inducing Employee to accept the Vice President of Quality
Assurance position with the Company and to provide diligent and efficacious
services to the Company during his employment.

         NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:

         I. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby
accepts employment, upon the terms and conditions hereinafter set forth.

         II. TERM. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement is for a period commencing August 1, 2002,
and expiring July 31, 2003 (the "Initial Term"). On August 1, of each year,
beginning in 2003, the term of this Agreement shall be automatically extended
for an additional year without any further action on the part of the Company or
Employee unless terminated under the provisions of Section VIII of this
Agreement.

         III. DUTIES. Employee is engaged as Vice President of Quality Assurance
of the Company, to have complete responsibility for and authority over the
management of quality assurance and shall have full authority and
responsibility, subject only to the direction of the Company's Chief Executive
Officer or President and the Board of Directors, for administering those
operations of the Company in all respects.

         IV. EXTENT OF SERVICES. Employee shall faithfully, industriously, and
to the best of his ability, experience, and talents, perform all of the duties
that may be required of and from him pursuant to this Agreement. Nothing herein
shall be construed as preventing Employee from (a) investing his assets in such
form or manner as will not require any services on the part of Employee, unless
employee discloses in writing to the company the extent of such services and
receives written authorization to provide such services, in the operations or
the affairs of the companies in which such investments are made or (b) serving
as a director, advisor, or consultant; provided, however, that such investments
or services may not be in connection with a business which is in competition
with the Company (excluding (i) indirect investments through mutual funds or
other broad based investment vehicles, (ii) investments in debt instruments, and
(iii) investments in less than 5% of the stock of any publicly held





business). For purposes hereof, "in competition with the Company" shall be
construed consistently with Section VII hereof.

         V. COMPENSATION AND EMPLOYEE BENEFITS.

                  A. ANNUAL BASE SALARY. For all services rendered by Employee
under this Agreement, the Company shall pay Employee an annual base salary ,
payable in equal bi-weekly installments. The amount of such base salary shall be
reviewed at least once each fiscal year by the Compensation Committee of the
Company's Board of Directors.

                  B. STOCK OPTIONS. Employee shall be eligible for future stock
option grants at the same time and based on the same criteria as other executive
officers of the Company.

                  C. BONUS COMPENSATION. Employee may receive bonuses, payable
in cash or shares of the Company's stock, as may be determined from time to time
by the Board of Directors or the Compensation Committee of the Board of
Directors, in its sole discretion, on the basis of: (i) Employee's success in
meeting his personal performance goals, as established by the Compensation
Committee of the Board of Directors; (ii) Employee's merit, including but not
limited to the quality of the services provided by Employee and his
industriousness and diligence in performing such services; and (iii) the
Company's financial success and progress in the prior fiscal year. Employee's
annual bonus opportunity is equal to thirty five percent (35%) of his current
annual base salary.

                  D. VACATION. Employee shall be entitled to accrue four (4)
weeks of paid vacation for each year of service provided. Any accrued but unused
vacation time shall be paid to Employee at or before the termination of his
employment, in accordance with Company policy, in addition to any amounts due
and payable to Employee under Section VIII hereof. Employee shall be required to
take at least two (2) weeks vacation per year, including in at least one case, a
vacation lasting no less than five (5) consecutive business days.

                  E. EMPLOYEE BENEFITS. Employee shall be entitled to receive
all of the rights, benefits, and privileges of an employee and an executive
officer under any generally applicable retirement, pension, profit-sharing,
insurance, health and hospital, or other employee benefit plans which may be now
in effect or hereafter adopted by the Company.

                  F. WORKING FACILITIES. Employee shall be furnished with a
private office, business tools, and such other facilities and services suitable
to Employee's position and adequate for the performance of the duties required
by this Agreement.

                  G. EXPENSES. Subject to limits which may be imposed by the
Chief Executive Officer, President or the Board of Directors, including any
committee thereof, Employee is authorized to incur reasonable expenses in
connection with his responsibilities in conducting the business of the Company,
including expenses for entertainment, travel, and similar items. The Company
will reimburse Employee for all such expenses upon the presentation by Employee,
in a timely manner of an itemized account of such expenditures, including
receipts or other adequate documentation, or Employee may pay such expenses with
a Company credit card, if a Company credit card is issued to Employee, and
Employee shall



                                       2


appropriately document the business purpose of such expenditures. Employee's
expenses must be submitted to and approved by the Audit Committee or another
officer or employee designated by the Audit Committee to review and approve such
expenses.

                  H. AUTOMOBILE ALLOWANCE. The Company will pay Employee an
automobile allowance for the expense of leasing or financing an automobile, as
well as for insurance, maintenance, fuel and repairs associated with such
automobile. Any automobile for which Employee accepts this allowance must be
suitable for the Company's use in performing services for the Company.
Specifically, such automobile must have four doors. The automobile allowance
shall be payable in equal bi-weekly installments and shall be $10,000.00 per
year. If and to the extent that the automobile is not considered by the Company
to have been used for business purposes, based upon documentation submitted to
the Company at the Company's request, the Company will include the value of the
non-business use of the automobile and other reimbursements made in connection
therewith on Employee's Form W-2 or 1099 as income for each year such personal
benefit is received.

                  I. EDUCATIONAL EXPENSES. Employee shall be entitled to receive
reimbursement for educational expenses consistent with the company's policy on
educational reimbursement.

         VI. PROPRIETARY INTERESTS OF COMPANY.

                    Employee and the Company recognize that the Company is in a
highly competitive business in a highly technical industry. The parties
acknowledge that the success or failure of the Company depends largely on the
development and use of certain proprietary and confidential information and
trade secrets, including without limitation, information concerning any of the
Company's patented components, research and development projects and in patent
process components, and personal relationships with present and potential
customers, suppliers, contractors, and governmental agencies as well as
technology, procedures, systems, and techniques relating to the products
developed or distributed by the Company (hereinafter collectively referred to as
"CONFIDENTIAL INFORMATION"). Confidential Information is a substantial asset of
the Company. Confidential Information will be disclosed to Employee in the
normal course of operation. Employee acknowledges that Confidential Information
is extremely valuable to the Company and must be protected from unauthorized use
by the Company's competitors or other persons. Therefore, Employee agrees not to
disclose or use, whether for the benefit of Employee or any other person or
entity, at any time during or after his employment, any Confidential Information
to any person or entity other than the Company or persons authorized by the
Company to receive such Confidential Information.

                    Employee recognizes that, during the term of his employment
with the Company, he may develop new products, technology, processes, devices,
inventions, or methods of production, including but not limited to computer
hardware, software or "firmware," and may enhance, improve or perfect existing
products, technology, processes, devices, inventions or methods of production
(hereinafter collectively referred to as "INVENTIONS"). As partial consideration
for the salary and other benefits provided by the Company to Employee, Employee
hereby agrees that his entire work product while in the employ of the Company,
including any Inventions, is the exclusive property of the Company



                                       3


unless Employee has received written authorization from the Company for the
exclusion of such work from this agreement. Employee also agrees to cooperate
fully with the Company and to do whatever acts are reasonably necessary in order
to obtain United States or foreign letters patent or copyrights, or both, and to
vest the entire right and title thereto in the Company. Employee further agrees
that the Company shall have the royalty-free right to use in its business, and
to make, use, and sell such Inventions whether or not patentable, regardless of
whether they are conceived or made by Employee during the hours which he is
employed by the Company or with the use of or assistance of the Company's
facilities, materials or personnel.

                    Except as required in his duties to the Company, Employee
will not, directly or indirectly, use, disseminate, disclose, lecture upon, or
publish articles concerning any Confidential Information without the prior
written consent of the Company.

                    Upon termination of his employment with the Company, all
documents, records, notebooks, and similar repositories of or containing
Confidential Information, including copies thereof, then in Employee's
possession, whether prepared by Employee or others, will be left with the
Company, and no copies thereof will be retained by Employee.

                    It is agreed that any breach of this section of the
Agreement will cause immediate irreparable harm to the Company and monetary
damages would be difficult if not impossible to ascertain. Therefore, the
parties agree that, upon any breach of any covenant in this Section VI, that the
Company may obtain from the district court for the City and County of Denver,
Colorado, or any other court of competent jurisdiction, an appropriate
restraining order, preliminary injunction or other form of equitable relief with
respect thereto. Nothing contained herein shall be construed as prohibiting the
Company from pursuing any other available remedies for such breach, including
the recovery of damages, costs, and attorney fees.

         VII. NONCOMPETE AND NONSOLICITATION. During the term of this Agreement
and for a period of the greater of (a) one year after termination or expiration
of this Agreement or (b) the period during which a Severance Amount or
consulting arrangement is being paid to Employee by the Company (the "NONCOMPETE
PERIOD"), Employee will not, directly or indirectly, own, manage, operate,
control, provide services to, be employed by, participate in, or be connected in
any manner with the ownership, management, operation, or control of any business
which develops, manufactures, distributes or sells the same type of products as
the Company, or products which are the functional equivalent of the Company's
products or currently planned products, within and to the same market as the
Company's market at the time of Employee's proposed activity or, after the
termination of this Agreement, at or prior to the time of such termination.
Employee certifies that his employment with the Company will not breach a
previous employment agreement. Employee agrees not to engage in the unauthorized
use of the proprietary assets of others during the term of his employment by the
Company. Employee agrees not to enter into any other employment agreement, oral
or written, which will run concurrently, in whole or in part, with Employee's
employment by the Company without the prior written approval of the CEO of the
Company. It is agreed that any breach of this section of the Agreement will
cause immediate irreparable harm to the Company and that monetary damages for
such breach would be difficult if not impossible to ascertain.



                                       4


Therefore, the parties agree that upon any breach of the covenants of this
section the Company may obtain from the district court for the City and County
of Denver, Colorado, or any other court of competent jurisdiction, an
appropriate restraining order, preliminary injunction or other form of equitable
relief with respect thereto. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other available remedies for such
breach, including the recovery of damages, costs, and attorney fees.

                    The foregoing agreement not to compete shall not be held
invalid because of the scope of the territory or the actions restricted thereby,
or the period of time within which such agreement is operative; but any judgment
by a court of competent jurisdiction may define the maximum territory and
actions subject to, and restricted by, this paragraph and the period of time
during which such agreement is enforceable.

                    Notwithstanding the foregoing, in the event of a Change of
Control, as hereinafter defined, not recommended by a majority of the Board of
Directors of the Company as constituted prior to the date of such Change of
Control, this non-compete agreement shall terminate upon the date of such Change
of Control.

         VIII. TERMINATION OF EMPLOYMENT.

                  A. TERMINATION BY MUTUAL AGREEMENT. The Company and Employee
may agree to terminate this Agreement on terms and conditions mutually
acceptable to them as of the date of termination.

                  B. DEATH. In the event of Employee's death during the term of
this Agreement, including the Consulting Period, if any, the Company shall pay
to Employee's estate any unpaid wages or other amounts owing at the time of
death and shall pay, in addition to and not as a substitute for the proceeds
from any life insurance policies on Employee's life paid for by the Company, an
amount equal to the Severance Amount which would have been payable to Employee
if there had been a Voluntary Termination on the date of Employee's death and
all notice and other requirements for the payment of such Severance Amount had
been satisfied.

                  C. DISABILITY. If Employee becomes Disabled during the term of
employment, the Company may, at its option, by written notice to Employee or
Employee's personal representative, terminate the employment. Employee shall
thereafter be eligible to receive disability benefits under the Company's
standard employee disability insurance policy like any other employee.

                  D. VOLUNTARY OR INVOLUNTARY TERMINATION. Upon a Voluntary or
Involuntary Termination as defined herein, Employee shall continue to render his
services to the Company, if and to the extent required by the Company, up to the
date of such Voluntary or Involuntary Termination as referenced in the written
notice of termination submitted to Employee by the Company, or vice versa, and
shall be paid (i) the unpaid amount of the then applicable annual base salary up
to the date of such Voluntary or Involuntary Termination, (ii) any bonuses which
the Company's Board of Directors may determine, in its sole discretion, to be
due and payable to Employee, and (iii) the Severance Amount as defined herein.
In the



                                       5


event of a Voluntary Termination, as a condition to Employee's receipt of the
foregoing payments to Employee, during the time between the submission of a
notice of termination by Employee and the effective date of termination set
forth in such notice, Employee shall continue to diligently provide the Company
with such services as the Company may request. In the event of an Involuntary
Termination, all unvested stock options and stock appreciation rights that have
previously been granted to Employee will fully vest and remain exercisable for
three (3) months after such termination.

                  E. DEFINITIONS. All the terms defined in this Section shall
have the meanings given below throughout this Agreement.

                           1. "CHANGE IN DUTIES, COMPENSATION, OR BENEFITS"
shall mean any one or more of the following:

                                    a. a significant and detrimental change in
the nature or scope of Employee's authority, responsibilities or duties from
those currently applicable to him;

                                    b. a reduction in Employee's annual base
salary from that currently provided to him;

                                    c. a diminution in Employee's eligibility to
participate in bonus, stock option, incentive award or any other compensation
plan which provides opportunities to receive compensation from those currently
applicable to him, except for: (i) changes in the eligibility requirements for
plans that are applicable to employees generally; (ii) changes in plans that are
applicable to all executives and result in a diminution of Employee's benefits
under such plan that is fair and proportional as compared to the diminution of
benefits for all executives; and (iii) changes that are required by applicable
law;

                                    d. a material diminution in employee
benefits (including but not limited to medical, dental or life insurance and
long-term disability plans) and perquisites currently applicable to Employee,
except for: (i) changes in the eligibility requirements for benefits that are
applicable to employees generally; (ii) changes in benefits and perquisites that
are applicable to all executives and result in a diminution of Employee's
benefits that is fair and proportional as compared to the diminution for all
executives; and (iii) changes that are required by applicable law;

                                    e. a change in the location of Employee's
principal place of employment by the Company (including its subsidiaries) by
more than fifty (50) miles from the location where he was principally employed
immediately prior to the date on which a Change of Control occurs; or

                                    f. a reasonable determination by a majority
of those persons comprising the Board of Directors of the Company prior to a
Change of Control (even if such determination is made after such Change of
Control) that, as a result of a Change of Control and a change in circumstances
thereafter significantly affecting his position, Employee is unable to exercise
the functions or duties attached to his position immediately prior to the date
on which a Change of Control occurs.



                                       6


                           2. "CHANGE OF CONTROL" shall be deemed to have
occurred if:

                                    a. any "person," including a "group" as
determined in accordance with Section 13(d)(3) of the Securities Exchange Act of
1934 (the "EXCHANGE ACT"), is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities;

                                    b. as a result of, or in connection with,
any tender offer or exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the foregoing
transactions (a "TRANSACTION"), the persons who were directors of the Company
before the Transaction shall cease to constitute a majority of the Board of
Directors of the Company or any successor to the Company;

                                    c. the Company is merged or consolidated
with another corporation or entity and, as a result of the merger or
consolidation, less than 80% of the outstanding voting securities of the
surviving corporation or entity is then owned in the aggregate by the former
stockholders of the Company;

                                    d. a tender offer or exchange offer is made
and consummated for the ownership of securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding voting
securities; or

                                    e. the Company transfers all or
substantially all of its assets to another corporation which is not a wholly
owned subsidiary of the Company.

                           3. "DISABLED" OR "DISABILITY" shall mean mental or
physical illness or condition rendering Employee incapable of performing any
portion of Employee's normal duties with the Company even after the Company's
reasonable accommodation of any such disability in accordance with the Americans
with Disabilities Act and the Colorado Nondiscrimination statute.

                           4. "INVOLUNTARY TERMINATION" shall mean any
termination except:

                                    a. VOLUNTARY TERMINATION;

                                    b. termination by mutual agreement;

                                    c. termination as a result of death; or

                                    d. Employee's voluntary retirement from
employment or mandatory retirement from employment pursuant to a retirement plan
to which Employee was subject prior to any Change of Control. ("RETIREMENT").

                           5. "SEVERANCE AMOUNT" is equal to:

                                    a. in the case of a Change in Control,
employee may unilaterally elect to terminate this agreement within six months
after the Change of Control has



                                       7


occurred. Employee's election will be treated as an Involuntary Termination and
he will receive a lump sum Severance Payment, payable within thirty days of his
election, equal to his then current base salary, plus one hundred percent of his
annual bonus opportunity and continuation of his car allowance for one year. In
the case of a Change in Duties Compensation and Benefits, employee may
unilaterally elect to terminate this agreement. Employee's election will be
treated as an Involuntary Termination and employee will receive a Severance
Payment equal to (6) six months of his then current base salary paid on the
company's regular payroll dates and his pro-rata share of the incentive earned
over the six months following his separation date paid on the company's then
regularly scheduled incentive payment dates and continuation of his car
allowance for six months. In the case of an Involuntary Termination, not
following a Change in Control or a Change in Duties, Compensation and Benefits,
employee will receive a Severance Payment equal to (6) six months of his then
current base salary paid on the company's regular payroll dates and his pro-rata
share of the incentive earned over the six months following his separation date
paid on the company's then regularly scheduled incentive payment dates and
continuation of his car allowance for six months. In the event of Voluntary
Termination, no Severance Amount shall be payable until employee has completed
one (1) year of service with the company and his Severance Amount will be equal
to one (1) month's salary for every year of service completed up to a maximum of
three (3) months, payable ratably on the Company's regular payroll dates.

                                    b. In the case of a Voluntary Termination or
an Involuntary Termination resulting from Employee's resignation following a
Change in Duties, Compensation or Benefits, Employee must give the Company
proper notice of such Termination in order to receive the Severance Amount. For
purposes hereof, proper notice is defined as written notice received by the
Company not less than thirty (30) business days prior to the date of termination
of employment.

                                    c. In the case of an Involuntary Termination
by the Company, the Company must give Employee not less than thirty (30)
business days prior written notice of such termination, provided, however, that
the Company may, in its sole discretion, elect to have Employee provide
different services during such notice period than those provided prior to such
notice.

                                    d. Notwithstanding any other provision of
this Agreement, in the event that Employee is found to have violated the
non-compete provisions of Section VII of this Agreement by a court of competent
jurisdiction ("BREACH"), all Severance Amounts due and owing under this
Agreement shall be terminated upon the effective date of the Breach and Employee
shall reimburse the Company for any portion of the Severance Amount previously
paid to Employee.

                           6. "VOLUNTARY TERMINATION" shall mean any termination
which results from a resignation by Employee other than a resignation following
a Change in Duties, Compensation, or Benefits as defined herein.

                           7. "VOTING SECURITIES" shall mean any securities
which ordinarily possess the power to vote in the election of directors without
the occurrence of any pre-condition or contingency other than the passage of
time.



                                       8


                           8. "BENEFICIALLY OWNED" shall mean beneficial
ownership by Employee, Employee's spouse, or a trust or similar arrangement
established by or for the benefit of Employee, Employee's spouse, or Employee's
minor children as well as the meaning of such term under Section 13 or Section
16 of the Exchange Act.

                  F. SECTION 280G PAYMENT. In the unlikely event that the
Severance Amount payments under this Agreement are determined by an independent
accounting firm retained by Employee (but paid for by the Company) to constitute
"excess parachute payments" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended, (the "CODE") and any regulations thereunder,
such Severance Amount shall be reduced by the amount necessary to avoid such
classification.

                  G. MEDICAL AND DENTAL BENEFITS. If Employee's employment by
the Company or any subsidiary or successor of the Company is terminated because
of Death, Disability, or Involuntary Termination, then to the extent that
Employee or any of Employee's dependents may be covered under the terms of any
medical and dental plans of the Company (or any subsidiary) immediately prior to
the termination, the Company will provide Employee and those dependents with the
same or equivalent coverages until three (3) months after any such termination
of employment. The Company may, at its election, procure such coverages apart
from, and outside of the terms of, the plans applicable to other employees. The
Company's obligation to provide such coverages will be limited by the
requirement that Employee and Employee's dependents comply with all of the
conditions of the medical or dental plans applicable to employees generally and
the Company is under no obligation to obtain special coverages for Employee
which would not be covered by the plans applicable to employees generally. In
consideration for these benefits, Employee must make contributions equal to
those required from time to time from other employees for equivalent coverages
under the medical or dental plans. If and to the extent that Employee is
eligible to participate in a medical, dental or other health insurance plan of
another employer after the termination of his employment by the Company, then
the benefit provided by this section shall be eliminated or commensurately
diminished.

         IX. LIFE INSURANCE.

                  A. GROUP LIFE INSURANCE. The Company shall provide Employee
with personal life insurance under the Company's group life insurance policy as
in effect from time to time which shall be payable to a beneficiary designated
by Employee in addition to, and not as a substitute for, any Severance Amount
payable under Section VIII.B above. Employee acknowledges that, while the
Company currently maintains group life insurance which provides for a death
benefit equal to three (3) times an officer's annual base salary at the time of
death, with a maximum payment of $500,000, as well as an accidental death and
dismemberment policy (the "AD&D Policy") which also provides for an additional
benefit in the same amount as the group life insurance if the cause of death is
covered by the AD&D Policy, such coverages may be altered or amended in the
future on a Company-wide basis, provided, however, that under no circumstances
will such coverages be reduced unless other officers of comparable rank within
the Company are correspondingly reduced.



                                       9


                  B. KEY MAN LIFE INSURANCE. Employee hereby consents to the
purchase by the Company, at the Company's option, of one or more "key man" life
insurance policies on Employee's life naming the Company or its designee as
beneficiary (the "Key Man Policies"); provided, however, that the Company shall
not be required to obtain such insurance. Employee agrees that he shall take any
reasonable actions which may be requested by the Company, and otherwise fully
cooperate with the Company, in its efforts to purchase and maintain the Key Man
Policies. The Key Man Policies will be owned by the Company and the proceeds
made payable to the Company or its designee. If purchased by the Company, the
Key Man Policies shall be for the purpose of providing funds necessary to obtain
a replacement for Employee and for any other reasonable business purpose as may
be determined by the Company in amounts sufficient to accomplish their intended
purposes.

         X. DIRECTORS AND OFFICERS INSURANCE. The Company shall maintain and
keep in force directors and officers liability insurance coverage on all
directors and officers in such an amount as the Company deems reasonable and
necessary under the circumstances but in no event less than $7.5 million of
aggregate coverage.

         XI. POST-TERMINATION CONSULTING. In the event of Employee's Involuntary
or Voluntary Termination, Employee agrees to provide services to the Company as
a consultant for a period of ninety (90) days following the completion of all
severance payments (the "Consulting Period"), in exchange for cash compensation
at the rate of $100 per hour. Employee shall have the right to decline to
provide any consulting services requested by the Company after an Involuntary
Termination or Voluntary Termination but such refusal during the period when
severance payments are being made by the Company will result in the forfeiture
of Employee's right to the Severance Amount hereunder. If Employee does elect to
provide consulting services following the completion of the severance period,
Employee shall be obligated to provide no more than ten (10) hours of consulting
services per week during the Consulting Period, if and to the extent requested
by the Company. Employee may determine to cease providing such consulting
services to the Company at any time during the Consulting Period by providing
the Company with ten days written notice.

         XII. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered in person or sent by
registered or certified mail to Employee's residence as indicated in Employee's
personnel file at in the Company's records in the case of Employee or to its
principal office in the case of the Company.

         XIII. WAIVER. The waiver of any provision of this Agreement shall not
operate or be construed as a waiver of any other provision of this Agreement. No
waiver shall be valid unless in writing and executed by the party to be charged
therewith.

         XIV. SEVERABILITY/MODIFICATION. In the event that any clause or
provision of this Agreement shall be determined to be invalid, illegal or
unenforceable, such clause or provision may be severed or modified to the extent
necessary, and, as severed and/or modified, this Agreement shall remain in full
force and effect.

         XV. ASSIGNMENT. Except for a transfer by will or by the laws of descent
or distribution, Employee's right to receive payments or benefits under this
Agreement shall not



                                       10


be assignable or transferable, whether by pledge, creation of a security
interest or otherwise. In the event of any attempted assignment or transfer
contrary to this paragraph, the Company shall have no liability to pay any
amount so attempted to be assigned or transferred. Employee acknowledges that
the services to be rendered under this Agreement are unique and personal.
Accordingly, Employee may not assign such duties or obligations under this
Agreement.

         XVI. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors and assigns (including, without
limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or other
disposition of all or substantially all of its assets unless either (i) the
person or entity acquiring the assets or a substantial portion of the assets
shall expressly assume by an instrument in writing all duties and obligations of
the Company under this Agreement or (ii) the Company shall provide, through the
establishment of a separate reserve or otherwise, for the payment in full of all
amounts which are or may reasonably be expected to become payable to Employee
under this Agreement.

         XVII. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
concerning the employment arrangement between the parties and shall, as of the
effective date hereof, supersede all other such agreements between the parties,
provided, however, that nothing in this Agreement shall prevent the Company from
granting additional or special compensation or benefits to Employee after the
date of execution of this Agreement. This Agreement may not be amended except by
an agreement in writing signed by both parties.

         XVIII. GOVERNING LAW AND JURISDICTION. This Agreement shall be
interpreted, construed, and enforced under the laws of the State of Colorado.
The courts of the State of Colorado shall have sole jurisdiction and venue over
all controversies which may arise with respect to this Agreement.

         XIX. TIME. In comparing any period of time prescribed or allowed by
this Agreement, the day of the act, event or default from which the designated
period of time begins to run shall not be included. Time accounting shall begin
upon midnight of the following calendar day. All periods of time shall be
assumed to be specified in calendar days unless otherwise noted. In the case of
fractional days of time, the appropriate equivalent hours can be calculated and
accounted for against midnight of the calendar day in which the period of time
started. For purposes of calculating the duration of the covenant not to compete
the time period of such covenant shall be extended by one day for each day that
Employee competes with Company in violation of such covenant.

         XX. COUNTERPARTS. This Agreement may be signed in one or more
counterparts which, taken together, shall constitute a single binding agreement
between the parties. Photocopies or telecopies of the parties' original
signatures hereto may be relied upon as originals for all purposes.



                                       11


         IN WITNESS WHEREOF, the parties have executed this Agreement the date
and year indicated above.

                                       THE COMPANY:

                                       VARI-L COMPANY, INC.



                                       By: /s/ CHARLES R. BLAND
                                          --------------------------------------
                                          Charles R. Bland, President


                                       EMPLOYEE:



                                       /s/ JANICE E. HYLAND
                                       -----------------------------------------
                                       Janice E. Hyland



                                       12

EX-10.23

                                                                   EXHIBIT 10.23

                              VARI-L COMPANY, INC.
                         EXECUTIVE EMPLOYMENT AGREEMENT


         THIS AGREEMENT, effective August 1, 2002, is made and entered into by
and between VARI-L COMPANY, INC. (the "Company") and Matthew D. Pope
("Employee").

         WHEREAS, the Company wishes to engage Employee as the Company's Vice
President- of New Business Development to manage the Company's new business
development as part of the Company's continuing efforts to build shareholder
value; and

         WHEREAS, the Company's Board of Directors, comprised solely of
disinterested directors, has determined to provide Employee with this employment
agreement, including the severance package and other benefits provided hereby,
for the purpose of inducing Employee to accept the Vice President of New
Business Development position with the Company and to provide diligent and
efficacious services to the Company during his employment.

         NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:

         I. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby
accepts employment, upon the terms and conditions hereinafter set forth.

         II. TERM. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement is for a period commencing August 1, 2002,
and expiring July 31, 2003 (the "Initial Term"). On August 1, of each year,
beginning in 2003, the term of this Agreement shall be automatically extended
for an additional year without any further action on the part of the Company or
Employee unless terminated under the provisions of Section VIII of this
Agreement.

         III. DUTIES. Employee is engaged as Vice President of New Business
Development of the Company, to have complete responsibility for and authority
over the management of new business development and shall have full authority
and responsibility, subject only to the direction of the Company's Chief
Executive Officer or President and the Board of Directors, for administering
those operations of the Company in all respects.

         IV. EXTENT OF SERVICES. Employee shall faithfully, industriously, and
to the best of his ability, experience, and talents, perform all of the duties
that may be required of and from him pursuant to this Agreement. Nothing herein
shall be construed as preventing Employee from (a) investing his assets in such
form or manner as will not require any services on the part of Employee, unless
employee discloses in writing to the company the extent of such services and
receives written authorization to provide such services, in the operations or
the affairs of the companies in which such investments are made or (b) serving
as a director, advisor, or consultant; provided, however, that such investments
or services may not be in connection with a business which is in competition
with the Company (excluding (i) indirect investments through mutual funds or
other broad based investment vehicles, (ii) investments in debt instruments, and
(iii) investments in less than 5% of the stock of any publicly held





business). For purposes hereof, "in competition with the Company" shall be
construed consistently with Section VII hereof.

         V. COMPENSATION AND EMPLOYEE BENEFITS.

                  A. ANNUAL BASE SALARY. For all services rendered by Employee
under this Agreement, the Company shall pay Employee an annual base salary ,
payable in equal bi-weekly installments. The amount of such base salary shall be
reviewed at least once each fiscal year by the Compensation Committee of the
Company's Board of Directors.

                  B. STOCK OPTIONS. Employee shall be eligible for future stock
option grants at the same time and based on the same criteria as other executive
officers of the Company.

                  C. BONUS COMPENSATION. Employee may receive bonuses, payable
in cash or shares of the Company's stock, as may be determined from time to time
by the Board of Directors or the Compensation Committee of the Board of
Directors, in its sole discretion, on the basis of: (i) Employee's success in
meeting his personal performance goals, as established by the Compensation
Committee of the Board of Directors; (ii) Employee's merit, including but not
limited to the quality of the services provided by Employee and his
industriousness and diligence in performing such services; and (iii) the
Company's financial success and progress in the prior fiscal year. Employee's
annual bonus opportunity is equal to thirty five percent (35%) of his current
annual base salary.

                  D. VACATION. Employee shall be entitled to accrue four (4)
weeks of paid vacation for each year of service provided. Any accrued but unused
vacation time shall be paid to Employee at or before the termination of his
employment, in accordance with Company policy, in addition to any amounts due
and payable to Employee under Section VIII hereof. Employee shall be required to
take at least two (2) weeks vacation per year, including in at least one case, a
vacation lasting no less than five (5) consecutive business days.

                  E. EMPLOYEE BENEFITS. Employee shall be entitled to receive
all of the rights, benefits, and privileges of an employee and an executive
officer under any generally applicable retirement, pension, profit-sharing,
insurance, health and hospital, or other employee benefit plans which may be now
in effect or hereafter adopted by the Company.

                  F. WORKING FACILITIES. Employee shall be furnished with a
private office, business tools, and such other facilities and services suitable
to Employee's position and adequate for the performance of the duties required
by this Agreement.

                  G. EXPENSES. Subject to limits which may be imposed by the
Chief Executive Officer, President or the Board of Directors, including any
committee thereof, Employee is authorized to incur reasonable expenses in
connection with his responsibilities in conducting the business of the Company,
including expenses for entertainment, travel, and similar items. The Company
will reimburse Employee for all such expenses upon the presentation by Employee,
in a timely manner of an itemized account of such expenditures, including
receipts or other adequate documentation, or Employee may pay such expenses with
a Company credit card, if a Company credit card is issued to Employee, and
Employee shall



                                       2


appropriately document the business purpose of such expenditures. Employee's
expenses must be submitted to and approved by the Audit Committee or another
officer or employee designated by the Audit Committee to review and approve such
expenses.

                  H. AUTOMOBILE ALLOWANCE. The Company will pay Employee an
automobile allowance for the expense of leasing or financing an automobile, as
well as for insurance, maintenance, fuel and repairs associated with such
automobile. Any automobile for which Employee accepts this allowance must be
suitable for the Company's use in performing services for the Company.
Specifically, such automobile must have four doors. The automobile allowance
shall be payable in equal bi-weekly installments and shall be $10,000.00 per
year. If and to the extent that the automobile is not considered by the Company
to have been used for business purposes, based upon documentation submitted to
the Company at the Company's request, the Company will include the value of the
non-business use of the automobile and other reimbursements made in connection
therewith on Employee's Form W-2 or 1099 as income for each year such personal
benefit is received.

                  I. EDUCATIONAL EXPENSES. Employee shall be entitled to receive
reimbursement for educational expenses consistent with the company's policy on
educational reimbursement.

         VI. PROPRIETARY INTERESTS OF COMPANY.

                    Employee and the Company recognize that the Company is in a
highly competitive business in a highly technical industry. The parties
acknowledge that the success or failure of the Company depends largely on the
development and use of certain proprietary and confidential information and
trade secrets, including without limitation, information concerning any of the
Company's patented components, research and development projects and in patent
process components, and personal relationships with present and potential
customers, suppliers, contractors, and governmental agencies as well as
technology, procedures, systems, and techniques relating to the products
developed or distributed by the Company (hereinafter collectively referred to as
"CONFIDENTIAL INFORMATION"). Confidential Information is a substantial asset of
the Company. Confidential Information will be disclosed to Employee in the
normal course of operation. Employee acknowledges that Confidential Information
is extremely valuable to the Company and must be protected from unauthorized use
by the Company's competitors or other persons. Therefore, Employee agrees not to
disclose or use, whether for the benefit of Employee or any other person or
entity, at any time during or after his employment, any Confidential Information
to any person or entity other than the Company or persons authorized by the
Company to receive such Confidential Information.

                    Employee recognizes that, during the term of his employment
with the Company, he may develop new products, technology, processes, devices,
inventions, or methods of production, including but not limited to computer
hardware, software or "firmware," and may enhance, improve or perfect existing
products, technology, processes, devices, inventions or methods of production
(hereinafter collectively referred to as "INVENTIONS"). As partial consideration
for the salary and other benefits provided by the Company to Employee, Employee
hereby agrees that his entire work product while in the employ of the Company,
including any Inventions, is the exclusive property of the Company



                                       3


unless Employee has received written authorization from the Company for the
exclusion of such work from this agreement. Employee also agrees to cooperate
fully with the Company and to do whatever acts are reasonably necessary in order
to obtain United States or foreign letters patent or copyrights, or both, and to
vest the entire right and title thereto in the Company. Employee further agrees
that the Company shall have the royalty-free right to use in its business, and
to make, use, and sell such Inventions whether or not patentable, regardless of
whether they are conceived or made by Employee during the hours which he is
employed by the Company or with the use of or assistance of the Company's
facilities, materials or personnel.

                    Except as required in his duties to the Company, Employee
will not, directly or indirectly, use, disseminate, disclose, lecture upon, or
publish articles concerning any Confidential Information without the prior
written consent of the Company.

                    Upon termination of his employment with the Company, all
documents, records, notebooks, and similar repositories of or containing
Confidential Information, including copies thereof, then in Employee's
possession, whether prepared by Employee or others, will be left with the
Company, and no copies thereof will be retained by Employee.

                    It is agreed that any breach of this section of the
Agreement will cause immediate irreparable harm to the Company and monetary
damages would be difficult if not impossible to ascertain. Therefore, the
parties agree that, upon any breach of any covenant in this Section VI, that the
Company may obtain from the district court for the City and County of Denver,
Colorado, or any other court of competent jurisdiction, an appropriate
restraining order, preliminary injunction or other form of equitable relief with
respect thereto. Nothing contained herein shall be construed as prohibiting the
Company from pursuing any other available remedies for such breach, including
the recovery of damages, costs, and attorney fees.

         VII. NONCOMPETE AND NONSOLICITATION. During the term of this Agreement
and for a period of the greater of (a) one year after termination or expiration
of this Agreement or (b) the period during which a Severance Amount or
consulting arrangement is being paid to Employee by the Company (the "NONCOMPETE
PERIOD"), Employee will not, directly or indirectly, own, manage, operate,
control, provide services to, be employed by, participate in, or be connected in
any manner with the ownership, management, operation, or control of any business
which develops, manufactures, distributes or sells the same type of products as
the Company, or products which are the functional equivalent of the Company's
products or currently planned products, within and to the same market as the
Company's market at the time of Employee's proposed activity or, after the
termination of this Agreement, at or prior to the time of such termination.
Employee certifies that his employment with the Company will not breach a
previous employment agreement. Employee agrees not to engage in the unauthorized
use of the proprietary assets of others during the term of his employment by the
Company. Employee agrees not to enter into any other employment agreement, oral
or written, which will run concurrently, in whole or in part, with Employee's
employment by the Company without the prior written approval of the CEO of the
Company. It is agreed that any breach of this section of the Agreement will
cause immediate irreparable harm to the Company and that monetary damages for
such breach would be difficult if not impossible to ascertain.



                                       4


Therefore, the parties agree that upon any breach of the covenants of this
section the Company may obtain from the district court for the City and County
of Denver, Colorado, or any other court of competent jurisdiction, an
appropriate restraining order, preliminary injunction or other form of equitable
relief with respect thereto. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other available remedies for such
breach, including the recovery of damages, costs, and attorney fees.

                    The foregoing agreement not to compete shall not be held
invalid because of the scope of the territory or the actions restricted thereby,
or the period of time within which such agreement is operative; but any judgment
by a court of competent jurisdiction may define the maximum territory and
actions subject to, and restricted by, this paragraph and the period of time
during which such agreement is enforceable.

                    Notwithstanding the foregoing, in the event of a Change of
Control, as hereinafter defined, not recommended by a majority of the Board of
Directors of the Company as constituted prior to the date of such Change of
Control, this non-compete agreement shall terminate upon the date of such Change
of Control.

         VIII. TERMINATION OF EMPLOYMENT.

                  A. TERMINATION BY MUTUAL AGREEMENT. The Company and Employee
may agree to terminate this Agreement on terms and conditions mutually
acceptable to them as of the date of termination.

                  B. DEATH. In the event of Employee's death during the term of
this Agreement, including the Consulting Period, if any, the Company shall pay
to Employee's estate any unpaid wages or other amounts owing at the time of
death and shall pay, in addition to and not as a substitute for the proceeds
from any life insurance policies on Employee's life paid for by the Company, an
amount equal to the Severance Amount which would have been payable to Employee
if there had been a Voluntary Termination on the date of Employee's death and
all notice and other requirements for the payment of such Severance Amount had
been satisfied.

                  C. DISABILITY. If Employee becomes Disabled during the term of
employment, the Company may, at its option, by written notice to Employee or
Employee's personal representative, terminate the employment. Employee shall
thereafter be eligible to receive disability benefits under the Company's
standard employee disability insurance policy like any other employee.

                  D. VOLUNTARY OR INVOLUNTARY TERMINATION. Upon a Voluntary or
Involuntary Termination as defined herein, Employee shall continue to render his
services to the Company, if and to the extent required by the Company, up to the
date of such Voluntary or Involuntary Termination as referenced in the written
notice of termination submitted to Employee by the Company, or vice versa, and
shall be paid (i) the unpaid amount of the then applicable annual base salary up
to the date of such Voluntary or Involuntary Termination, (ii) any bonuses which
the Company's Board of Directors may determine, in its sole discretion, to be
due and payable to Employee, and (iii) the Severance Amount as defined herein.
In the



                                       5


event of a Voluntary Termination, as a condition to Employee's receipt of the
foregoing payments to Employee, during the time between the submission of a
notice of termination by Employee and the effective date of termination set
forth in such notice, Employee shall continue to diligently provide the Company
with such services as the Company may request. In the event of an Involuntary
Termination, all unvested stock options and stock appreciation rights that have
previously been granted to Employee will fully vest and remain exercisable for
three (3) months after such termination.

                  E. DEFINITIONS. All the terms defined in this Section shall
have the meanings given below throughout this Agreement.

                           1. "CHANGE IN DUTIES, COMPENSATION, OR BENEFITS"
shall mean any one or more of the following:

                                    a. a significant and detrimental change in
the nature or scope of Employee's authority, responsibilities or duties from
those currently applicable to him;

                                    b. a reduction in Employee's annual base
salary from that currently provided to him;

                                    c. a diminution in Employee's eligibility to
participate in bonus, stock option, incentive award or any other compensation
plan which provides opportunities to receive compensation from those currently
applicable to him, except for: (i) changes in the eligibility requirements for
plans that are applicable to employees generally; (ii) changes in plans that are
applicable to all executives and result in a diminution of Employee's benefits
under such plan that is fair and proportional as compared to the diminution of
benefits for all executives; and (iii) changes that are required by applicable
law;

                                    d. a material diminution in employee
benefits (including but not limited to medical, dental or life insurance and
long-term disability plans) and perquisites currently applicable to Employee,
except for: (i) changes in the eligibility requirements for benefits that are
applicable to employees generally; (ii) changes in benefits and perquisites that
are applicable to all executives and result in a diminution of Employee's
benefits that is fair and proportional as compared to the diminution for all
executives; and (iii) changes that are required by applicable law;

                                    e. a change in the location of Employee's
principal place of employment by the Company (including its subsidiaries) by
more than fifty (50) miles from the location where he was principally employed
immediately prior to the date on which a Change of Control occurs; or

                                    f. a reasonable determination by a majority
of those persons comprising the Board of Directors of the Company prior to a
Change of Control (even if such determination is made after such Change of
Control) that, as a result of a Change of Control and a change in circumstances
thereafter significantly affecting his position, Employee is unable to exercise
the functions or duties attached to his position immediately prior to the date
on which a Change of Control occurs.



                                       6


                           2. "CHANGE OF CONTROL" shall be deemed to have
occurred if:

                                    a. any "person," including a "group" as
determined in accordance with Section 13(d)(3) of the Securities Exchange Act of
1934 (the "EXCHANGE ACT"), is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities;

                                    b. as a result of, or in connection with,
any tender offer or exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the foregoing
transactions (a "TRANSACTION"), the persons who were directors of the Company
before the Transaction shall cease to constitute a majority of the Board of
Directors of the Company or any successor to the Company;

                                    c. the Company is merged or consolidated
with another corporation or entity and, as a result of the merger or
consolidation, less than 80% of the outstanding voting securities of the
surviving corporation or entity is then owned in the aggregate by the former
stockholders of the Company;

                                    d. a tender offer or exchange offer is made
and consummated for the ownership of securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding voting
securities; or

                                    e. the Company transfers all or
substantially all of its assets to another corporation which is not a wholly
owned subsidiary of the Company.

                           3. "DISABLED" OR "DISABILITY" shall mean mental or
physical illness or condition rendering Employee incapable of performing any
portion of Employee's normal duties with the Company even after the Company's
reasonable accommodation of any such disability in accordance with the Americans
with Disabilities Act and the Colorado Nondiscrimination statute.

                           4. "INVOLUNTARY TERMINATION" shall mean any
termination except:

                                    a. VOLUNTARY TERMINATION;

                                    b. termination by mutual agreement;

                                    c. termination as a result of death; or

                                    d. Employee's voluntary retirement from
employment or mandatory retirement from employment pursuant to a retirement plan
to which Employee was subject prior to any Change of Control. ("RETIREMENT").

                           5. "SEVERANCE AMOUNT" is equal to:

                                    a. in the case of a Change in Control,
employee may unilaterally elect to terminate this agreement within six months
after the Change of Control has



                                       7

occurred. Employee's election will be treated as an Involuntary Termination and
he will receive a lump sum Severance Payment, payable within thirty days of his
election, equal to his then current base salary, plus one hundred percent of his
annual bonus opportunity and continuation of his car allowance for one year. In
the case of a Change in Duties Compensation and Benefits, employee may
unilaterally elect to terminate this agreement. Employee's election will be
treated as an Involuntary Termination and employee will receive a Severance
Payment equal to (6) six months of his then current base salary paid on the
company's regular payroll dates and his pro-rata share of the incentive earned
over the six months following his separation date paid on the company's then
regularly scheduled incentive payment dates and continuation of his car
allowance for six months. In the case of an Involuntary Termination, not
following a Change in Control or a Change in Duties, Compensation and Benefits,
employee will receive a Severance Payment equal to (6) six months of his then
current base salary paid on the company's regular payroll dates and his pro-rata
share of the incentive earned over the six months following his separation date
paid on the company's then regularly scheduled incentive payment dates and
continuation of his car allowance for six months. In the event of Voluntary
Termination, no Severance Amount shall be payable until employee has completed
one (1) year of service with the company and his Severance Amount will be equal
to one (1) month's salary for every year of service completed up to a maximum of
three (3) months, payable ratably on the Company's regular payroll dates.

                                    b. In the case of a Voluntary Termination or
an Involuntary Termination resulting from Employee's resignation following a
Change in Duties, Compensation or Benefits, Employee must give the Company
proper notice of such Termination in order to receive the Severance Amount. For
purposes hereof, proper notice is defined as written notice received by the
Company not less than thirty (30) business days prior to the date of termination
of employment.

                                    c. In the case of an Involuntary Termination
by the Company, the Company must give Employee not less than thirty (30)
business days prior written notice of such termination, provided, however, that
the Company may, in its sole discretion, elect to have Employee provide
different services during such notice period than those provided prior to such
notice.

                                    d. Notwithstanding any other provision of
this Agreement, in the event that Employee is found to have violated the
non-compete provisions of Section VII of this Agreement by a court of competent
jurisdiction ("BREACH"), all Severance Amounts due and owing under this
Agreement shall be terminated upon the effective date of the Breach and Employee
shall reimburse the Company for any portion of the Severance Amount previously
paid to Employee.

                           6. "VOLUNTARY TERMINATION" shall mean any termination
which results from a resignation by Employee other than a resignation following
a Change in Duties, Compensation, or Benefits as defined herein.

                           7. "VOTING SECURITIES" shall mean any securities
which ordinarily possess the power to vote in the election of directors without
the occurrence of any pre-condition or contingency other than the passage of
time.



                                       8


                           8. "BENEFICIALLY OWNED" shall mean beneficial
ownership by Employee, Employee's spouse, or a trust or similar arrangement
established by or for the benefit of Employee, Employee's spouse, or Employee's
minor children as well as the meaning of such term under Section 13 or Section
16 of the Exchange Act.

                  F. SECTION 280G PAYMENT. In the unlikely event that the
Severance Amount payments under this Agreement are determined by an independent
accounting firm retained by Employee (but paid for by the Company) to constitute
"excess parachute payments" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended, (the "CODE") and any regulations thereunder,
such Severance Amount shall be reduced by the amount necessary to avoid such
classification.

                  G. MEDICAL AND DENTAL BENEFITS. If Employee's employment by
the Company or any subsidiary or successor of the Company is terminated because
of Death, Disability, or Involuntary Termination, then to the extent that
Employee or any of Employee's dependents may be covered under the terms of any
medical and dental plans of the Company (or any subsidiary) immediately prior to
the termination, the Company will provide Employee and those dependents with the
same or equivalent coverages until three (3) months after any such termination
of employment. The Company may, at its election, procure such coverages apart
from, and outside of the terms of, the plans applicable to other employees. The
Company's obligation to provide such coverages will be limited by the
requirement that Employee and Employee's dependents comply with all of the
conditions of the medical or dental plans applicable to employees generally and
the Company is under no obligation to obtain special coverages for Employee
which would not be covered by the plans applicable to employees generally. In
consideration for these benefits, Employee must make contributions equal to
those required from time to time from other employees for equivalent coverages
under the medical or dental plans. If and to the extent that Employee is
eligible to participate in a medical, dental or other health insurance plan of
another employer after the termination of his employment by the Company, then
the benefit provided by this section shall be eliminated or commensurately
diminished.

         IX. LIFE INSURANCE.

                  A. GROUP LIFE INSURANCE. The Company shall provide Employee
with personal life insurance under the Company's group life insurance policy as
in effect from time to time which shall be payable to a beneficiary designated
by Employee in addition to, and not as a substitute for, any Severance Amount
payable under Section VIII.B above. Employee acknowledges that, while the
Company currently maintains group life insurance which provides for a death
benefit equal to three (3) times an officer's annual base salary at the time of
death, with a maximum payment of $500,000, as well as an accidental death and
dismemberment policy (the "AD&D Policy") which also provides for an additional
benefit in the same amount as the group life insurance if the cause of death is
covered by the AD&D Policy, such coverages may be altered or amended in the
future on a Company-wide basis, provided, however, that under no circumstances
will such coverages be reduced unless other officers of comparable rank within
the Company are correspondingly reduced.



                                       9


                  B. KEY MAN LIFE INSURANCE. Employee hereby consents to the
purchase by the Company, at the Company's option, of one or more "key man" life
insurance policies on Employee's life naming the Company or its designee as
beneficiary (the "Key Man Policies"); provided, however, that the Company shall
not be required to obtain such insurance. Employee agrees that he shall take any
reasonable actions which may be requested by the Company, and otherwise fully
cooperate with the Company, in its efforts to purchase and maintain the Key Man
Policies. The Key Man Policies will be owned by the Company and the proceeds
made payable to the Company or its designee. If purchased by the Company, the
Key Man Policies shall be for the purpose of providing funds necessary to obtain
a replacement for Employee and for any other reasonable business purpose as may
be determined by the Company in amounts sufficient to accomplish their intended
purposes.

         X. DIRECTORS AND OFFICERS INSURANCE. The Company shall maintain and
keep in force directors and officers liability insurance coverage on all
directors and officers in such an amount as the Company deems reasonable and
necessary under the circumstances but in no event less than $7.5 million of
aggregate coverage.

         XI. POST-TERMINATION CONSULTING. In the event of Employee's Involuntary
or Voluntary Termination, Employee agrees to provide services to the Company as
a consultant for a period of ninety (90) days following the completion of all
severance payments (the "Consulting Period"), in exchange for cash compensation
at the rate of $100 per hour. Employee shall have the right to decline to
provide any consulting services requested by the Company after an Involuntary
Termination or Voluntary Termination but such refusal during the period when
severance payments are being made by the Company will result in the forfeiture
of Employee's right to the Severance Amount hereunder. If Employee does elect to
provide consulting services following the completion of the severance period,
Employee shall be obligated to provide no more than ten (10) hours of consulting
services per week during the Consulting Period, if and to the extent requested
by the Company. Employee may determine to cease providing such consulting
services to the Company at any time during the Consulting Period by providing
the Company with ten days written notice.

         XII. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered in person or sent by
registered or certified mail to Employee's residence as indicated in Employee's
personnel file at in the Company's records in the case of Employee or to its
principal office in the case of the Company.

         XIII. WAIVER. The waiver of any provision of this Agreement shall not
operate or be construed as a waiver of any other provision of this Agreement. No
waiver shall be valid unless in writing and executed by the party to be charged
therewith.

         XIV. SEVERABILITY/MODIFICATION. In the event that any clause or
provision of this Agreement shall be determined to be invalid, illegal or
unenforceable, such clause or provision may be severed or modified to the extent
necessary, and, as severed and/or modified, this Agreement shall remain in full
force and effect.

         XV. ASSIGNMENT. Except for a transfer by will or by the laws of descent
or distribution, Employee's right to receive payments or benefits under this
Agreement shall not



                                       10


be assignable or transferable, whether by pledge, creation of a security
interest or otherwise. In the event of any attempted assignment or transfer
contrary to this paragraph, the Company shall have no liability to pay any
amount so attempted to be assigned or transferred. Employee acknowledges that
the services to be rendered under this Agreement are unique and personal.
Accordingly, Employee may not assign such duties or obligations under this
Agreement.

         XVI. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors and assigns (including, without
limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or other
disposition of all or substantially all of its assets unless either (i) the
person or entity acquiring the assets or a substantial portion of the assets
shall expressly assume by an instrument in writing all duties and obligations of
the Company under this Agreement or (ii) the Company shall provide, through the
establishment of a separate reserve or otherwise, for the payment in full of all
amounts which are or may reasonably be expected to become payable to Employee
under this Agreement.

         XVII. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
concerning the employment arrangement between the parties and shall, as of the
effective date hereof, supersede all other such agreements between the parties,
provided, however, that nothing in this Agreement shall prevent the Company from
granting additional or special compensation or benefits to Employee after the
date of execution of this Agreement. This Agreement may not be amended except by
an agreement in writing signed by both parties.

         XVIII. GOVERNING LAW AND JURISDICTION. This Agreement shall be
interpreted, construed, and enforced under the laws of the State of Colorado.
The courts of the State of Colorado shall have sole jurisdiction and venue over
all controversies which may arise with respect to this Agreement.

         XIX. TIME. In comparing any period of time prescribed or allowed by
this Agreement, the day of the act, event or default from which the designated
period of time begins to run shall not be included. Time accounting shall begin
upon midnight of the following calendar day. All periods of time shall be
assumed to be specified in calendar days unless otherwise noted. In the case of
fractional days of time, the appropriate equivalent hours can be calculated and
accounted for against midnight of the calendar day in which the period of time
started. For purposes of calculating the duration of the covenant not to compete
the time period of such covenant shall be extended by one day for each day that
Employee competes with Company in violation of such covenant.

         XX. COUNTERPARTS. This Agreement may be signed in one or more
counterparts which, taken together, shall constitute a single binding agreement
between the parties. Photocopies or telecopies of the parties' original
signatures hereto may be relied upon as originals for all purposes.



                                       11


         IN WITNESS WHEREOF, the parties have executed this Agreement the date
and year indicated above.

                                       THE COMPANY:

                                       VARI-L COMPANY, INC.



                                       By: /s/ CHARLES R. BLAND
                                          --------------------------------------
                                          Charles R. Bland, President


                                       EMPLOYEE:



                                       /s/ MATTHEW D. POPE
                                       -----------------------------------------
                                       Matthew D. Pope



                                       12

EX-10.24

                                                                   EXHIBIT 10.24

                              VARI-L COMPANY, INC.
                         EXECUTIVE EMPLOYMENT AGREEMENT


         THIS AGREEMENT, effective August 1, 2002, is made and entered into by
and between VARI-L COMPANY, INC. (the "Company") and Larry M. Romero
("Employee").

         WHEREAS, the Company wishes to engage Employee as the Company's Vice
President- of Process Engineering to manage the Company's process engineering as
part of the Company's continuing efforts to build shareholder value; and

         WHEREAS, the Company's Board of Directors, comprised solely of
disinterested directors, has determined to provide Employee with this employment
agreement, including the severance package and other benefits provided hereby,
for the purpose of inducing Employee to accept the Vice President of Process
Engineering position with the Company and to provide diligent and efficacious
services to the Company during his employment.

         NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:

         I. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby
accepts employment, upon the terms and conditions hereinafter set forth.

         II. TERM. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement is for a period commencing August 1, 2002,
and expiring July 31, 2003 (the "Initial Term"). On August 1, of each year,
beginning in 2002, the term of this Agreement shall be automatically extended
for an additional year without any further action on the part of the Company or
Employee unless terminated under the provisions of Section VIII of this
Agreement.

         III. DUTIES. Employee is engaged as Vice President of Process
Engineering of the Company, to have complete responsibility for and authority
over the management of process engineering and shall have full authority and
responsibility, subject only to the direction of the Company's Chief Executive
Officer or President and the Board of Directors, for administering those
operations of the Company in all respects.

         IV. EXTENT OF SERVICES. Employee shall faithfully, industriously, and
to the best of his ability, experience, and talents, perform all of the duties
that may be required of and from him pursuant to this Agreement. Nothing herein
shall be construed as preventing Employee from (a) investing his assets in such
form or manner as will not require any services on the part of Employee, unless
employee discloses in writing to the company the extent of such services and
receives written authorization to provide such services, in the operations or
the affairs of the companies in which such investments are made or (b) serving
as a director, advisor, or consultant; provided, however, that such investments
or services may not be in connection with a business which is in competition
with the Company (excluding (i) indirect investments through mutual funds or
other broad based investment vehicles, (ii) investments in debt instruments, and
(iii) investments in less than 5% of the stock of any publicly held





business). For purposes hereof, "in competition with the Company" shall be
construed consistently with Section VII hereof.

         V. COMPENSATION AND EMPLOYEE BENEFITS.

                  A. ANNUAL BASE SALARY. For all services rendered by Employee
under this Agreement, the Company shall pay Employee an annual base salary ,
payable in equal bi-weekly installments. The amount of such base salary shall be
reviewed at least once each fiscal year by the Compensation Committee of the
Company's Board of Directors.

                  B. STOCK OPTIONS. Employee shall be eligible for future stock
option grants at the same time and based on the same criteria as other executive
officers of the Company.

                  C. BONUS COMPENSATION. Employee may receive bonuses, payable
in cash or shares of the Company's stock, as may be determined from time to time
by the Board of Directors or the Compensation Committee of the Board of
Directors, in its sole discretion, on the basis of: (i) Employee's success in
meeting his personal performance goals, as established by the Compensation
Committee of the Board of Directors; (ii) Employee's merit, including but not
limited to the quality of the services provided by Employee and his
industriousness and diligence in performing such services; and (iii) the
Company's financial success and progress in the prior fiscal year. Employee's
annual bonus opportunity is equal to thirty five percent (35%) of his current
annual base salary.

                  D. VACATION. Employee shall be entitled to accrue four (4)
weeks of paid vacation for each year of service provided. Any accrued but unused
vacation time shall be paid to Employee at or before the termination of his
employment, in accordance with Company policy, in addition to any amounts due
and payable to Employee under Section VIII hereof. Employee shall be required to
take at least two (2) weeks vacation per year, including in at least one case, a
vacation lasting no less than five (5) consecutive business days.

                  E. EMPLOYEE BENEFITS. Employee shall be entitled to receive
all of the rights, benefits, and privileges of an employee and an executive
officer under any generally applicable retirement, pension, profit-sharing,
insurance, health and hospital, or other employee benefit plans which may be now
in effect or hereafter adopted by the Company.

                  F. WORKING FACILITIES. Employee shall be furnished with a
private office, business tools, and such other facilities and services suitable
to Employee's position and adequate for the performance of the duties required
by this Agreement.

                  G. EXPENSES. Subject to limits which may be imposed by the
Chief Executive Officer, President or the Board of Directors, including any
committee thereof, Employee is authorized to incur reasonable expenses in
connection with his responsibilities in conducting the business of the Company,
including expenses for entertainment, travel, and similar items. The Company
will reimburse Employee for all such expenses upon the presentation by Employee,
in a timely manner of an itemized account of such expenditures, including
receipts or other adequate documentation, or Employee may pay such expenses with
a Company credit card, if a Company credit card is issued to Employee, and
Employee shall



                                       2


appropriately document the business purpose of such expenditures. Employee's
expenses must be submitted to and approved by the Audit Committee or another
officer or employee designated by the Audit Committee to review and approve such
expenses.

                  H. AUTOMOBILE ALLOWANCE. The Company will pay Employee an
automobile allowance for the expense of leasing or financing an automobile, as
well as for insurance, maintenance, fuel and repairs associated with such
automobile. Any automobile for which Employee accepts this allowance must be
suitable for the Company's use in performing services for the Company.
Specifically, such automobile must have four doors. The automobile allowance
shall be payable in equal bi-weekly installments and shall be $10,000.00 per
year. If and to the extent that the automobile is not considered by the Company
to have been used for business purposes, based upon documentation submitted to
the Company at the Company's request, the Company will include the value of the
non-business use of the automobile and other reimbursements made in connection
therewith on Employee's Form W-2 or 1099 as income for each year such personal
benefit is received.

                  I. EDUCATIONAL EXPENSES. Employee shall be entitled to receive
reimbursement for educational expenses consistent with the company's policy on
educational reimbursement.

         VI. PROPRIETARY INTERESTS OF COMPANY.

                    Employee and the Company recognize that the Company is in a
highly competitive business in a highly technical industry. The parties
acknowledge that the success or failure of the Company depends largely on the
development and use of certain proprietary and confidential information and
trade secrets, including without limitation, information concerning any of the
Company's patented components, research and development projects and in patent
process components, and personal relationships with present and potential
customers, suppliers, contractors, and governmental agencies as well as
technology, procedures, systems, and techniques relating to the products
developed or distributed by the Company (hereinafter collectively referred to as
"CONFIDENTIAL INFORMATION"). Confidential Information is a substantial asset of
the Company. Confidential Information will be disclosed to Employee in the
normal course of operation. Employee acknowledges that Confidential Information
is extremely valuable to the Company and must be protected from unauthorized use
by the Company's competitors or other persons. Therefore, Employee agrees not to
disclose or use, whether for the benefit of Employee or any other person or
entity, at any time during or after his employment, any Confidential Information
to any person or entity other than the Company or persons authorized by the
Company to receive such Confidential Information.

                    Employee recognizes that, during the term of his employment
with the Company, he may develop new products, technology, processes, devices,
inventions, or methods of production, including but not limited to computer
hardware, software or "firmware," and may enhance, improve or perfect existing
products, technology, processes, devices, inventions or methods of production
(hereinafter collectively referred to as "INVENTIONS"). As partial consideration
for the salary and other benefits provided by the Company to Employee, Employee
hereby agrees that his entire work product while in the employ of the Company,
including any Inventions, is the exclusive property of the Company



                                       3


unless Employee has received written authorization from the Company for the
exclusion of such work from this agreement. Employee also agrees to cooperate
fully with the Company and to do whatever acts are reasonably necessary in order
to obtain United States or foreign letters patent or copyrights, or both, and to
vest the entire right and title thereto in the Company. Employee further agrees
that the Company shall have the royalty-free right to use in its business, and
to make, use, and sell such Inventions whether or not patentable, regardless of
whether they are conceived or made by Employee during the hours which he is
employed by the Company or with the use of or assistance of the Company's
facilities, materials or personnel.

                    Except as required in his duties to the Company, Employee
will not, directly or indirectly, use, disseminate, disclose, lecture upon, or
publish articles concerning any Confidential Information without the prior
written consent of the Company.

                    Upon termination of his employment with the Company, all
documents, records, notebooks, and similar repositories of or containing
Confidential Information, including copies thereof, then in Employee's
possession, whether prepared by Employee or others, will be left with the
Company, and no copies thereof will be retained by Employee.

                    It is agreed that any breach of this section of the
Agreement will cause immediate irreparable harm to the Company and monetary
damages would be difficult if not impossible to ascertain. Therefore, the
parties agree that, upon any breach of any covenant in this Section VI, that the
Company may obtain from the district court for the City and County of Denver,
Colorado, or any other court of competent jurisdiction, an appropriate
restraining order, preliminary injunction or other form of equitable relief with
respect thereto. Nothing contained herein shall be construed as prohibiting the
Company from pursuing any other available remedies for such breach, including
the recovery of damages, costs, and attorney fees.

         VII. NONCOMPETE AND NONSOLICITATION. During the term of this Agreement
and for a period of the greater of (a) one year after termination or expiration
of this Agreement or (b) the period during which a Severance Amount or
consulting arrangement is being paid to Employee by the Company (the "NONCOMPETE
PERIOD"), Employee will not, directly or indirectly, own, manage, operate,
control, provide services to, be employed by, participate in, or be connected in
any manner with the ownership, management, operation, or control of any business
which develops, manufactures, distributes or sells the same type of products as
the Company, or products which are the functional equivalent of the Company's
products or currently planned products, within and to the same market as the
Company's market at the time of Employee's proposed activity or, after the
termination of this Agreement, at or prior to the time of such termination.
Employee certifies that his employment with the Company will not breach a
previous employment agreement. Employee agrees not to engage in the unauthorized
use of the proprietary assets of others during the term of his employment by the
Company. Employee agrees not to enter into any other employment agreement, oral
or written, which will run concurrently, in whole or in part, with Employee's
employment by the Company without the prior written approval of the CEO of the
Company. It is agreed that any breach of this section of the Agreement will
cause immediate irreparable harm to the Company and that monetary damages for
such breach would be difficult if not impossible to ascertain.



                                       4


Therefore, the parties agree that upon any breach of the covenants of this
section the Company may obtain from the district court for the City and County
of Denver, Colorado, or any other court of competent jurisdiction, an
appropriate restraining order, preliminary injunction or other form of equitable
relief with respect thereto. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other available remedies for such
breach, including the recovery of damages, costs, and attorney fees.

                    The foregoing agreement not to compete shall not be held
invalid because of the scope of the territory or the actions restricted thereby,
or the period of time within which such agreement is operative; but any judgment
by a court of competent jurisdiction may define the maximum territory and
actions subject to, and restricted by, this paragraph and the period of time
during which such agreement is enforceable.

                    Notwithstanding the foregoing, in the event of a Change of
Control, as hereinafter defined, not recommended by a majority of the Board of
Directors of the Company as constituted prior to the date of such Change of
Control, this non-compete agreement shall terminate upon the date of such Change
of Control.

         VIII. TERMINATION OF EMPLOYMENT.

                  A. TERMINATION BY MUTUAL AGREEMENT. The Company and Employee
may agree to terminate this Agreement on terms and conditions mutually
acceptable to them as of the date of termination.

                  B. DEATH. In the event of Employee's death during the term of
this Agreement, including the Consulting Period, if any, the Company shall pay
to Employee's estate any unpaid wages or other amounts owing at the time of
death and shall pay, in addition to and not as a substitute for the proceeds
from any life insurance policies on Employee's life paid for by the Company, an
amount equal to the Severance Amount which would have been payable to Employee
if there had been a Voluntary Termination on the date of Employee's death and
all notice and other requirements for the payment of such Severance Amount had
been satisfied.

                  C. DISABILITY. If Employee becomes Disabled during the term of
employment, the Company may, at its option, by written notice to Employee or
Employee's personal representative, terminate the employment. Employee shall
thereafter be eligible to receive disability benefits under the Company's
standard employee disability insurance policy like any other employee.

                  D. VOLUNTARY OR INVOLUNTARY TERMINATION. Upon a Voluntary or
Involuntary Termination as defined herein, Employee shall continue to render his
services to the Company, if and to the extent required by the Company, up to the
date of such Voluntary or Involuntary Termination as referenced in the written
notice of termination submitted to Employee by the Company, or vice versa, and
shall be paid (i) the unpaid amount of the then applicable annual base salary up
to the date of such Voluntary or Involuntary Termination, (ii) any bonuses which
the Company's Board of Directors may determine, in its sole discretion, to be
due and payable to Employee, and (iii) the Severance Amount as defined herein.
In the



                                       5


event of a Voluntary Termination, as a condition to Employee's receipt of the
foregoing payments to Employee, during the time between the submission of a
notice of termination by Employee and the effective date of termination set
forth in such notice, Employee shall continue to diligently provide the Company
with such services as the Company may request. In the event of an Involuntary
Termination, all unvested stock options and stock appreciation rights that have
previously been granted to Employee will fully vest and remain exercisable for
three (3) months after such termination.

                  E. DEFINITIONS. All the terms defined in this Section shall
have the meanings given below throughout this Agreement.

                           1. "CHANGE IN DUTIES, COMPENSATION, OR BENEFITS"
shall mean any one or more of the following:

                                    a. a significant and detrimental change in
the nature or scope of Employee's authority, responsibilities or duties from
those currently applicable to him;

                                    b. a reduction in Employee's annual base
salary from that currently provided to him;

                                    c. a diminution in Employee's eligibility to
participate in bonus, stock option, incentive award or any other compensation
plan which provides opportunities to receive compensation from those currently
applicable to him, except for: (i) changes in the eligibility requirements for
plans that are applicable to employees generally; (ii) changes in plans that are
applicable to all executives and result in a diminution of Employee's benefits
under such plan that is fair and proportional as compared to the diminution of
benefits for all executives; and (iii) changes that are required by applicable
law;

                                    d. a material diminution in employee
benefits (including but not limited to medical, dental or life insurance and
long-term disability plans) and perquisites currently applicable to Employee,
except for: (i) changes in the eligibility requirements for benefits that are
applicable to employees generally; (ii) changes in benefits and perquisites that
are applicable to all executives and result in a diminution of Employee's
benefits that is fair and proportional as compared to the diminution for all
executives; and (iii) changes that are required by applicable law;

                                    e. a change in the location of Employee's
principal place of employment by the Company (including its subsidiaries) by
more than fifty (50) miles from the location where he was principally employed
immediately prior to the date on which a Change of Control occurs; or

                                    f. a reasonable determination by a majority
of those persons comprising the Board of Directors of the Company prior to a
Change of Control (even if such determination is made after such Change of
Control) that, as a result of a Change of Control and a change in circumstances
thereafter significantly affecting his position, Employee is unable to exercise
the functions or duties attached to his position immediately prior to the date
on which a Change of Control occurs.



                                       6


                           2. "CHANGE OF CONTROL" shall be deemed to have
occurred if:

                                    a. any "person," including a "group" as
determined in accordance with Section 13(d)(3) of the Securities Exchange Act of
1934 (the "EXCHANGE ACT"), is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities;

                                    b. as a result of, or in connection with,
any tender offer or exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the foregoing
transactions (a "TRANSACTION"), the persons who were directors of the Company
before the Transaction shall cease to constitute a majority of the Board of
Directors of the Company or any successor to the Company;

                                    c. the Company is merged or consolidated
with another corporation or entity and, as a result of the merger or
consolidation, less than 80% of the outstanding voting securities of the
surviving corporation or entity is then owned in the aggregate by the former
stockholders of the Company;

                                    d. a tender offer or exchange offer is made
and consummated for the ownership of securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding voting
securities; or

                                    e. the Company transfers all or
substantially all of its assets to another corporation which is not a wholly
owned subsidiary of the Company.

                           3. "DISABLED" OR "DISABILITY" shall mean mental or
physical illness or condition rendering Employee incapable of performing any
portion of Employee's normal duties with the Company even after the Company's
reasonable accommodation of any such disability in accordance with the Americans
with Disabilities Act and the Colorado Nondiscrimination statute.

                           4. "INVOLUNTARY TERMINATION" shall mean any
termination except:

                                    a. VOLUNTARY TERMINATION;

                                    b. termination by mutual agreement;

                                    c. termination as a result of death; or

                                    d. Employee's voluntary retirement from
employment or mandatory retirement from employment pursuant to a retirement plan
to which Employee was subject prior to any Change of Control. ("RETIREMENT").

                           5. "SEVERANCE AMOUNT" is equal to:

                                    a. in the case of a Change in Control,
employee may unilaterally elect to terminate this agreement within six months
after the Change of Control has



                                       7

occurred. Employee's election will be treated as an Involuntary Termination and
he will receive a lump sum Severance Payment, payable within thirty days of his
election, equal to his then current base salary, plus one hundred percent of his
annual bonus opportunity and continuation of his car allowance for one year. In
the case of a Change in Duties Compensation and Benefits, employee may
unilaterally elect to terminate this agreement. Employee's election will be
treated as an Involuntary Termination and employee will receive a Severance
Payment equal to (6) six months of his then current base salary paid on the
company's regular payroll dates and his pro-rata share of the incentive earned
over the six months following his separation date paid on the company's then
regularly scheduled incentive payment dates and continuation of his car
allowance for six months. In the case of an Involuntary Termination, not
following a Change in Control or a Change in Duties, Compensation and Benefits,
employee will receive a Severance Payment equal to (6) six months of his then
current base salary paid on the company's regular payroll dates and his pro-rata
share of the incentive earned over the six months following his separation date
paid on the company's then regularly scheduled incentive payment dates and
continuation of his car allowance for six months. In the event of Voluntary
Termination, no Severance Amount shall be payable until employee has completed
one (1) year of service with the company and his Severance Amount will be equal
to one (1) month's salary for every year of service completed up to a maximum of
three (3) months, payable ratably on the Company's regular payroll dates.

                                    b. In the case of a Voluntary Termination or
an Involuntary Termination resulting from Employee's resignation following a
Change in Duties, Compensation or Benefits, Employee must give the Company
proper notice of such Termination in order to receive the Severance Amount. For
purposes hereof, proper notice is defined as written notice received by the
Company not less than thirty (30) business days prior to the date of termination
of employment.

                                    c. In the case of an Involuntary Termination
by the Company, the Company must give Employee not less than thirty (30)
business days prior written notice of such termination, provided, however, that
the Company may, in its sole discretion, elect to have Employee provide
different services during such notice period than those provided prior to such
notice.

                                    d. Notwithstanding any other provision of
this Agreement, in the event that Employee is found to have violated the
non-compete provisions of Section VII of this Agreement by a court of competent
jurisdiction ("BREACH"), all Severance Amounts due and owing under this
Agreement shall be terminated upon the effective date of the Breach and Employee
shall reimburse the Company for any portion of the Severance Amount previously
paid to Employee.

                           6. "VOLUNTARY TERMINATION" shall mean any termination
which results from a resignation by Employee other than a resignation following
a Change in Duties, Compensation, or Benefits as defined herein.

                           7. "VOTING SECURITIES" shall mean any securities
which ordinarily possess the power to vote in the election of directors without
the occurrence of any pre-condition or contingency other than the passage of
time.



                                       8


                           8. "BENEFICIALLY OWNED" shall mean beneficial
ownership by Employee, Employee's spouse, or a trust or similar arrangement
established by or for the benefit of Employee, Employee's spouse, or Employee's
minor children as well as the meaning of such term under Section 13 or Section
16 of the Exchange Act.

                  F. SECTION 280G PAYMENT. In the unlikely event that the
Severance Amount payments under this Agreement are determined by an independent
accounting firm retained by Employee (but paid for by the Company) to constitute
"excess parachute payments" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended, (the "CODE") and any regulations thereunder,
such Severance Amount shall be reduced by the amount necessary to avoid such
classification.

                  G. MEDICAL AND DENTAL BENEFITS. If Employee's employment by
the Company or any subsidiary or successor of the Company is terminated because
of Death, Disability, or Involuntary Termination, then to the extent that
Employee or any of Employee's dependents may be covered under the terms of any
medical and dental plans of the Company (or any subsidiary) immediately prior to
the termination, the Company will provide Employee and those dependents with the
same or equivalent coverages until three (3) months after any such termination
of employment. The Company may, at its election, procure such coverages apart
from, and outside of the terms of, the plans applicable to other employees. The
Company's obligation to provide such coverages will be limited by the
requirement that Employee and Employee's dependents comply with all of the
conditions of the medical or dental plans applicable to employees generally and
the Company is under no obligation to obtain special coverages for Employee
which would not be covered by the plans applicable to employees generally. In
consideration for these benefits, Employee must make contributions equal to
those required from time to time from other employees for equivalent coverages
under the medical or dental plans. If and to the extent that Employee is
eligible to participate in a medical, dental or other health insurance plan of
another employer after the termination of his employment by the Company, then
the benefit provided by this section shall be eliminated or commensurately
diminished.

         IX. LIFE INSURANCE.

                  A. GROUP LIFE INSURANCE. The Company shall provide Employee
with personal life insurance under the Company's group life insurance policy as
in effect from time to time which shall be payable to a beneficiary designated
by Employee in addition to, and not as a substitute for, any Severance Amount
payable under Section VIII.B above. Employee acknowledges that, while the
Company currently maintains group life insurance which provides for a death
benefit equal to three (3) times an officer's annual base salary at the time of
death, with a maximum payment of $500,000, as well as an accidental death and
dismemberment policy (the "AD&D Policy") which also provides for an additional
benefit in the same amount as the group life insurance if the cause of death is
covered by the AD&D Policy, such coverages may be altered or amended in the
future on a Company-wide basis, provided, however, that under no circumstances
will such coverages be reduced unless other officers of comparable rank within
the Company are correspondingly reduced.



                                       9


                  B. KEY MAN LIFE INSURANCE. Employee hereby consents to the
purchase by the Company, at the Company's option, of one or more "key man" life
insurance policies on Employee's life naming the Company or its designee as
beneficiary (the "Key Man Policies"); provided, however, that the Company shall
not be required to obtain such insurance. Employee agrees that he shall take any
reasonable actions which may be requested by the Company, and otherwise fully
cooperate with the Company, in its efforts to purchase and maintain the Key Man
Policies. The Key Man Policies will be owned by the Company and the proceeds
made payable to the Company or its designee. If purchased by the Company, the
Key Man Policies shall be for the purpose of providing funds necessary to obtain
a replacement for Employee and for any other reasonable business purpose as may
be determined by the Company in amounts sufficient to accomplish their intended
purposes.

         X. DIRECTORS AND OFFICERS INSURANCE. The Company shall maintain and
keep in force directors and officers liability insurance coverage on all
directors and officers in such an amount as the Company deems reasonable and
necessary under the circumstances but in no event less than $7.5 million of
aggregate coverage.

         XI. POST-TERMINATION CONSULTING. In the event of Employee's Involuntary
or Voluntary Termination, Employee agrees to provide services to the Company as
a consultant for a period of ninety (90) days following the completion of all
severance payments (the "Consulting Period"), in exchange for cash compensation
at the rate of $100 per hour. Employee shall have the right to decline to
provide any consulting services requested by the Company after an Involuntary
Termination or Voluntary Termination but such refusal during the period when
severance payments are being made by the Company will result in the forfeiture
of Employee's right to the Severance Amount hereunder. If Employee does elect to
provide consulting services following the completion of the severance period,
Employee shall be obligated to provide no more than ten (10) hours of consulting
services per week during the Consulting Period, if and to the extent requested
by the Company. Employee may determine to cease providing such consulting
services to the Company at any time during the Consulting Period by providing
the Company with ten days written notice.

         XII. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered in person or sent by
registered or certified mail to Employee's residence as indicated in Employee's
personnel file at in the Company's records in the case of Employee or to its
principal office in the case of the Company.

         XIII. WAIVER. The waiver of any provision of this Agreement shall not
operate or be construed as a waiver of any other provision of this Agreement. No
waiver shall be valid unless in writing and executed by the party to be charged
therewith.

         XIV. SEVERABILITY/MODIFICATION. In the event that any clause or
provision of this Agreement shall be determined to be invalid, illegal or
unenforceable, such clause or provision may be severed or modified to the extent
necessary, and, as severed and/or modified, this Agreement shall remain in full
force and effect.

         XV. ASSIGNMENT. Except for a transfer by will or by the laws of descent
or distribution, Employee's right to receive payments or benefits under this
Agreement shall not



                                       10


be assignable or transferable, whether by pledge, creation of a security
interest or otherwise. In the event of any attempted assignment or transfer
contrary to this paragraph, the Company shall have no liability to pay any
amount so attempted to be assigned or transferred. Employee acknowledges that
the services to be rendered under this Agreement are unique and personal.
Accordingly, Employee may not assign such duties or obligations under this
Agreement.

         XVI. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors and assigns (including, without
limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or other
disposition of all or substantially all of its assets unless either (i) the
person or entity acquiring the assets or a substantial portion of the assets
shall expressly assume by an instrument in writing all duties and obligations of
the Company under this Agreement or (ii) the Company shall provide, through the
establishment of a separate reserve or otherwise, for the payment in full of all
amounts which are or may reasonably be expected to become payable to Employee
under this Agreement.

         XVII. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
concerning the employment arrangement between the parties and shall, as of the
effective date hereof, supersede all other such agreements between the parties,
provided, however, that nothing in this Agreement shall prevent the Company from
granting additional or special compensation or benefits to Employee after the
date of execution of this Agreement. This Agreement may not be amended except by
an agreement in writing signed by both parties.

         XVIII. GOVERNING LAW AND JURISDICTION. This Agreement shall be
interpreted, construed, and enforced under the laws of the State of Colorado.
The courts of the State of Colorado shall have sole jurisdiction and venue over
all controversies which may arise with respect to this Agreement.

         XIX. TIME. In comparing any period of time prescribed or allowed by
this Agreement, the day of the act, event or default from which the designated
period of time begins to run shall not be included. Time accounting shall begin
upon midnight of the following calendar day. All periods of time shall be
assumed to be specified in calendar days unless otherwise noted. In the case of
fractional days of time, the appropriate equivalent hours can be calculated and
accounted for against midnight of the calendar day in which the period of time
started. For purposes of calculating the duration of the covenant not to compete
the time period of such covenant shall be extended by one day for each day that
Employee competes with Company in violation of such covenant.

         XX. COUNTERPARTS. This Agreement may be signed in one or more
counterparts which, taken together, shall constitute a single binding agreement
between the parties. Photocopies or telecopies of the parties' original
signatures hereto may be relied upon as originals for all purposes.



                                       11


         IN WITNESS WHEREOF, the parties have executed this Agreement the date
and year indicated above.

                                       THE COMPANY:

                                       VARI-L COMPANY, INC.



                                       By: /s/ CHARLES R. BLAND
                                          --------------------------------------
                                          Charles R. Bland, President


                                       EMPLOYEE:



                                       /s/ LARRY M. ROMERO
                                       -----------------------------------------
                                       Larry M. Romero



                                       12

EX-10.25

                                                                   EXHIBIT 10.25

                              VARI-L COMPANY, INC.
                         EXECUTIVE EMPLOYMENT AGREEMENT


         THIS AGREEMENT, effective August 1, 2002, is made and entered into by
and between VARI-L COMPANY, INC. (the "Company") and Timothy G. Schamberger
("Employee").

         WHEREAS, the Company wishes to engage Employee as the Company's Vice
President- of Sales and Marketing to manage the Company's sales and marketing as
part of the Company's continuing efforts to build shareholder value; and

         WHEREAS, the Company's Board of Directors, comprised solely of
disinterested directors, has determined to provide Employee with this employment
agreement, including the severance package and other benefits provided hereby,
for the purpose of inducing Employee to accept the Vice President of Sales and
Marketing position with the Company and to provide diligent and efficacious
services to the Company during his employment.

         NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:

         I. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby
accepts employment, upon the terms and conditions hereinafter set forth.

         II. TERM. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement is for a period commencing August 1, 2002,
and expiring July 31, 2003 (the "Initial Term"). On August 1, of each year,
beginning in 2003, the term of this Agreement shall be automatically extended
for an additional year without any further action on the part of the Company or
Employee unless terminated under the provisions of Section VIII of this
Agreement.

         III. DUTIES. Employee is engaged as Vice President of Sales and
Marketing of the Company, to have complete responsibility for and authority over
the management of sales and marketing and shall have full authority and
responsibility, subject only to the direction of the Company's Chief Executive
Officer or President and the Board of Directors, for administering those
operations of the Company in all respects.

         IV. EXTENT OF SERVICES. Employee shall faithfully, industriously, and
to the best of his ability, experience, and talents, perform all of the duties
that may be required of and from him pursuant to this Agreement. Nothing herein
shall be construed as preventing Employee from (a) investing his assets in such
form or manner as will not require any services on the part of Employee, unless
employee discloses in writing to the company the extent of such services and
receives written authorization to provide such services, in the operations or
the affairs of the companies in which such investments are made or (b) serving
as a director, advisor, or consultant; provided, however, that such investments
or services may not be in connection with a business which is in competition
with the Company (excluding (i) indirect investments through mutual funds or
other broad based investment vehicles, (ii) investments in





debt instruments, and (iii) investments in less than 5% of the stock of any
publicly held business). For purposes hereof, "in competition with the Company"
shall be construed consistently with Section VII hereof.

         V. COMPENSATION AND EMPLOYEE BENEFITS.

                  A. ANNUAL BASE SALARY. For all services rendered by Employee
under this Agreement, the Company shall pay Employee an annual base salary ,
payable in equal bi-weekly installments. The amount of such base salary shall be
reviewed at least once each fiscal year by the Compensation Committee of the
Company's Board of Directors.

                  B. STOCK OPTIONS. Employee shall be eligible for future stock
option grants at the same time and based on the same criteria as other executive
officers of the Company.

                  C. BONUS COMPENSATION. Employee may receive bonuses, payable
in cash or shares of the Company's stock, as may be determined from time to time
by the Board of Directors or the Compensation Committee of the Board of
Directors, in its sole discretion, on the basis of: (i) Employee's success in
meeting his personal performance goals, as established by the Compensation
Committee of the Board of Directors; (ii) Employee's merit, including but not
limited to the quality of the services provided by Employee and his
industriousness and diligence in performing such services; and (iii) the
Company's financial success and progress in the prior fiscal year. Employee's
annual bonus opportunity is equal to thirty five percent (35%) of his current
annual base salary.

                  D. VACATION. Employee shall be entitled to accrue four (4)
weeks of paid vacation for each year of service provided. Any accrued but unused
vacation time shall be paid to Employee at or before the termination of his
employment, in accordance with Company policy, in addition to any amounts due
and payable to Employee under Section VIII hereof. Employee shall be required to
take at least two (2) weeks vacation per year, including in at least one case, a
vacation lasting no less than five (5) consecutive business days.

                  E. EMPLOYEE BENEFITS. Employee shall be entitled to receive
all of the rights, benefits, and privileges of an employee and an executive
officer under any generally applicable retirement, pension, profit-sharing,
insurance, health and hospital, or other employee benefit plans which may be now
in effect or hereafter adopted by the Company.

                  F. WORKING FACILITIES. Employee shall be furnished with a
private office, business tools, and such other facilities and services suitable
to Employee's position and adequate for the performance of the duties required
by this Agreement.

                  G. EXPENSES. Subject to limits which may be imposed by the
Chief Executive Officer, President or the Board of Directors, including any
committee thereof, Employee is authorized to incur reasonable expenses in
connection with his responsibilities in conducting the business of the Company,
including expenses for entertainment, travel, and similar items. The Company
will reimburse Employee for all such expenses upon the presentation by Employee,
in a timely manner of an itemized account of such expenditures, including
receipts or other adequate documentation, or Employee may pay such expenses with



                                       2


a Company credit card, if a Company credit card is issued to Employee, and
Employee shall appropriately document the business purpose of such expenditures.
Employee's expenses must be submitted to and approved by the Audit Committee or
another officer or employee designated by the Audit Committee to review and
approve such expenses.

                  H. AUTOMOBILE ALLOWANCE. The Company will pay Employee an
automobile allowance for the expense of leasing or financing an automobile, as
well as for insurance, maintenance, fuel and repairs associated with such
automobile. Any automobile for which Employee accepts this allowance must be
suitable for the Company's use in performing services for the Company.
Specifically, such automobile must have four doors. The automobile allowance
shall be payable in equal bi-weekly installments and shall be $10,000.00 per
year. If and to the extent that the automobile is not considered by the Company
to have been used for business purposes, based upon documentation submitted to
the Company at the Company's request, the Company will include the value of the
non-business use of the automobile and other reimbursements made in connection
therewith on Employee's Form W-2 or 1099 as income for each year such personal
benefit is received.

                  I. EDUCATIONAL EXPENSES. Employee shall be entitled to receive
reimbursement for educational expenses consistent with the company's policy on
educational reimbursement.

         VI. PROPRIETARY INTERESTS OF COMPANY.

                    Employee and the Company recognize that the Company is in a
highly competitive business in a highly technical industry. The parties
acknowledge that the success or failure of the Company depends largely on the
development and use of certain proprietary and confidential information and
trade secrets, including without limitation, information concerning any of the
Company's patented components, research and development projects and in patent
process components, and personal relationships with present and potential
customers, suppliers, contractors, and governmental agencies as well as
technology, procedures, systems, and techniques relating to the products
developed or distributed by the Company (hereinafter collectively referred to as
"CONFIDENTIAL INFORMATION"). Confidential Information is a substantial asset of
the Company. Confidential Information will be disclosed to Employee in the
normal course of operation. Employee acknowledges that Confidential Information
is extremely valuable to the Company and must be protected from unauthorized use
by the Company's competitors or other persons. Therefore, Employee agrees not to
disclose or use, whether for the benefit of Employee or any other person or
entity, at any time during or after his employment, any Confidential Information
to any person or entity other than the Company or persons authorized by the
Company to receive such Confidential Information.

                    Employee recognizes that, during the term of his employment
with the Company, he may develop new products, technology, processes, devices,
inventions, or methods of production, including but not limited to computer
hardware, software or "firmware," and may enhance, improve or perfect existing
products, technology, processes, devices, inventions or methods of production
(hereinafter collectively referred to as "INVENTIONS"). As partial consideration
for the salary and other benefits provided by the Company to Employee, Employee
hereby agrees that his entire work product while in the



                                       3


employ of the Company, including any Inventions, is the exclusive property of
the Company unless Employee has received written authorization from the Company
for the exclusion of such work from this agreement. Employee also agrees to
cooperate fully with the Company and to do whatever acts are reasonably
necessary in order to obtain United States or foreign letters patent or
copyrights, or both, and to vest the entire right and title thereto in the
Company. Employee further agrees that the Company shall have the royalty-free
right to use in its business, and to make, use, and sell such Inventions whether
or not patentable, regardless of whether they are conceived or made by Employee
during the hours which he is employed by the Company or with the use of or
assistance of the Company's facilities, materials or personnel.

                    Except as required in his duties to the Company, Employee
will not, directly or indirectly, use, disseminate, disclose, lecture upon, or
publish articles concerning any Confidential Information without the prior
written consent of the Company.

                    Upon termination of his employment with the Company, all
documents, records, notebooks, and similar repositories of or containing
Confidential Information, including copies thereof, then in Employee's
possession, whether prepared by Employee or others, will be left with the
Company, and no copies thereof will be retained by Employee.

                    It is agreed that any breach of this section of the
Agreement will cause immediate irreparable harm to the Company and monetary
damages would be difficult if not impossible to ascertain. Therefore, the
parties agree that, upon any breach of any covenant in this Section VI, that the
Company may obtain from the district court for the City and County of Denver,
Colorado, or any other court of competent jurisdiction, an appropriate
restraining order, preliminary injunction or other form of equitable relief with
respect thereto. Nothing contained herein shall be construed as prohibiting the
Company from pursuing any other available remedies for such breach, including
the recovery of damages, costs, and attorney fees.

         VII. NONCOMPETE AND NONSOLICITATION. During the term of this Agreement
and for a period of the greater of (a) one year after termination or expiration
of this Agreement or (b) the period during which a Severance Amount or
consulting arrangement is being paid to Employee by the Company (the "NONCOMPETE
PERIOD"), Employee will not, directly or indirectly, own, manage, operate,
control, provide services to, be employed by, participate in, or be connected in
any manner with the ownership, management, operation, or control of any business
which develops, manufactures, distributes or sells the same type of products as
the Company, or products which are the functional equivalent of the Company's
products or currently planned products, within and to the same market as the
Company's market at the time of Employee's proposed activity or, after the
termination of this Agreement, at or prior to the time of such termination.
Employee certifies that his employment with the Company will not breach a
previous employment agreement. Employee agrees not to engage in the unauthorized
use of the proprietary assets of others during the term of his employment by the
Company. Employee agrees not to enter into any other employment agreement, oral
or written, which will run concurrently, in whole or in part, with Employee's
employment by the Company without the prior written approval of the CEO of the
Company. It is agreed that any breach of this section of the Agreement will
cause immediate irreparable harm to the Company



                                       4


and that monetary damages for such breach would be difficult if not impossible
to ascertain. Therefore, the parties agree that upon any breach of the covenants
of this section the Company may obtain from the district court for the City and
County of Denver, Colorado, or any other court of competent jurisdiction, an
appropriate restraining order, preliminary injunction or other form of equitable
relief with respect thereto. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other available remedies for such
breach, including the recovery of damages, costs, and attorney fees.

                    The foregoing agreement not to compete shall not be held
invalid because of the scope of the territory or the actions restricted thereby,
or the period of time within which such agreement is operative; but any judgment
by a court of competent jurisdiction may define the maximum territory and
actions subject to, and restricted by, this paragraph and the period of time
during which such agreement is enforceable.

                    Notwithstanding the foregoing, in the event of a Change of
Control, as hereinafter defined, not recommended by a majority of the Board of
Directors of the Company as constituted prior to the date of such Change of
Control, this non-compete agreement shall terminate upon the date of such Change
of Control.

         VIII. TERMINATION OF EMPLOYMENT.

                  A. TERMINATION BY MUTUAL AGREEMENT. The Company and Employee
may agree to terminate this Agreement on terms and conditions mutually
acceptable to them as of the date of termination.

                  B. DEATH. In the event of Employee's death during the term of
this Agreement, including the Consulting Period, if any, the Company shall pay
to Employee's estate any unpaid wages or other amounts owing at the time of
death and shall pay, in addition to and not as a substitute for the proceeds
from any life insurance policies on Employee's life paid for by the Company, an
amount equal to the Severance Amount which would have been payable to Employee
if there had been a Voluntary Termination on the date of Employee's death and
all notice and other requirements for the payment of such Severance Amount had
been satisfied.

                  C. DISABILITY. If Employee becomes Disabled during the term of
employment, the Company may, at its option, by written notice to Employee or
Employee's personal representative, terminate the employment. Employee shall
thereafter be eligible to receive disability benefits under the Company's
standard employee disability insurance policy like any other employee.

                  D. VOLUNTARY OR INVOLUNTARY TERMINATION. Upon a Voluntary or
Involuntary Termination as defined herein, Employee shall continue to render his
services to the Company, if and to the extent required by the Company, up to the
date of such Voluntary or Involuntary Termination as referenced in the written
notice of termination submitted to Employee by the Company, or vice versa, and
shall be paid (i) the unpaid amount of the then applicable annual base salary up
to the date of such Voluntary or Involuntary Termination, (ii) any bonuses which
the Company's Board of Directors may determine, in its sole discretion, to



                                       5


be due and payable to Employee, and (iii) the Severance Amount as defined
herein. In the event of a Voluntary Termination, as a condition to Employee's
receipt of the foregoing payments to Employee, during the time between the
submission of a notice of termination by Employee and the effective date of
termination set forth in such notice, Employee shall continue to diligently
provide the Company with such services as the Company may request. In the event
of an Involuntary Termination, all unvested stock options and stock appreciation
rights that have previously been granted to Employee will fully vest and remain
exercisable for three (3) months after such termination.

                  E. DEFINITIONS. All the terms defined in this Section shall
have the meanings given below throughout this Agreement.

                           1. "CHANGE IN DUTIES, COMPENSATION, OR BENEFITS"
shall mean any one or more of the following:

                                    a. a significant and detrimental change in
the nature or scope of Employee's authority, responsibilities or duties from
those currently applicable to him;

                                    b. a reduction in Employee's annual base
salary from that currently provided to him;

                                    c. a diminution in Employee's eligibility to
participate in bonus, stock option, incentive award or any other compensation
plan which provides opportunities to receive compensation from those currently
applicable to him, except for: (i) changes in the eligibility requirements for
plans that are applicable to employees generally; (ii) changes in plans that are
applicable to all executives and result in a diminution of Employee's benefits
under such plan that is fair and proportional as compared to the diminution of
benefits for all executives; and (iii) changes that are required by applicable
law;

                                    d. a material diminution in employee
benefits (including but not limited to medical, dental or life insurance and
long-term disability plans) and perquisites currently applicable to Employee,
except for: (i) changes in the eligibility requirements for benefits that are
applicable to employees generally; (ii) changes in benefits and perquisites that
are applicable to all executives and result in a diminution of Employee's
benefits that is fair and proportional as compared to the diminution for all
executives; and (iii) changes that are required by applicable law;

                                    e. a change in the location of Employee's
principal place of employment by the Company (including its subsidiaries) by
more than fifty (50) miles from the location where he was principally employed
immediately prior to the date on which a Change of Control occurs; or

                                    f. a reasonable determination by a majority
of those persons comprising the Board of Directors of the Company prior to a
Change of Control (even if such determination is made after such Change of
Control) that, as a result of a Change of Control and a change in circumstances
thereafter significantly affecting his position, Employee is



                                       6


unable to exercise the functions or duties attached to his position immediately
prior to the date on which a Change of Control occurs.

                           2. "CHANGE OF CONTROL" shall be deemed to have
occurred if:

                                    a. any "person," including a "group" as
determined in accordance with Section 13(d)(3) of the Securities Exchange Act of
1934 (the "EXCHANGE ACT"), is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities;

                                    b. as a result of, or in connection with,
any tender offer or exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the foregoing
transactions (a "TRANSACTION"), the persons who were directors of the Company
before the Transaction shall cease to constitute a majority of the Board of
Directors of the Company or any successor to the Company;

                                    c. the Company is merged or consolidated
with another corporation or entity and, as a result of the merger or
consolidation, less than 80% of the outstanding voting securities of the
surviving corporation or entity is then owned in the aggregate by the former
stockholders of the Company;

                                    d. a tender offer or exchange offer is made
and consummated for the ownership of securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding voting
securities; or

                                    e. the Company transfers all or
substantially all of its assets to another corporation which is not a wholly
owned subsidiary of the Company.

                           3. "DISABLED" OR "DISABILITY" shall mean mental or
physical illness or condition rendering Employee incapable of performing any
portion of Employee's normal duties with the Company even after the Company's
reasonable accommodation of any such disability in accordance with the Americans
with Disabilities Act and the Colorado Nondiscrimination statute.

                           4. "INVOLUNTARY TERMINATION" shall mean any
termination except:

                                    a. VOLUNTARY TERMINATION;

                                    b. termination by mutual agreement;

                                    c. termination as a result of death; or

                                    d. Employee's voluntary retirement from
employment or mandatory retirement from employment pursuant to a retirement plan
to which Employee was subject prior to any Change of Control. ("RETIREMENT").



                                       7

                           5. "SEVERANCE AMOUNT" is equal to:

                                    a. in the case of a Change in Control,
employee may unilaterally elect to terminate this agreement within six months
after the Change of Control has occurred. Employee's election will be treated as
an Involuntary Termination and he will receive a lump sum Severance Payment,
payable within thirty days of his election, equal to his then current base
salary, plus one hundred percent of his annual bonus opportunity and
continuation of his car allowance for one year. In the case of a Change in
Duties Compensation and Benefits, employee may unilaterally elect to terminate
this agreement. Employee's election will be treated as an Involuntary
Termination and employee will receive a Severance Payment equal to (6) six
months of his then current base salary paid on the company's regular payroll
dates and his pro-rata share of the incentive earned over the six months
following his separation date paid on the company's then regularly scheduled
incentive payment dates and continuation of his car allowance for six months. In
the case of an Involuntary Termination, not following a Change in Control or a
Change in Duties, Compensation and Benefits, employee will receive a Severance
Payment equal to (6) six months of his then current base salary paid on the
company's regular payroll dates and his pro-rata share of the incentive earned
over the six months following his separation date paid on the company's then
regularly scheduled incentive payment dates and continuation of his car
allowance for six months. In the event of Voluntary Termination, no Severance
Amount shall be payable until employee has completed one (1) year of service
with the company and his Severance Amount will be equal to one (1) month's
salary for every year of service completed up to a maximum of three (3) months,
payable ratably on the Company's regular payroll dates.

                                    b. In the case of a Voluntary Termination or
an Involuntary Termination resulting from Employee's resignation following a
Change in Duties, Compensation or Benefits, Employee must give the Company
proper notice of such Termination in order to receive the Severance Amount. For
purposes hereof, proper notice is defined as written notice received by the
Company not less than thirty (30) business days prior to the date of termination
of employment.

                                    c. In the case of an Involuntary Termination
by the Company, the Company must give Employee not less than thirty (30)
business days prior written notice of such termination, provided, however, that
the Company may, in its sole discretion, elect to have Employee provide
different services during such notice period than those provided prior to such
notice.

                                    d. Notwithstanding any other provision of
this Agreement, in the event that Employee is found to have violated the
non-compete provisions of Section VII of this Agreement by a court of competent
jurisdiction ("BREACH"), all Severance Amounts due and owing under this
Agreement shall be terminated upon the effective date of the Breach and Employee
shall reimburse the Company for any portion of the Severance Amount previously
paid to Employee.

                           6. "VOLUNTARY TERMINATION" shall mean any termination
which results from a resignation by Employee other than a resignation following
a Change in Duties, Compensation, or Benefits as defined herein.



                                       8


                           7. "VOTING SECURITIES" shall mean any securities
which ordinarily possess the power to vote in the election of directors without
the occurrence of any pre-condition or contingency other than the passage of
time.

                           8. "BENEFICIALLY OWNED" shall mean beneficial
ownership by Employee, Employee's spouse, or a trust or similar arrangement
established by or for the benefit of Employee, Employee's spouse, or Employee's
minor children as well as the meaning of such term under Section 13 or Section
16 of the Exchange Act.

                           F. SECTION 280G PAYMENT. In the unlikely event that
the Severance Amount payments under this Agreement are determined by an
independent accounting firm retained by Employee (but paid for by the Company)
to constitute "excess parachute payments" within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended, (the "CODE") and any regulations
thereunder, such Severance Amount shall be reduced by the amount necessary to
avoid such classification.

                           G. MEDICAL AND DENTAL BENEFITS. If Employee's
employment by the Company or any subsidiary or successor of the Company is
terminated because of Death, Disability, or Involuntary Termination, then to the
extent that Employee or any of Employee's dependents may be covered under the
terms of any medical and dental plans of the Company (or any subsidiary)
immediately prior to the termination, the Company will provide Employee and
those dependents with the same or equivalent coverages until three (3) months
after any such termination of employment. The Company may, at its election,
procure such coverages apart from, and outside of the terms of, the plans
applicable to other employees. The Company's obligation to provide such
coverages will be limited by the requirement that Employee and Employee's
dependents comply with all of the conditions of the medical or dental plans
applicable to employees generally and the Company is under no obligation to
obtain special coverages for Employee which would not be covered by the plans
applicable to employees generally. In consideration for these benefits, Employee
must make contributions equal to those required from time to time from other
employees for equivalent coverages under the medical or dental plans. If and to
the extent that Employee is eligible to participate in a medical, dental or
other health insurance plan of another employer after the termination of his
employment by the Company, then the benefit provided by this section shall be
eliminated or commensurately diminished.

         IX. LIFE INSURANCE.

                           A. GROUP LIFE INSURANCE. The Company shall provide
Employee with personal life insurance under the Company's group life insurance
policy as in effect from time to time which shall be payable to a beneficiary
designated by Employee in addition to, and not as a substitute for, any
Severance Amount payable under Section VIII.B above. Employee acknowledges that,
while the Company currently maintains group life insurance which provides for a
death benefit equal to three (3) times an officer's annual base salary at the
time of death, with a maximum payment of $500,000, as well as an accidental
death and dismemberment policy (the "AD&D Policy") which also provides for an
additional benefit in the same amount as the group life insurance if the cause
of death is covered by the AD&D Policy, such coverages may be altered or amended
in the future on a Company-wide basis,



                                       9


provided, however, that under no circumstances will such coverages be reduced
unless other officers of comparable rank within the Company are correspondingly
reduced.

                  B. KEY MAN LIFE INSURANCE. Employee hereby consents to the
purchase by the Company, at the Company's option, of one or more "key man" life
insurance policies on Employee's life naming the Company or its designee as
beneficiary (the "Key Man Policies"); provided, however, that the Company shall
not be required to obtain such insurance. Employee agrees that he shall take any
reasonable actions which may be requested by the Company, and otherwise fully
cooperate with the Company, in its efforts to purchase and maintain the Key Man
Policies. The Key Man Policies will be owned by the Company and the proceeds
made payable to the Company or its designee. If purchased by the Company, the
Key Man Policies shall be for the purpose of providing funds necessary to obtain
a replacement for Employee and for any other reasonable business purpose as may
be determined by the Company in amounts sufficient to accomplish their intended
purposes.

         X. DIRECTORS AND OFFICERS INSURANCE. The Company shall maintain and
keep in force directors and officers liability insurance coverage on all
directors and officers in such an amount as the Company deems reasonable and
necessary under the circumstances but in no event less than $7.5 million of
aggregate coverage.

         XI. POST-TERMINATION CONSULTING. In the event of Employee's Involuntary
or Voluntary Termination, Employee agrees to provide services to the Company as
a consultant for a period of ninety (90) days following the completion of all
severance payments (the "Consulting Period"), in exchange for cash compensation
at the rate of $100 per hour. Employee shall have the right to decline to
provide any consulting services requested by the Company after an Involuntary
Termination or Voluntary Termination but such refusal during the period when
severance payments are being made by the Company will result in the forfeiture
of Employee's right to the Severance Amount hereunder. If Employee does elect to
provide consulting services following the completion of the severance period,
Employee shall be obligated to provide no more than ten (10) hours of consulting
services per week during the Consulting Period, if and to the extent requested
by the Company. Employee may determine to cease providing such consulting
services to the Company at any time during the Consulting Period by providing
the Company with ten days written notice.

         XII. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered in person or sent by
registered or certified mail to Employee's residence as indicated in Employee's
personnel file at in the Company's records in the case of Employee or to its
principal office in the case of the Company.

         XIII. WAIVER. The waiver of any provision of this Agreement shall not
operate or be construed as a waiver of any other provision of this Agreement. No
waiver shall be valid unless in writing and executed by the party to be charged
therewith.

         XIV. SEVERABILITY/MODIFICATION. In the event that any clause or
provision of this Agreement shall be determined to be invalid, illegal or
unenforceable, such clause or provision may be severed or modified to the extent
necessary, and, as severed and/or modified, this Agreement shall remain in full
force and effect.



                                       10


         XV. ASSIGNMENT. Except for a transfer by will or by the laws of descent
or distribution, Employee's right to receive payments or benefits under this
Agreement shall not be assignable or transferable, whether by pledge, creation
of a security interest or otherwise. In the event of any attempted assignment or
transfer contrary to this paragraph, the Company shall have no liability to pay
any amount so attempted to be assigned or transferred. Employee acknowledges
that the services to be rendered under this Agreement are unique and personal.
Accordingly, Employee may not assign such duties or obligations under this
Agreement.

         XVI. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors and assigns (including, without
limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or other
disposition of all or substantially all of its assets unless either (i) the
person or entity acquiring the assets or a substantial portion of the assets
shall expressly assume by an instrument in writing all duties and obligations of
the Company under this Agreement or (ii) the Company shall provide, through the
establishment of a separate reserve or otherwise, for the payment in full of all
amounts which are or may reasonably be expected to become payable to Employee
under this Agreement.

         XVII. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
concerning the employment arrangement between the parties and shall, as of the
effective date hereof, supersede all other such agreements between the parties,
provided, however, that nothing in this Agreement shall prevent the Company from
granting additional or special compensation or benefits to Employee after the
date of execution of this Agreement. This Agreement may not be amended except by
an agreement in writing signed by both parties.

         XVIII. GOVERNING LAW AND JURISDICTION. This Agreement shall be
interpreted, construed, and enforced under the laws of the State of Colorado.
The courts of the State of Colorado shall have sole jurisdiction and venue over
all controversies which may arise with respect to this Agreement.

         XIX. TIME. In comparing any period of time prescribed or allowed by
this Agreement, the day of the act, event or default from which the designated
period of time begins to run shall not be included. Time accounting shall begin
upon midnight of the following calendar day. All periods of time shall be
assumed to be specified in calendar days unless otherwise noted. In the case of
fractional days of time, the appropriate equivalent hours can be calculated and
accounted for against midnight of the calendar day in which the period of time
started. For purposes of calculating the duration of the covenant not to compete
the time period of such covenant shall be extended by one day for each day that
Employee competes with Company in violation of such covenant.

         XX. COUNTERPARTS. This Agreement may be signed in one or more
counterparts which, taken together, shall constitute a single binding agreement
between the parties. Photocopies or telecopies of the parties' original
signatures hereto may be relied upon as originals for all purposes.



                                       11


         IN WITNESS WHEREOF, the parties have executed this Agreement the date
and year indicated above.

                                       THE COMPANY:

                                       VARI-L COMPANY, INC.



                                       By: /s/ CHARLES R. BLAND
                                          --------------------------------------
                                          Charles R. Bland, President


                                       EMPLOYEE:



                                       /s/ TIMOTHY G. SCHAMBERGER
                                       -----------------------------------------
                                       Timothy G. Schamberger



                                       12

EX-10.26

                                                                   EXHIBIT 10.26

                              VARI-L COMPANY, INC.
                         EXECUTIVE EMPLOYMENT AGREEMENT


         THIS AGREEMENT, effective August 1, 2002, is made and entered into by
and between VARI-L COMPANY, INC. (the "Company") and Daniel J. Wilmot
("Employee").

         WHEREAS, the Company wishes to engage Employee as the Company's Vice
President- of Research and Development to manage the Company's Advanced
Technology Research and Development as part of the Company's continuing efforts
to build shareholder value; and

         WHEREAS, the Company's Board of Directors, comprised solely of
disinterested directors, has determined to provide Employee with this employment
agreement, including the severance package and other benefits provided hereby,
for the purpose of inducing Employee to accept the Vice President of Research
and Development position with the Company and to provide diligent and
efficacious services to the Company during his employment.

         NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:

         I. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby
accepts employment, upon the terms and conditions hereinafter set forth.

         II. TERM. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement is for a period commencing August 1, 2002,
and expiring July 31, 2003 (the "Initial Term"). On August 1 of each year,
beginning in 2003, the term of this Agreement shall be automatically extended
for an additional year without any further action on the part of the Company or
Employee unless terminated under the provisions of Section VIII of this
Agreement.

         III. DUTIES. Employee is engaged as Vice President Research and
Development of the Company, to have complete responsibility for and authority
over the management of Research and Development and shall have full authority
and responsibility, subject only to the direction of the Company's Chief
Executive Officer or President and the Board of Directors, for administering
those operations of the Company in all respects.

         IV. EXTENT OF SERVICES. Employee shall faithfully, industriously, and
to the best of his ability, experience, and talents, perform all of the duties
that may be required of and from him pursuant to this Agreement. Nothing herein
shall be construed as preventing Employee from (a) investing his assets in such
form or manner as will not require any services on the part of Employee, unless
employee discloses in writing to the company the extent of such services and
receives written authorization to provide such services, in the operations or
the affairs of the companies in which such investments are made or (b) serving
as a director, advisor, or consultant; provided, however, that such investments
or services may not be in connection with a business which is in competition
with the Company (excluding (i) indirect investments through mutual funds or
other broad based investment vehicles, (ii) investments in debt instruments, and
(iii) investments in less than 5% of the stock of any publicly held business).
For purposes hereof, "in competition with the Company" shall be construed
consistently with Section VII hereof.





         V. COMPENSATION AND EMPLOYEE BENEFITS.

                  A. ANNUAL BASE SALARY. For all services rendered by Employee
under this Agreement, the Company shall pay Employee an annual base salary ,
payable in equal bi-weekly installments. The amount of such base salary shall be
reviewed at least once each fiscal year by the Compensation Committee of the
Company's Board of Directors.

                  B. STOCK OPTIONS. Employee shall be eligible for future stock
option grants at the same time and based on the same criteria as other executive
officers of the Company.

                  C. BONUS COMPENSATION. Employee may receive bonuses, payable
in cash or shares of the Company's stock, as may be determined from time to time
by the Board of Directors or the Compensation Committee of the Board of
Directors, in its sole discretion, on the basis of: (i) Employee's success in
meeting his personal performance goals, as established by the Compensation
Committee of the Board of Directors; (ii) Employee's merit, including but not
limited to the quality of the services provided by Employee and his
industriousness and diligence in performing such services; and (iii) the
Company's financial success and progress in the prior fiscal year. Employee's
annual bonus opportunity is equal to thirty-five percent (35%) of his current
annual base salary.

                  D. VACATION. Employee shall be entitled to accrue four (4)
weeks of paid vacation for each year of service provided. Any accrued but unused
vacation time shall be paid to Employee at or before the termination of his
employment, in accordance with Company policy, in addition to any amounts due
and payable to Employee under Section VIII hereof. Employee shall be required to
take at least two (2) weeks vacation per year, including in at least one case, a
vacation lasting no less than five (5) consecutive business days.

                  E. EMPLOYEE BENEFITS. Employee shall be entitled to receive
all of the rights, benefits, and privileges of an employee and an executive
officer under any generally applicable retirement, pension, profit-sharing,
insurance, health and hospital, or other employee benefit plans which may be now
in effect or hereafter adopted by the Company.

                  F. WORKING FACILITIES. Employee shall be furnished with a
private office, business tools, and such other facilities and services suitable
to Employee's position and adequate for the performance of the duties required
by this Agreement.

                  G. EXPENSES. Subject to limits, which may be imposed by the
Chief Executive Officer, President or the Board of Directors, including any
committee thereof, Employee is authorized to incur reasonable expenses in
connection with his responsibilities in conducting the business of the Company,
including expenses for entertainment, travel, and similar items. The Company
will reimburse Employee for all such expenses upon the presentation by Employee,
in a timely manner of an itemized account of such expenditures, including
receipts or other adequate documentation, or Employee may pay such expenses with
a Company credit card, if a Company credit card is issued to Employee, and
Employee shall appropriately document the business purpose of such expenditures.
Employee's expenses must be submitted to and approved by the Audit Committee or
another officer or employee designated by the Audit Committee to review and
approve such expenses.



                                       2


                  H. AUTOMOBILE ALLOWANCE. The Company will pay Employee an
automobile allowance for the expense of leasing or financing an automobile, as
well as for insurance, maintenance, fuel and repairs associated with such
automobile. Any automobile for which Employee accepts this allowance must be
suitable for the Company's use in performing services for the Company.
Specifically, such automobile must have four doors. The automobile allowance
shall be payable in equal bi-weekly installments and shall be $10,000.00 per
year. If and to the extent that the automobile is not considered by the Company
to have been used for business purposes, based upon documentation submitted to
the Company at the Company's request, the Company will include the value of the
non-business use of the automobile and other reimbursements made in connection
therewith on Employee's Form W-2 or 1099 as income for each year such personal
benefit is received.

                  I. EDUCATIONAL EXPENSES. Employee shall be entitled to receive
reimbursement for educational expenses consistent with the company's policy on
educational reimbursement.

         VI. PROPRIETARY INTERESTS OF COMPANY.

                    Employee and the Company recognize that the Company is in a
highly competitive business in a highly technical industry. The parties
acknowledge that the success or failure of the Company depends largely on the
development and use of certain proprietary and confidential information and
trade secrets, including without limitation, information concerning any of the
Company's patented components, research and development projects and in patent
process components, and personal relationships with present and potential
customers, suppliers, contractors, and governmental agencies as well as
technology, procedures, systems, and techniques relating to the products
developed or distributed by the Company (hereinafter collectively referred to as
"CONFIDENTIAL INFORMATION"). Confidential Information is a substantial asset of
the Company. Confidential Information will be disclosed to Employee in the
normal course of operation. Employee acknowledges that Confidential Information
is extremely valuable to the Company and must be protected from unauthorized use
by the Company's competitors or other persons. Therefore, Employee agrees not to
disclose or use, whether for the benefit of Employee or any other person or
entity, at any time during or after his employment, any Confidential Information
to any person or entity other than the Company or persons authorized by the
Company to receive such Confidential Information.

                    Employee recognizes that, during the term of his employment
with the Company, he may develop new products, technology, processes, devices,
inventions, or methods of production, including but not limited to computer
hardware, software or "firmware," and may enhance, improve or perfect existing
products, technology, processes, devices, inventions or methods of production
(hereinafter collectively referred to as "INVENTIONS"). As partial consideration
for the salary and other benefits provided by the Company to Employee, Employee
hereby agrees that his entire work product while in the employ of the Company,
including any Inventions, is the exclusive property of the Company unless
Employee has received written authorization from the Company for the exclusion
of such work from this agreement. Employee also agrees to cooperate fully with
the Company and to do whatever acts are reasonably necessary in order to obtain
United States or foreign letters patent or copyrights, or both, and to vest the
entire right and title thereto in the Company. Employee further agrees that the
Company shall have the royalty-free right to use in its business, and to make,
use, and sell such Inventions whether or not patentable, regardless of whether
they are conceived or made by Employee during



                                       3


the hours which he is employed by the Company or with the use of or assistance
of the Company's facilities, materials or personnel.

                    Except as required in his duties to the Company, Employee
will not, directly or indirectly, use, disseminate, disclose, lecture upon, or
publish articles concerning any Confidential Information without the prior
written consent of the Company.

                    Upon termination of his employment with the Company, all
documents, records, notebooks, and similar repositories of or containing
Confidential Information, including copies thereof, then in Employee's
possession, whether prepared by Employee or others, will be left with the
Company, and no copies thereof will be retained by Employee.

                    It is agreed that any breach of this section of the
Agreement will cause immediate irreparable harm to the Company and monetary
damages would be difficult if not impossible to ascertain. Therefore, the
parties agree that, upon any breach of any covenant in this Section VI, that the
Company may obtain from the district court for the City and County of Denver,
Colorado, or any other court of competent jurisdiction, an appropriate
restraining order, preliminary injunction or other form of equitable relief with
respect thereto. Nothing contained herein shall be construed as prohibiting the
Company from pursuing any other available remedies for such breach, including
the recovery of damages, costs, and attorney fees.

         VII. NONCOMPETE AND NONSOLICITATION. During the term of this Agreement
and for a period of the greater of (a) one year after termination or expiration
of this Agreement or (b) the period during which a Severance Amount or
consulting arrangement is being paid to Employee by the Company (the "NONCOMPETE
PERIOD"), Employee will not, directly or indirectly, own, manage, operate,
control, provide services to, be employed by, participate in, or be connected in
any manner with the ownership, management, operation, or control of any business
which develops, manufactures, distributes or sells the same type of products as
the Company, or products which are the functional equivalent of the Company's
products or currently planned products, within and to the same market as the
Company's market at the time of Employee's proposed activity or, after the
termination of this Agreement, at or prior to the time of such termination.
Employee certifies that his employment with the Company will not breach a
previous employment agreement. Employee agrees not to engage in the unauthorized
use of the proprietary assets of others during the term of his employment by the
Company. Employee agrees not to enter into any other employment agreement, oral
or written, which will run concurrently, in whole or in part, with Employee's
employment by the Company without the prior written approval of the CEO of the
Company. It is agreed that any breach of this section of the Agreement will
cause immediate irreparable harm to the Company and that monetary damages for
such breach would be difficult if not impossible to ascertain. Therefore, the
parties agree that upon any breach of the covenants of this section the Company
may obtain from the district court for the City and County of Denver, Colorado,
or any other court of competent jurisdiction, an appropriate restraining order,
preliminary injunction or other form of equitable relief with respect thereto.
Nothing contained herein shall be construed as prohibiting the Company from
pursuing any other available remedies for such breach, including the recovery of
damages, costs, and attorney fees.

                    The foregoing agreement not to compete shall not be held
invalid because of the scope of the territory or the actions restricted thereby,
or the period of time within which such agreement is operative; but any judgment
by a court of competent jurisdiction may define the



                                       4


maximum territory and actions subject to, and restricted by, this paragraph and
the period of time during which such agreement is enforceable.

                    Notwithstanding the foregoing, in the event of a Change of
Control, as hereinafter defined, not recommended by a majority of the Board of
Directors of the Company as constituted prior to the date of such Change of
Control, this non-compete agreement shall terminate upon the date of such Change
of Control.

         VIII. TERMINATION OF EMPLOYMENT.

                  A. TERMINATION BY MUTUAL AGREEMENT. The Company and Employee
may agree to terminate this Agreement on terms and conditions mutually
acceptable to them as of the date of termination.

                  B. DEATH. In the event of Employee's death during the term of
this Agreement, including the Consulting Period, if any, the Company shall pay
to Employee's estate any unpaid wages or other amounts owing at the time of
death and shall pay, in addition to and not as a substitute for the proceeds
from any life insurance policies on Employee's life paid for by the Company, an
amount equal to the Severance Amount which would have been payable to Employee
if there had been a Voluntary Termination on the date of Employee's death and
all notice and other requirements for the payment of such Severance Amount had
been satisfied.

                  C. DISABILITY. If Employee becomes Disabled during the term of
employment, the Company may, at its option, by written notice to Employee or
Employee's personal representative, terminate the employment. Employee shall
thereafter be eligible to receive disability benefits under the Company's
standard employee disability insurance policy like any other employee.

                  D. VOLUNTARY OR INVOLUNTARY TERMINATION. Upon a Voluntary or
Involuntary Termination as defined herein, Employee shall continue to render his
services to the Company, if and to the extent required by the Company, up to the
date of such Voluntary or Involuntary Termination as referenced in the written
notice of termination submitted to Employee by the Company, or vice versa, and
shall be paid (i) the unpaid amount of the then applicable annual base salary up
to the date of such Voluntary or Involuntary Termination, (ii) any bonuses which
the Company's Board of Directors may determine, in its sole discretion, to be
due and payable to Employee, and (iii) the Severance Amount as defined herein.
In the event of a Voluntary Termination, as a condition to Employee's receipt of
the foregoing payments to Employee, during the time between the submission of a
notice of termination by Employee and the effective date of termination set
forth in such notice, Employee shall continue to diligently provide the Company
with such services as the Company may request. In the event of an Involuntary
Termination, all unvested stock options and stock appreciation rights that have
previously been granted to Employee will fully vest and remain exercisable for
three (3) months after such termination.

                  E. DEFINITIONS. All the terms defined in this Section shall
have the meanings given below throughout this Agreement.

                           1. "CHANGE IN DUTIES, COMPENSATION, OR BENEFITS"
shall mean any one or more of the following:



                                       5


                                    a. a significant and detrimental change in
the nature or scope of Employee's authority, responsibilities or duties from
those currently applicable to him;

                                    b. a reduction in Employee's annual base
salary from that currently provided to him;

                                    c. a diminution in Employee's eligibility to
participate in bonus, stock option, incentive award or any other compensation
plan which provides opportunities to receive compensation from those currently
applicable to him, except for: (i) changes in the eligibility requirements for
plans that are applicable to employees generally; (ii) changes in plans that are
applicable to all executives and result in a diminution of Employee's benefits
under such plan that is fair and proportional as compared to the diminution of
benefits for all executives; and (iii) changes that are required by applicable
law;

                                    d. a material diminution in employee
benefits (including but not limited to medical, dental or life insurance and
long-term disability plans) and perquisites currently applicable to Employee,
except for: (i) changes in the eligibility requirements for benefits that are
applicable to employees generally; (ii) changes in benefits and perquisites that
are applicable to all executives and result in a diminution of Employee's
benefits that is fair and proportional as compared to the diminution for all
executives; and (iii) changes that are required by applicable law;

                                    e. a change in the location of Employee's
principal place of employment by the Company (including its subsidiaries) by
more than fifty (50) miles from the location where he was principally employed
immediately prior to the date on which a Change of Control occurs; or

                                    f. a reasonable determination by a majority
of those persons comprising the Board of Directors of the Company prior to a
Change of Control (even if such determination is made after such Change of
Control) that, as a result of a Change of Control and a change in circumstances
thereafter significantly affecting his position, Employee is unable to exercise
the functions or duties attached to his position immediately prior to the date
on which a Change of Control occurs.

                           2. "CHANGE OF CONTROL" shall be deemed to have
occurred if:

                                    a. any "person," including a "group" as
determined in accordance with Section 13(d)(3) of the Securities Exchange Act of
1934 (the "EXCHANGE ACT"), is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities;

                                    b. as a result of, or in connection with,
any tender offer or exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the foregoing
transactions (a "TRANSACTION"), the persons who were directors of the Company
before the Transaction shall cease to constitute a majority of the Board of
Directors of the Company or any successor to the Company;



                                       6


                                    c. the Company is merged or consolidated
with another corporation or entity and, as a result of the merger or
consolidation, less than 80% of the outstanding voting securities of the
surviving corporation or entity is then owned in the aggregate by the former
stockholders of the Company;

                                    d. a tender offer or exchange offer is made
and consummated for the ownership of securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding voting
securities; or

                                    e. the Company transfers all or
substantially all of its assets to another corporation which is not a wholly
owned subsidiary of the Company.

                           3. "DISABLED" OR "DISABILITY" shall mean mental or
physical illness or condition rendering Employee incapable of performing any
portion of Employee's normal duties with the Company even after the Company's
reasonable accommodation of any such disability in accordance with the Americans
with Disabilities Act and the Colorado Nondiscrimination statute.

                           4. "INVOLUNTARY TERMINATION" shall mean any
termination except:

                                    a. VOLUNTARY TERMINATION;

                                    b. termination by mutual agreement;

                                    c. termination as a result of death; or

                                    d. Employee's voluntary retirement from
employment or mandatory retirement from employment pursuant to a retirement plan
to which Employee was subject prior to any Change of Control. ("RETIREMENT").

                           5. "SEVERANCE AMOUNT" is equal to:

                                    a. in the case of a Change in Control,
employee may unilaterally elect to terminate this agreement within six months
after the Change of Control has occurred. Employee's election will be treated as
an Involuntary Termination and he will receive a lump sum Severance Payment,
payable within thirty days of his election, equal to his then current base
salary, plus one hundred percent of his annual bonus opportunity and
continuation of his car allowance for one year. In the case of a Change in
Duties Compensation and Benefits, employee may unilaterally elect to terminate
this agreement. Employee's election will be treated as an Involuntary
Termination and employee will receive a Severance Payment equal to (6) six
months of his then current base salary paid on the company's regular payroll
dates and his pro-rata share of the incentive earned over the six months
following his separation date paid on the company's then regularly scheduled
incentive payment dates and continuation of his car allowance for six months. In
the case of an Involuntary Termination, not following a Change in Control or a
Change in Duties, Compensation and Benefits, employee will receive a Severance
Payment equal to (6) six months of his then current base salary paid on the
company's regular payroll dates and his pro-rata share of the incentive earned
over the six months following his separation date paid on the company's then
regularly scheduled incentive payment dates and continuation of his car
allowance for six months. In the event of Voluntary Termination, no



                                       7

Severance Amount shall be payable until employee has completed one (1) year of
service with the company and his Severance Amount will be equal to one (1)
month's salary for every year of service completed up to a maximum of three (3)
months, payable ratably on the Company's regular payroll dates.

                                    b. In the case of a Voluntary Termination or
an Involuntary Termination resulting from Employee's resignation following a
Change in Duties, Compensation or Benefits, Employee must give the Company
proper notice of such Termination in order to receive the Severance Amount. For
purposes hereof, proper notice is defined as written notice received by the
Company not less than thirty 30) business days prior to the date of termination
of employment.

                                    c. In the case of an Involuntary Termination
by the Company, the Company must give Employee not less than thirty (30)
business days prior written notice of such termination, provided, however, that
the Company may, in its sole discretion, elect to have Employee provide
different services during such notice period than those provided prior to such
notice.

                                    d. Notwithstanding any other provision of
this Agreement, in the event that Employee is found to have violated the
non-compete provisions of Section VII of this Agreement by a court of competent
jurisdiction ("BREACH"), all Severance Amounts due and owing under this
Agreement shall be terminated upon the effective date of the Breach and Employee
shall reimburse the Company for any portion of the Severance Amount previously
paid to Employee.

                           6. "VOLUNTARY TERMINATION" shall mean any
termination, which results from a resignation by Employee other than a
resignation following a Change in Duties, Compensation, or Benefits as defined
herein.

                           7. "VOTING SECURITIES" shall mean any securities,
which ordinarily possess the power to vote in the election of directors without
the occurrence of any pre-condition or contingency other than the passage of
time.

                           8. "BENEFICIALLY OWNED" shall mean beneficial
ownership by Employee, Employee's spouse, or a trust or similar arrangement
established by or for the benefit of Employee, Employee's spouse, or Employee's
minor children as well as the meaning of such term under Section 13 or Section
16 of the Exchange Act.

                  F. SECTION 280G PAYMENT. In the unlikely event that the
Severance Amount payments under this Agreement are determined by an independent
accounting firm retained by Employee (but paid for by the Company) to constitute
"excess parachute payments" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended, (the "CODE") and any regulations thereunder,
such Severance Amount shall be reduced by the amount necessary to avoid such
classification.

                  G. MEDICAL AND DENTAL BENEFITS. If Employee's employment by
the Company or any subsidiary or successor of the Company is terminated because
of Death, Disability, or Involuntary Termination, then to the extent that
Employee or any of Employee's dependents may be covered under the terms of any
medical and dental plans of the Company (or



                                       8


any subsidiary) immediately prior to the termination, the Company will provide
Employee and those dependents with the same or equivalent coverages until three
(3) months after any such termination of employment. The Company may, at its
election, procure such coverages apart from, and outside of the terms of, the
plans applicable to other employees. The Company's obligation to provide such
coverages will be limited by the requirement that Employee and Employee's
dependents comply with all of the conditions of the medical or dental plans
applicable to employees generally and the Company is under no obligation to
obtain special coverages for Employee which would not be covered by the plans
applicable to employees generally. In consideration for these benefits, Employee
must make contributions equal to those required from time to time from other
employees for equivalent coverages under the medical or dental plans. If and to
the extent that Employee is eligible to participate in a medical, dental or
other health insurance plan of another employer after the termination of his
employment by the Company, then the benefit provided by this section shall be
eliminated or commensurately diminished.

         IX. LIFE INSURANCE.

                  A. GROUP LIFE INSURANCE. The Company shall provide Employee
with personal life insurance under the Company's group life insurance policy as
in effect from time to time which shall be payable to a beneficiary designated
by Employee in addition to, and not as a substitute for, any Severance Amount
payable under Section VIII.B above. Employee acknowledges that, while the
Company currently maintains group life insurance which provides for a death
benefit equal to three (3) times an officer's annual base salary at the time of
death, with a maximum payment of $500,000, as well as an accidental death and
dismemberment policy (the "AD&D Policy") which also provides for an additional
benefit in the same amount as the group life insurance if the cause of death is
covered by the AD&D Policy, such coverages may be altered or amended in the
future on a Company-wide basis, provided, however, that under no circumstances
will such coverages be reduced unless other officers of comparable rank within
the Company are correspondingly reduced.

                  B. KEY MAN LIFE INSURANCE. Employee hereby consents to the
purchase by the Company, at the Company's option, of one or more "key man" life
insurance policies on Employee's life naming the Company or its designee as
beneficiary (the "Key Man Policies"); provided, however, that the Company shall
not be required to obtain such insurance. Employee agrees that he shall take any
reasonable actions which may be requested by the Company, and otherwise fully
cooperate with the Company, in its efforts to purchase and maintain the Key Man
Policies. The Key Man Policies will be owned by the Company and the proceeds
made payable to the Company or its designee. If purchased by the Company, the
Key Man Policies shall be for the purpose of providing funds necessary to obtain
a replacement for Employee and for any other reasonable business purpose as may
be determined by the Company in amounts sufficient to accomplish their intended
purposes.

         X. DIRECTORS AND OFFICERS INSURANCE. The Company shall maintain and
keep in force directors and officers liability insurance coverage on all
directors and officers in such an amount as the Company deems reasonable and
necessary under the circumstances but in no event less than $7.5 million of
aggregate coverage.

         XI. POST-TERMINATION CONSULTING. In the event of Employee's Involuntary
or Voluntary Termination, Employee agrees to provide services to the Company as
a consultant for



                                       9


a period of ninety (90) days following the completion of all severance payments
(the "Consulting Period"), in exchange for cash compensation at the rate of $100
per hour. Employee shall have the right to decline to provide any consulting
services requested by the Company after an Involuntary Termination or Voluntary
Termination but such refusal during the period when severance payments are being
made by the Company will result in the forfeiture of Employee's right to the
Severance Amount hereunder. If Employee does elect to provide consulting
services following the completion of the severance period, Employee shall be
obligated to provide no more than ten (10) hours of consulting services per week
during the Consulting Period, if and to the extent requested by the Company.
Employee may determine to cease providing such consulting services to the
Company at any time during the Consulting Period by providing the Company with
ten days written notice.

         XII. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered in person or sent by
registered or certified mail to Employee's residence as indicated in Employee's
personnel file at in the Company's records in the case of Employee or to its
principal office in the case of the Company.

         XIII. WAIVER. The waiver of any provision of this Agreement shall not
operate or be construed as a waiver of any other provision of this Agreement. No
waiver shall be valid unless in writing and executed by the party to be charged
therewith.

         XIV. SEVERABILITY/MODIFICATION. In the event that any clause or
provision of this Agreement shall be determined to be invalid, illegal or
unenforceable, such clause or provision may be severed or modified to the extent
necessary, and, as severed and/or modified, this Agreement shall remain in full
force and effect.

         XV. ASSIGNMENT. Except for a transfer by will or by the laws of descent
or distribution, Employee's right to receive payments or benefits under this
Agreement shall not be assignable or transferable, whether by pledge, creation
of a security interest or otherwise. In the event of any attempted assignment or
transfer contrary to this paragraph, the Company shall have no liability to pay
any amount so attempted to be assigned or transferred. Employee acknowledges
that the services to be rendered under this Agreement are unique and personal.
Accordingly, Employee may not assign such duties or obligations under this
Agreement.

         XVI. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors and assigns (including, without
limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or other
disposition of all or substantially all of its assets unless either (i) the
person or entity acquiring the assets or a substantial portion of the assets
shall expressly assume by an instrument in writing all duties and obligations of
the Company under this Agreement or (ii) the Company shall provide, through the
establishment of a separate reserve or otherwise, for the payment in full of all
amounts which are or may reasonably be expected to become payable to Employee
under this Agreement.

         XVII. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
concerning the employment arrangement between the parties and shall, as of the
effective date hereof, supersede all other such agreements between the parties,
provided, however, that nothing in this Agreement shall prevent the Company from
granting additional or special compensation or



                                       10


benefits to Employee after the date of execution of this Agreement. This
Agreement may not be amended except by an agreement in writing signed by both
parties.

         XVIII. GOVERNING LAW AND JURISDICTION. This Agreement shall be
interpreted, construed, and enforced under the laws of the State of Colorado.
The courts of the State of Colorado shall have sole jurisdiction and venue over
all controversies which may arise with respect to this Agreement.

         XIX. TIME. In comparing any period of time prescribed or allowed by
this Agreement, the day of the act, event or default from which the designated
period of time begins to run shall not be included. Time accounting shall begin
upon midnight of the following calendar day. All periods of time shall be
assumed to be specified in calendar days unless otherwise noted. In the case of
fractional days of time, the appropriate equivalent hours can be calculated and
accounted for against midnight of the calendar day in which the period of time
started. For purposes of calculating the duration of the covenant not to compete
the time period of such covenant shall be extended by one day for each day that
Employee competes with Company in violation of such covenant.

         XX. COUNTERPARTS. This Agreement may be signed in one or more
counterparts which, taken together, shall constitute a single binding agreement
between the parties. Photocopies or telecopies of the parties' original
signatures hereto may be relied upon as originals for all purposes.

         IN WITNESS WHEREOF, the parties have executed this Agreement the date
and year indicated above.

                                       THE COMPANY:

                                       VARI-L COMPANY, INC.



                                       By: /s/ CHARLES R. BLAND
                                          --------------------------------------
                                          Charles R. Bland, President


                                       EMPLOYEE:



                                       /s/ DANIEL J. WILMOT
                                       -----------------------------------------
                                       Daniel J. Wilmot



                                       11

EX-10.27

                                                                   EXHIBIT 10.27

September 9, 2002


Mr. Charles Bland
Vari-L Company, Inc.
4895 Peoria Street
Denver, CO 80239


Dear Chuck:

The purpose of this letter is to set forth the understanding and agreement
between Green Manning & Bunch, Ltd. ("GMB") and Vari-L Company, Inc. (the
"Company") whereby GMB will act as the exclusive financial advisor and
representative of the Company with respect to a possible transaction described
immediately below. Such a transaction could involve one or more of the
following: (a) An equity investment of up to $5 million (a "Financing") by any
potential equity investors listed on Exhibit A (the "Equity Investors"), (b) a
sale of a majority interest in the Company either through a merger, combination,
joint venture, consolidation, sale of the majority of the Company's assets, sale
of a majority of the equity of the Company, or otherwise (a "Sale"), or (c) a
sale of part of the Company (involving $5 million or more), or sale of a
material amount of the Company's assets; either through a merger, combination,
joint venture, consolidation, or otherwise (a "Partial Sale"). Any such
transaction is sometimes referred to herein as a "Transaction."

GMB and the Company acknowledge that during the course of this engagement, the
Company will endeavor to secure interim financing to provide additional
liquidity for the Company. Any amounts raised in this effort are not covered by
the terms of this engagement and no professional or finders fees will be due
GMB.

DUTIES

Regarding any equity investment of up to $5 million with any Equity Investor,
GMB's duties shall include the following:

  1.  Advise the Company regarding its strategic and financial alternatives as
      they relate to an equity investment by the Equity Investors.





Mr. Charles R. Bland
Chief Executive Officer
Vari-L Company, Inc.
September 9, 2002
Page 2


  2.  Assist and advise the Company in negotiations with prospective Equity
      Investors, including, if appropriate, financial advice concerning the
      relative value of any proposed exchange of securities in a Transaction.

  3.  Assist the Company, in conjunction with Company legal counsel, with
      document preparation, procedural execution and closing a Transaction.

  4.  If requested by the Company, provide financial advice relating to
      regulatory approvals required for a Transaction.

  5.  Provide the Company with periodic written status reports and be available
      to the Company at all reasonable times to discuss any matters relating to
      a possible Transaction.

  6.  Render such additional financial advisory services including without
      limitation, meetings with the Board of Directors and other representatives
      of the Company, as reasonably requested by the Company.

If the Company chooses to pursue a Sale or Partial Sale, GMB's duties would
include the following:

  1.  Advise the Company concerning its strategic and financial options with
      respect to maximizing shareholder value, including, without limitation,
      advice regarding solicited or unsolicited proposals submitted to the
      Company.

  2.  Prepare information for presentation to prospective parties who might be
      interested in a Sale or Partial Sale and who are approved by the Company.

  3.  Advise the Company with respect to appropriate and desirable values and
      other terms to be realized in a Sale or Partial Sale.

  4.  Conduct a controlled Sale or Partial Sale process, subject at all times to
      the directions of the Company. This process would include information
      meetings with Company management and prospective parties.

  5.  Screen prospective parties and enter into preliminary negotiations with
      qualified prospective parties approved by the Company.

  6.  Assist and advise the Company in final negotiations with prospective
      parties, including, if appropriate, financial advice concerning the
      relative value of any proposed exchange of securities in a Sale or Partial
      Sale.





Mr. Charles R. Bland
Chief Executive Officer
Vari-L Company, Inc.
September 9, 2002
Page 3


  7.  Assist the Company, in conjunction with Company legal counsel, with
      document preparation, procedural execution and closing a Sale or Partial
      Sale.

  8.  If requested by the Company, provide financial advice relating to
      regulatory approvals required for a Sale or Partial Sale.

  9.  Provide the Company with periodic written status reports and be available
      to the Company at all reasonable times to discuss any matters relating to
      a possible Sale or Partial Sale.

  10. If requested by the Company, provide a fairness opinion relating to the
      Transaction.

  11. Render such additional financial advisory services with respect to a Sale
      or Partial Sale, including without limitation, meetings with the Board of
      Directors and other representatives of the Company, as reasonably
      requested by the Company.

GMB agrees that all information it receives from the Company will be treated as
strictly confidential, unless the information is publicly available, and shall
only be used by GMB for the purposes set forth herein.

GMB shall use reasonable efforts to assist the Company in completing a
Financing, Sale or Partial Sale; however, the Company acknowledges that GMB's
obligations hereunder are on a "best efforts" basis and shall not constitute a
firm commitment to underwrite the Financing, Sale or Partial Sale.

The Company may request that GMB perform other financial advisory services on
behalf of the Company. Any such engagement shall be the subject of a separate
agreement (or an addendum or supplement to this agreement) between the parties.

FEES

GMB's fees for providing the above services shall be as follows:

    1.   Monthly Retainer. GMB shall receive a non-refundable cash fee of
         $15,000 for each month or portion thereof while this agreement is in
         effect. The first monthly retainer shall be due upon the signing of
         this engagement letter and subsequent monthly retainers shall
         automatically be due at the beginning of each month thereafter until
         this agreement is terminated. All monthly retainers shall be fully
         credited against any success fees referred to in the paragraphs set
         forth below.

    2.   Sale Success Fee. At the closing of a Sale, GMB shall receive a cash
         Sale Success Fee equal to 2% of the Transaction Amount (defined below)
         up to $20 million; plus 3% of the Transaction





Mr. Charles R. Bland
Chief Executive Officer
Vari-L Company, Inc.
September 9, 2002
Page 4


         Amount in excess of $20 million up to $25 million; plus 4% of the
         Transaction Amount in excess of $25 million up to $30 million; plus 5%
         of the Transaction Amount in excess of $30 million.

    3.   Partial Sale Success Fee. At the closing of a Partial Sale, GMB shall
         receive a cash Partial Sale Success Fee equal to 2% of the Transaction
         Amount.

    4.   Financing Cash Success Fee. A cash success fee of 5% of the amount of a
         Financing shall be payable upon the closing of a Financing. If such a
         Financing is accompanied by an acquisition, the amount of the Financing
         shall be increased by the value attributable to the acquisition.

    5.   Minimum Cash Success Fee. A minimum cash success fee of $200,000 shall
         be payable upon the closing of a Financing. A minimum cash success fee
         of $500,000 shall be payable upon the closing of a Sale or Partial
         Sale.

    6.   Warrant Success Fee. In conjunction with a Financing, GMB would earn a
         "warrant success fee" which is payable in warrants only upon the
         successful closing of such a Financing. The warrant success fee would
         be equal to warrants to purchase $250,000 of Company stock at a strike
         price equal to the per share price of such Financing.

For purposes of this engagement, the "Transaction Amount" shall be the amount of
cash, securities and other amounts paid or payable to the Company or its
shareholders in a Sale or a Partial Sale and shall include the principal amount
of bank debt assumed or continuing in the Transaction as well as any earnout, as
defined below, received by the Company or its shareholders and any distributions
or dividends paid to the shareholders subsequent to the date of this agreement
as a result of a Transaction and any Financing amount not otherwise included in
the foregoing.

If any portion of the Transaction Amount in connection with a Sale or Partial
Sale is in the form of debt or equity securities, then that amount of the
Transaction Amount shall be based upon the average (mean, if bid and asked
prices are quoted) closing price of such securities for the 20 trading days
immediately preceding the date of the execution of the Transaction agreement,
based on standard published market prices or, if such securities do not have a
public market, based upon the fair market value of such securities as of the
date of the agreement, as determined by good faith negotiations and agreement
between us.

"Earnout" shall include any cash, securities or other remuneration received as a
result of the future performance of the Company, or as a result of any
non-compete, consulting or similar agreements entered into by any stockholder,
employee or other affiliate of the Company relating to the Transaction,
excluding, however, normal employment and non-compete agreements with operating





Mr. Charles R. Bland
Chief Executive Officer
Vari-L Company, Inc.
September 9, 2002
Page 5


management. Earnout amounts that are non-contingent (i.e., non-compete,
consulting and similar agreements) shall be deemed paid at the closing for
purposes of the Transaction Amount calculation. Other Earnout amounts (i.e.,
based on future performance, etc.) shall be deemed paid only as received, and
our fee on those amounts shall be payable at the time such Earnout payment is
received.

EXPENSES

The Company shall reimburse GMB on a monthly basis for its reasonable documented
out-of-pocket expenses, which will not exceed $15,000 in the aggregate without
the prior approval of the Company. The Company agrees that reimbursement of
GMB's expenses and the non-refundable fees referred to above are not contingent
upon the completion of any Transaction and shall be due and payable when billed
by GMB.

EXCLUSIVITY

For a period of 24 months from the date of this letter, GMB shall have the
option to represent the Company on any investment banking transaction involving
the Company. The terms of such engagement including the fee payable to GMB for
any such transaction shall be commensurate with standard investment fees charged
by reputable investment banks on comparable transactions.

TERM AND TERMINATION

GMB shall act as the Company's exclusive agent for a period of 12 months from
the date of acceptance of this agreement unless earlier terminated as provided
below or unless extended by mutual consent. GMB shall be the sole and exclusive
representative of the Company in connection with any negotiations or discussions
with prospective financing sources or prospective purchasers. However, the
specific role of GMB in representing the Company in any such negotiations or
discussions shall be determined by the Company and shall be subject at all times
to the Company's direction, review and final approval. In order that GMB can
best assist the Company in any proposed Transaction the Company agrees to
promptly notify GMB of any inquiries received by the Company concerning any
Transaction covered by this agreement.

Either GMB or the Company may terminate this agreement at any time by providing
written notification thereof. If within 12 months following the termination of
this agreement, the Company agrees (in principle or otherwise) to consummate a
Transaction of the nature contemplated by this agreement with financing sources
or purchasers with which GMB has had discussions on behalf of the Company, or
with a purchaser or financing source that contacted, was contacted by, or held
discussions with the Company regarding a transaction, whether or not such
contacts or discussions were initiated by GMB, during the term of GMB's
engagement hereunder, GMB shall, at the time of the consummation of such
Transaction, be entitled to its full fees as set forth in this agreement. Within





Mr. Charles R. Bland
Chief Executive Officer
Vari-L Company, Inc.
September 9, 2002
Page 6


30 days following termination hereunder, GMB shall provide the Company with a
list of parties with which GMB has had discussions on behalf of the Company
hereunder, and the Company shall provide GMB with a list of parties with which
the Company has had discussions during the term of this agreement.

INDEMNIFICATION

The Company understands and confirms that, in assisting with the preparation of
Company information and in discussing any proposed Transaction with prospective
financing sources or purchasers, (i) GMB will be using and relying on data,
material and information furnished to it by the Company, and (ii) GMB shall not
have any responsibility for the accuracy or completeness of any such
information, whether or not it makes an independent verification. The Company
hereby represents and warrants to GMB that all such information or other
information or materials approved by the Company for provision to prospective
financing sources or purchasers will not contain any untrue statement of
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.

The Company and its subsidiaries, if any, agree to indemnify and hold harmless
GMB, its partners, officers, directors, employees, affiliates, agents, assignees
and each person, if any, who controls GMB within the meaning of the federal
securities laws, from and against any and all, claims, expenses, damages, or
liabilities, joint or several, to which GMB or any such person becomes subject
under federal or state statutes, regulations, common law or otherwise, arising
out of, in connection with, or based upon any matter contemplated by this letter
agreement (or any addendum or supplement hereto), whether or not resulting in
any liability; and to reimburse GMB and any such person as and when incurred for
any reasonable legal or other expenses incurred by GMB or any such person in
connection with investigating or defending against any such claim, damage or
liability or providing evidence, producing documents, or taking any other action
in respect thereto (whether or not GMB or any such person is a defendant in, or
target of, such action, proceeding or investigation). In no event shall the
Company be liable to GMB or any such person under this paragraph, however, to
the extent that any such claim, expense, damage or liability is found in a final
judicial determination, not subject to further appeal, to have resulted from
GMB's or any such person's gross negligence or willful misconduct.

The foregoing reimbursement and indemnification provisions shall survive any
termination of this agreement and are in addition to, and not subject to the
limitations of, the fees, charges and reimbursement of expenses specifically
provided for elsewhere in this agreement.

Promptly after receipt by GMB of notice of any complaint or the commencement of
any action, proceeding or investigation in respect of which a claim hereunder
for indemnity, reimbursement or hold harmless may be sought as provided above,
GMB will notify the Company in writing of such complaint or of the commencement
of such action, proceeding or investigation. The Company shall





Mr. Charles R. Bland
Chief Executive Officer
Vari-L Company, Inc.
September 9, 2002
Page 7


select legal counsel to represent the indemnified party in such action, which
may include counsel for the Company, unless such counsel has a conflict of
interest in representing both, in which event, the indemnified party shall be
entitled to participate with counsel of its choice in the defense of any such
action, proceeding, or investigation described in the preceding paragraphs,
provided such counsel is reasonably satisfactory to the Company, provided
further, that the Company shall not in such event be responsible hereunder for
the fees and expenses of more than one firm of separate counsel in connection
with any action, proceeding or investigation in the same jurisdiction. The
Company shall not be liable for any settlement of any action, proceeding or
investigation effected without its written consent.

GENERAL

In the event of administrative proceedings or litigation in connection with the
services provided under this agreement, GMB agrees that its representatives will
be available to testify in such proceedings or litigation, at the request of the
Company or its Board of Directors. In addition to reimbursement of all
out-of-pocket expenses reasonably incurred by GMB, including the reasonable fees
and disbursement of its legal counsel, the Company will pay GMB reasonable and
customary additional compensation as agreed upon by GMB and the Company to cover
such testimony in connection with such litigation and the preparation therefore.

The benefits of this agreement shall inure to the respective successors and
assigns of the parties hereto and of the indemnified parties and to the heirs
and personal representatives of those of the indemnified parties who are natural
persons, and the obligations and liabilities assumed in this agreement by the
parties hereto shall be binding upon their respective successors and assigns.

No party to this agreement may assign its rights hereunder without the written
consent of all parties hereto. At or near the time of the closing of a
Financing, GMB and the Company may consider whether it is appropriate for GMB to
receive part or all of its cash fees hereunder in the form of the Company's
equity securities, but nothing herein shall require the Company to issue or GMB
to accept payment for such fees in equity securities of the Company in the
absence of a separate written agreement to such effect between the parties.

If and only if a Transaction is consummated, the Company agrees that GMB shall
have the right, at its own expense and after consummation of such Transaction,
to advertise its participation in the transaction in "tombstone" or other
appropriate advertisements in newspapers, magazines, trade publications or other
publications, provided such advertisements are dignified and in keeping with
reasonable standards in the investment banking industry.





Mr. Charles R. Bland
Chief Executive Officer
Vari-L Company, Inc.
September 9, 2002
Page 8


We very much appreciate the opportunity to work with you on this engagement. If
the foregoing is agreeable to you, please signify by signing below and returning
one copy to us, whereupon this letter will be a binding agreement between GMB
and the Company.




Sincerely,

GREEN MANNING & BUNCH, LTD.
By: CoBiz GMB, Inc.
its General Partner



By: /s/ JAMES T. BUNCH
   -----------------------------------------
   James T. Bunch, Co-President


Accepted and agreed to on September 9, 2002

Vari-L Company, Inc.



By: /s/ CHARLES R. BLAND
   -----------------------------------------
   Charles R. Bland, Chief Executive Officer

EX-10.29

                                                                   EXHIBIT 10.29


                               INDEMNITY AGREEMENT


         THIS AGREEMENT is made and entered into this 4th day of October, 2002
by and between VARI-L COMPANY, INC., a Colorado corporation (the "CORPORATION"),
and Charles R. Bland ("AGENT").

                                    RECITALS

         WHEREAS, Agent performs a valuable service to the Corporation in
Agent's capacity as Chief Executive Officer of the Corporation;

         WHEREAS, the stockholders of the Corporation have adopted bylaws (the
"BYLAWS") permitting the indemnification of the directors, officers, employees
and other agents of the Corporation, as authorized by the Colorado Business
Corporation Code, as amended (the "CODE");

         WHEREAS, the Bylaws and the Code, by their non-exclusive nature, permit
contracts between the Corporation and its agents, officers, employees and other
agents with respect to indemnification of such persons; and

         WHEREAS, in order to induce Agent to continue to serve as Chief
Executive Officer of the Corporation, the Corporation has determined and agreed
to enter into this Agreement with Agent;

         NOW, THEREFORE, in consideration of Agent's continued service as Chief
Executive Officer after the date hereof, the parties hereto agree as follows:

                                    AGREEMENT

         1. SERVICES TO THE CORPORATION. Agent will serve, at the will of the
Corporation or under separate contract, if any such contract exists, as Chief
Executive Officer of the Corporation or as a director, officer or other
fiduciary of an affiliate of the Corporation (including any employee benefit
plan of the Corporation) faithfully and to the best of his ability so long as he
is duly elected and qualified in accordance with the provisions of the Bylaws or
other applicable charter documents of the Corporation or such affiliate;
provided, however, that Agent may at any time and for any reason resign from
such position (subject to any contractual obligation that Agent may have assumed
apart from this Agreement) and that the Corporation or any affiliate shall have
no obligation under this Agreement to continue Agent in any such position.

         2. INDEMNITY OF AGENT. The Corporation hereby agrees to hold harmless
and indemnify Agent to the fullest extent authorized or permitted by the
provisions of the Bylaws and the Code, as the same may be amended from time to
time (but, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than the Bylaws or the Code permitted
prior to adoption of such amendment).



                                       1.




         3. ADDITIONAL INDEMNITY. In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 4 hereof, the Corporation hereby further agrees
to hold harmless and indemnify Agent:

                  (a) against any and all reasonable expenses (including
attorneys' fees), witness fees, damages, judgments, fines and amounts paid in
settlement and any other amounts that Agent becomes legally obligated to pay
because of any claim or claims made against or by him in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, arbitrational, administrative or investigative (including an action by
or in the right of the Corporation) to which Agent is, was or at any time
becomes a party, or is threatened to be made a party, by reason of the fact that
Agent is, was or at any time becomes a director, officer, employee or other
agent of Corporation; and

                  (b) otherwise to the fullest extent as may be provided to
Agent by the Corporation under the non-exclusivity provisions of the Code and
Article VI Section 9 of the Bylaws.

         4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to
Section 3 hereof shall be paid by the Corporation:

                  (a) on account of any claim against Agent solely for an
accounting of profits made from the purchase or sale by Agent of securities of
the Corporation pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law;

                  (b) on account of Agent's conduct that is established by a
final judgment as knowingly fraudulent or deliberately dishonest or that
constituted willful misconduct;

                  (c) on account of Agent's conduct that is established by a
final judgment as constituting a breach of Agent's duty of loyalty to the
Corporation or resulting in any personal profit or advantage to which Agent was
not legally entitled;

                  (d) for which payment is actually made to Agent under a valid
and collectible insurance policy or under a valid and enforceable indemnity
clause, bylaw or agreement, except in respect of any excess beyond payment under
such insurance, clause, bylaw or agreement;

                  (e) if indemnification is not lawful (and, in this respect,
both the Corporation and Agent have been advised that the Securities and
Exchange Commission believes that indemnification for liabilities arising under
the federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication); or

                  (f) in connection with any proceeding (or part thereof)
initiated by Agent, or any proceeding by Agent against the Corporation or its
directors, officers, employees or other agents, unless (i) such indemnification
is expressly required to be made by law, (ii) the proceeding was authorized by
the Board of Directors of the Corporation, (iii) such indemnification is
provided by the Corporation, in its sole discretion, pursuant to the powers



                                       2.




vested in the Corporation under the Code, or (iv) the proceeding is initiated
pursuant to Section 9 hereof.

         5. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Corporation contained herein shall continue during the period Agent is a
director, officer, employee or other agent of the Corporation (or is or was
serving at the request of the Corporation as a director, officer, employee or
other agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise) and shall continue thereafter so long as Agent
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative, by reason of the fact that Agent was serving in
the capacity referred to herein.

         6. PARTIAL INDEMNIFICATION. Agent shall be entitled under this
Agreement to indemnification by the Corporation for a portion of the expenses
(including attorneys' fees), witness fees, damages, judgments, fines and amounts
paid in settlement and any other amounts that Agent becomes legally obligated to
pay in connection with any action, suit or proceeding referred to in Section 3
hereof even if not entitled hereunder to indemnification for the total amount
thereof, and the Corporation shall indemnify Agent for the portion thereof to
which Agent is entitled.

         7. NOTIFICATION AND DEFENSE OF CLAIM. Not later than thirty (30) days
after receipt by Agent of notice of the commencement of any action, suit or
proceeding, Agent will, if a claim in respect thereof is to be made against the
Corporation under this Agreement, notify the Corporation of the commencement
thereof; but the omission so to notify the Corporation will not relieve it from
any liability which it may have to Agent otherwise than under this Agreement.
With respect to any such action, suit or proceeding as to which Agent notifies
the Corporation of the commencement thereof:

                  (a) the Corporation will be entitled to participate therein at
its own expense;

                  (b) except as otherwise provided below, the Corporation may,
at its option and jointly with any other indemnifying party similarly notified
and electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to Agent. After notice from the Corporation to Agent of
its election to assume the defense thereof, the Corporation will not be liable
to Agent under this Agreement for any legal or other expenses subsequently
incurred by Agent in connection with the defense thereof except for reasonable
costs of investigation or otherwise as provided below. Agent shall have the
right to employ separate counsel in such action, suit or proceeding but the fees
and expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of Agent unless (i)
the employment of counsel by Agent has been authorized by the Corporation, (ii)
Agent shall have reasonably concluded, and so notified the Corporation, that
there is an actual conflict of interest between the Corporation and Agent in the
conduct of the defense of such action or (iii) the Corporation shall not in fact
have employed counsel to assume the defense of such action, in each of which
cases the fees and expenses of Agent's separate counsel shall be at the expense
of the Corporation. The Corporation shall not be entitled to assume the defense
of any action, suit or proceeding brought by or on behalf of the Corporation or
as to which Agent shall have made the conclusion provided for in clause (ii)
above; and



                                       3.




                  (c) the Corporation shall not be liable to indemnify Agent
under this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent, which shall not be unreasonably withheld.
The Corporation shall be permitted to settle any action except that it shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Agent without Agent's written consent, which may be given or
withheld in Agent's sole discretion.

         8. EXPENSES. Subject to any limitations or satisfaction of any
requirements contained in the Bylaws or the Code or other applicable law, the
Corporation shall advance, prior to the final disposition of any proceeding,
promptly following request therefor, all reasonable expenses incurred by Agent
in connection with such proceeding upon receipt of (i) any affirmation by Agent
that may be required by the Bylaws or the Code and (ii) an undertaking by or on
behalf of Agent to repay said amounts if it shall be determined ultimately that
Agent is not entitled to be indemnified under the provisions of this Agreement,
the Bylaws, the Code or otherwise.

         9. ENFORCEMENT. Any right to indemnification or advances granted by
this Agreement to Agent shall be enforceable by or on behalf of Agent in any
court of competent jurisdiction if (i) the claim for indemnification or advances
is denied, in whole or in part, or (ii) no disposition of such claim is made
within ninety (90) days of request therefor. Agent, in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. It shall be a defense to any action for which a claim
for indemnification is made under Section 3 hereof (other than an action brought
to enforce a claim for expenses pursuant to Section 8 hereof, provided that the
required affirmation and undertaking has been tendered to the Corporation) that
Agent is not entitled to indemnification because of the limitations set forth in
Section 4 hereof.

         10. SUBROGATION. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Agent, who shall execute all documents required and shall
do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.

         11. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Agent by this
Agreement shall not be exclusive of any other right which Agent may have or
hereafter acquire under any statute, provision of the Corporation's Articles of
Incorporation or Bylaws, agreement, vote of stockholders or directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding office.

         12. SURVIVAL OF RIGHTS.

                  (a) The rights conferred on Agent by this Agreement shall
continue after Agent has ceased to provide the services contemplated in Section
1 hereof and shall inure to the benefit of Agent's heirs, executors and
administrators.

                  (b) The Corporation shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, expressly to
assume and agree to perform this Agreement in the same manner



                                       4.




and to the same extent that the Corporation would be required to perform if no
such succession had taken place.

         13. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof. Furthermore, if this Agreement shall be invalidated in its
entirety on any ground, then the Corporation shall nevertheless indemnify Agent
to the fullest extent provided by the Bylaws, the Code or any other applicable
law.

         14. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Colorado.

         15. AMENDMENT AND TERMINATION. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.

         16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute but one and the same
Agreement. Only one such counterpart need be produced to evidence the existence
of this Agreement.

         17. HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.

         18. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand to the party to whom such communication was
directed or (ii) upon the third business day after the date on which such
communication was mailed if mailed by certified or registered mail with postage
prepaid:

                  (a)      If to Agent, at the address indicated on the
                           signature page hereof.

                  (b)      If to the Corporation, to:

                           Vari-L Company, Inc.
                           4895 Peoria Street
                           Denver, Colorado 80239

or to such other address as may have been furnished to Agent by the Corporation.



                                       5.


         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.


                                     For Vari-L Company, Inc.

                                     By: Richard P. Dutkiewicz

                                     Title: VP - Finance and CFO

                                     For agent

                                     Charles R. Bland

                                     7180 S. Polo Ridge Dr.

                                     Littleton, Colorado 80128











                                       6.

EX-10.30

                                                                   EXHIBIT 10.30


                               INDEMNITY AGREEMENT


         THIS AGREEMENT is made and entered into this 4th day of October, 2002
by and between VARI-L COMPANY, Inc., a Colorado corporation (the "CORPORATION"),
and Richard P. Dutkiewicz ("AGENT").

                                    RECITALS

         WHEREAS, Agent performs a valuable service to the Corporation in
Agent's capacity as Chief Financial Officer of the Corporation;

         WHEREAS, the stockholders of the Corporation have adopted bylaws (the
"BYLAWS") permitting the indemnification of the directors, officers, employees
and other agents of the Corporation, as authorized by the Colorado Business
Corporation Code, as amended (the "CODE");

         WHEREAS, the Bylaws and the Code, by their non-exclusive nature, permit
contracts between the Corporation and its agents, officers, employees and other
agents with respect to indemnification of such persons; and

         WHEREAS, in order to induce Agent to continue to serve as Chief
Financial Officer of the Corporation, the Corporation has determined and agreed
to enter into this Agreement with Agent;

         NOW, THEREFORE, in consideration of Agent's continued service as Chief
Financial Officer after the date hereof, the parties hereto agree as follows:

                                    AGREEMENT

         1. SERVICES TO THE CORPORATION. Agent will serve, at the will of the
Corporation or under separate contract, if any such contract exists, as Chief
Financial Officer of the Corporation or as a director, officer or other
fiduciary of an affiliate of the Corporation (including any employee benefit
plan of the Corporation) faithfully and to the best of his ability so long as he
is duly elected and qualified in accordance with the provisions of the Bylaws or
other applicable charter documents of the Corporation or such affiliate;
provided, however, that Agent may at any time and for any reason resign from
such position (subject to any contractual obligation that Agent may have assumed
apart from this Agreement) and that the Corporation or any affiliate shall have
no obligation under this Agreement to continue Agent in any such position.

         2. INDEMNITY OF AGENT. The Corporation hereby agrees to hold harmless
and indemnify Agent to the fullest extent authorized or permitted by the
provisions of the Bylaws and the Code, as the same may be amended from time to
time (but, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than the Bylaws or the Code permitted
prior to adoption of such amendment).



                                       1.




         3. ADDITIONAL INDEMNITY. In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 4 hereof, the Corporation hereby further agrees
to hold harmless and indemnify Agent:

                  (a) against any and all reasonable expenses (including
attorneys' fees), witness fees, damages, judgments, fines and amounts paid in
settlement and any other amounts that Agent becomes legally obligated to pay
because of any claim or claims made against or by him in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, arbitrational, administrative or investigative (including an action by
or in the right of the Corporation) to which Agent is, was or at any time
becomes a party, or is threatened to be made a party, by reason of the fact that
Agent is, was or at any time becomes a director, officer, employee or other
agent of Corporation; and

                  (b) otherwise to the fullest extent as may be provided to
Agent by the Corporation under the non-exclusivity provisions of the Code and
Article VI Section 9 of the Bylaws.

         4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to
Section 3 hereof shall be paid by the Corporation:

                  (a) on account of any claim against Agent solely for an
accounting of profits made from the purchase or sale by Agent of securities of
the Corporation pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law;

                  (b) on account of Agent's conduct that is established by a
final judgment as knowingly fraudulent or deliberately dishonest or that
constituted willful misconduct;

                  (c) on account of Agent's conduct that is established by a
final judgment as constituting a breach of Agent's duty of loyalty to the
Corporation or resulting in any personal profit or advantage to which Agent was
not legally entitled;

                  (d) for which payment is actually made to Agent under a valid
and collectible insurance policy or under a valid and enforceable indemnity
clause, bylaw or agreement, except in respect of any excess beyond payment under
such insurance, clause, bylaw or agreement;

                  (e) if indemnification is not lawful (and, in this respect,
both the Corporation and Agent have been advised that the Securities and
Exchange Commission believes that indemnification for liabilities arising under
the federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication); or

                  (f) in connection with any proceeding (or part thereof)
initiated by Agent, or any proceeding by Agent against the Corporation or its
directors, officers, employees or other agents, unless (i) such indemnification
is expressly required to be made by law, (ii) the proceeding was authorized by
the Board of Directors of the Corporation, (iii) such indemnification is
provided by the Corporation, in its sole discretion, pursuant to the powers



                                       2.




vested in the Corporation under the Code, or (iv) the proceeding is initiated
pursuant to Section 9 hereof.

         5. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Corporation contained herein shall continue during the period Agent is a
director, officer, employee or other agent of the Corporation (or is or was
serving at the request of the Corporation as a director, officer, employee or
other agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise) and shall continue thereafter so long as Agent
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative, by reason of the fact that Agent was serving in
the capacity referred to herein.

         6. PARTIAL INDEMNIFICATION. Agent shall be entitled under this
Agreement to indemnification by the Corporation for a portion of the expenses
(including attorneys' fees), witness fees, damages, judgments, fines and amounts
paid in settlement and any other amounts that Agent becomes legally obligated to
pay in connection with any action, suit or proceeding referred to in Section 3
hereof even if not entitled hereunder to indemnification for the total amount
thereof, and the Corporation shall indemnify Agent for the portion thereof to
which Agent is entitled.

         7. NOTIFICATION AND DEFENSE OF CLAIM. Not later than thirty (30) days
after receipt by Agent of notice of the commencement of any action, suit or
proceeding, Agent will, if a claim in respect thereof is to be made against the
Corporation under this Agreement, notify the Corporation of the commencement
thereof; but the omission so to notify the Corporation will not relieve it from
any liability which it may have to Agent otherwise than under this Agreement.
With respect to any such action, suit or proceeding as to which Agent notifies
the Corporation of the commencement thereof:

                  (a) the Corporation will be entitled to participate therein at
its own expense;

                  (b) except as otherwise provided below, the Corporation may,
at its option and jointly with any other indemnifying party similarly notified
and electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to Agent. After notice from the Corporation to Agent of
its election to assume the defense thereof, the Corporation will not be liable
to Agent under this Agreement for any legal or other expenses subsequently
incurred by Agent in connection with the defense thereof except for reasonable
costs of investigation or otherwise as provided below. Agent shall have the
right to employ separate counsel in such action, suit or proceeding but the fees
and expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of Agent unless (i)
the employment of counsel by Agent has been authorized by the Corporation, (ii)
Agent shall have reasonably concluded, and so notified the Corporation, that
there is an actual conflict of interest between the Corporation and Agent in the
conduct of the defense of such action or (iii) the Corporation shall not in fact
have employed counsel to assume the defense of such action, in each of which
cases the fees and expenses of Agent's separate counsel shall be at the expense
of the Corporation. The Corporation shall not be entitled to assume the defense
of any action, suit or proceeding brought by or on behalf of the Corporation or
as to which Agent shall have made the conclusion provided for in clause (ii)
above; and



                                       3.




                  (c) the Corporation shall not be liable to indemnify Agent
under this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent, which shall not be unreasonably withheld.
The Corporation shall be permitted to settle any action except that it shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Agent without Agent's written consent, which may be given or
withheld in Agent's sole discretion.

         8. EXPENSES. Subject to any limitations or satisfaction of any
requirements contained in the Bylaws or the Code or other applicable law, the
Corporation shall advance, prior to the final disposition of any proceeding,
promptly following request therefor, all reasonable expenses incurred by Agent
in connection with such proceeding upon receipt of (i) any affirmation by Agent
that may be required by the Bylaws or the Code and (ii) an undertaking by or on
behalf of Agent to repay said amounts if it shall be determined ultimately that
Agent is not entitled to be indemnified under the provisions of this Agreement,
the Bylaws, the Code or otherwise.

         9. ENFORCEMENT. Any right to indemnification or advances granted by
this Agreement to Agent shall be enforceable by or on behalf of Agent in any
court of competent jurisdiction if (i) the claim for indemnification or advances
is denied, in whole or in part, or (ii) no disposition of such claim is made
within ninety (90) days of request therefor. Agent, in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. It shall be a defense to any action for which a claim
for indemnification is made under Section 3 hereof (other than an action brought
to enforce a claim for expenses pursuant to Section 8 hereof, provided that the
required affirmation and undertaking has been tendered to the Corporation) that
Agent is not entitled to indemnification because of the limitations set forth in
Section 4 hereof.

         10. SUBROGATION. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Agent, who shall execute all documents required and shall
do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.

         11. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Agent by this
Agreement shall not be exclusive of any other right which Agent may have or
hereafter acquire under any statute, provision of the Corporation's Articles of
Incorporation or Bylaws, agreement, vote of stockholders or directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding office.

         12. SURVIVAL OF RIGHTS.

                  (a) The rights conferred on Agent by this Agreement shall
continue after Agent has ceased to provide the services contemplated in Section
1 hereof and shall inure to the benefit of Agent's heirs, executors and
administrators.

                  (b) The Corporation shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, expressly to
assume and agree to perform this Agreement in the same manner



                                       4.




and to the same extent that the Corporation would be required to perform if no
such succession had taken place.

         13. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof. Furthermore, if this Agreement shall be invalidated in its
entirety on any ground, then the Corporation shall nevertheless indemnify Agent
to the fullest extent provided by the Bylaws, the Code or any other applicable
law.

         14. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Colorado.

         15. AMENDMENT AND TERMINATION. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.

         16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute but one and the same
Agreement. Only one such counterpart need be produced to evidence the existence
of this Agreement.

         17. HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.

         18. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand to the party to whom such communication was
directed or (ii) upon the third business day after the date on which such
communication was mailed if mailed by certified or registered mail with postage
prepaid:

                  (a)      If to Agent, at the address indicated on the
                           signature page hereof.

                  (b)      If to the Corporation, to:

                           Vari-L Company, Inc.
                           4895 Peoria Street
                           Denver, Colorado 80239

or to such other address as may have been furnished to Agent by the Corporation.



                                       5.




         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.


                                     For Vari-L Company, Inc.

                                     By: Charles R. Bland

                                     Title: CEO

                                     For agent

                                     Richard P. Dutkiewicz

                                     29359 Northstar Ln.

                                     Evergreen, CO 80439







                                       6.

EX-10.31

                                                                   EXHIBIT 10.31

                          UNITED STATES DISTRICT COURT
                              DISTRICT OF COLORADO


Civil Action No. 00-S-1198
(CONSOLIDATED)


MICHAEL RASNER, et al., On Behalf of Themselves and All Others Similarly
Situated,

                                              Plaintiffs,

         vs.

VARI-L COMPANY, INC., DEREK L. BAILEY, JOSEPH H. KISER, DAVID G. SHERMAN and JON
L. CLARK,

                                              Defendants.



- --------------------------------------------------------------------------------

                           MEMORANDUM OF UNDERSTANDING

- --------------------------------------------------------------------------------

         The Plaintiffs and Defendant Vari-L Company, Inc. ("Vari-L" or the
"Company") (the "Parties"), by and through their undersigned attorneys, have
reached an agreement in principle for the settlement of the litigation against
Vari-L only (the "Action") on the terms set forth below and subject to court
approval. This Memorandum of Understanding ("MOU" or "memorandum") outlines the
general terms of the proposed settlement (the "Settlement") and is intended to
be used as a basis for drafting a Stipulation of Settlement (the "Stipulation")
and accompanying papers which shall embody the terms set forth herein and such
other and consistent terms as are agreed upon by counsel for Plaintiffs and the
Company.






         1. For purposes of this Settlement, the "Class" and the "Class Period"
shall be as defined in the Consolidated Amended Class Action Complaint dated
October 9, 2001 (the "Complaint"). The Class shall be certified by stipulation
for purposes of this Settlement only.

         2. Vari-L shall pay $250,000 in cash and shall contribute 2,000,000
shares of its common stock, (collectively, the cash and the contributed stock
shall be referred to herein as the "Settlement Fund") to settle all claims
against Vari-L only. The 2,000,000 unrestricted shares shall be issued, printed
and contributed to the Settlement Fund at the sole expense of Vari-L, including
without limitation, any reasonable costs necessary to make these shares freely
tradeable upon distribution to the Settlement Class and Plaintiffs' Counsel.

         3. Vari-L shall transfer and assign any claims it may have against
Defendants Joseph H. Kiser, David G. Sherman, Jon C. Clark and Derek L. Bailey
(collectively, the "Individual Defendants") to Plaintiffs and Plaintiffs shall
be able to pursue such claims and to seek all damages permissible under the law
against these Individual Defendants, except that claims asserted by Vari-L in
Vari-L Company, Inc. v. David Sherman, Joseph Kiser, Joan Sherman, the Kathryn
Sherman Trust and J.C. Enterprises, Case No. 02-CV-2609 (District Court, City
and County of Denver) shall not be transferred or assigned, but shall be
retained by Vari-L, which shall be able to pursue such claims and seek all
remedies available.

         4. Vari-L shall also assign to the Plaintiffs any right it may have to
proceeds or other damages under the following insurance policies: (1) Reliance
Insurance Company ("Reliance"), Policy No. NDA0155834, limit of liability - $5
million; and (2) Agricultural Excess and Surplus Insurance Company ("AESIC"),
Policy No. NSX2422135, limit of liability - $2.5 million. The



                                       2



Company shall use its best efforts to obtain the written consent from Reliance
and AESIC of the assignment of the insurance proceeds to the Plaintiffs.

         5. Within fifteen days of receiving an order granting preliminary
approval to the Settlement (the "Preliminary Approval Order"), or December 15,
2002, whichever date is later, Vari-L shall pay $100,000 in accordance with
instructions provided by Plaintiffs' Lead Counsel to be placed into an escrow
account to be established by or on behalf of Plaintiffs' Lead Counsel for the
benefit of the Class for the express purpose of providing notice of the
Settlement to the Settlement Class and to administer the Settlement (the "Notice
and Administration Fund"). All reasonable costs and expenses of class notice and
administration of the Settlement shall be paid from the Notice and
Administration Fund when incurred.

         6. The remaining cash payment of $150,000, plus interest at a rate of
five (5%) percent per annum to begin accruing on the date of the order granting
preliminarily class approval or December 15, 2002, whichever is later, shall be
paid on or before thirty-five (35) days after the entry of an order granting
final approval to the Settlement (the "Final Order and Judgment") in accordance
with instructions provided by Plaintiffs' Lead Counsel into an escrow account to
be maintained by or on behalf of Plaintiffs' Lead Counsel for the benefit of the
Settlement Class (the "Escrow Fund"). This payment into the Escrow Fund shall be
made regardless of whether any appeal is taken of any aspect of the Final Order
and Judgment, subject to the provisions of the following paragraph.

         7. The Settlement Fund and the Notice and Administration Fund, less any
amounts incurred or accrued for notice, administration, and/or taxes, along with
any interest earned



                                       3



thereon, shall be immediately paid back to the person(s) or entity making the
deposits if the Settlement is not approved upon appeal or otherwise does not
become effective.

         8. With respect to the stock portion of the Settlement Fund, upon the
entry of the Final Order and Judgment, Vari-L shall take all steps reasonably
necessary to prepare for the contribution of the 2,000,000 freely tradeable
shares to the Settlement Fund, such that the shares will be available for
distribution within thirty-five (35) days after the entry of the Final Order and
Judgment. Upon the Effective Date of the Settlement, Plaintiffs' Counsel shall
propose additional instruction to Defendant regarding the contribution of these
shares to the Settlement Fund.

         9. With respect to any issuance of new Equity Securities (as defined
below) at any time between the execution of this Memorandum of Understanding and
the later of December 31, 2003 or the date that is three months after the date
of distribution of the shares comprising the stock portion of the Settlement
Fund to the members of the Settlement Class, the Settlement Class shall receive
an amount of Assessment Security upon the terms and conditions set forth below:

                  (a) Until the later of December 31, 2003 or the date that is
three months after the date of distribution of the shares comprising the stock
portion of the Settlement Fund to the members of the Settlement Class, the
Company may sell equity securities, securities that are convertible at any time
into one or more equity securities, and securities that provide for the purchase
at any time of one or more equity securities (collectively "New Equity
Securities") without being required to issue any Assessment Securities (as
defined below) to the Settlement



                                       4


Class if, and only if, one or more of the following conditions is satisfied: (i)
the sale of such security is made as a rights offering to all holders of the
Company's outstanding common stock; (ii) in the case of shares sold in a private
financing or PIPES transaction, the sale of such security is made at a
per-common-share price equal to or greater than the average closing price of
Company's common stock for the ten (10) consecutive trading days ending two
trading days before such transaction is priced; (iii) such security is sold at a
price per share not less than the Deemed Value (as defined below) of the shares
issued to the Settlement Class and the Company makes public disclosure of such
sale; (iv) the holders of the Company's common stock approve of such issuance at
a Meeting of Stockholders by the affirmative vote of a majority of shares
represented at such meeting (excluding the shares of such person or persons
participating in the issuance which is the subject matter of the vote); or (v)
the Company receives at the time of the sale of such security the signed opinion
or report of a nationally-recognized investment banking firm that is independent
of the Company and independent of all proposed purchasers of each such security
to the effect that the price at which such security is being sold is fair to the
Company and its stockholders from a financial point of view. The term New Equity
Securities shall not include (i) any shares of common stock, or rights or
options to purchase Common Stock, issued pursuant to the Company's existing
stock option plan or employee stock purchase plan or any new plan approved by
shareholders, or (ii) shares issued in an underwritten public offering. The term
"Deemed Value" shall be the average closing sale price of the Company's common
stock for the ten trading days preceding the date on which this Memorandum of
Understanding is signed.



                                       5


                  (b) Until the later of December 31, 2003 or the date that is
three months after the date of distribution of the shares comprising the stock
portion of the Settlement Fund to the members of the Settlement Class, any New
Equity Securities that are sold without meeting one or more of the conditions in
Paragraph 9(a) shall be designated as an "Assessment Security."

                  (c) With respect to any Assessment Security, the Settlement
Class shall be entitled to receive, without making payment, a number of shares
of the Assessment Security being sold in an amount determined in accordance with
the following formula:
                                        NP + FD
                        A = S [  1 -  [----------]  ]
                                        ND + FD

         Where:       A =           Number of Assessment Shares to be issued

                      S =           Number of shares originally issued to
                                    Settlement Class (2,000,000), as adjusted
                                    for stock splits, stock dividends and the
                                    like

                      N =           Number of New Equity Securities issued

                      P =           Price (on a common equivalent basis) of the
                                    New Equity Securities

                      F =           Fully diluted shares of Common Stock
                                    outstanding immediately prior to issuance of
                                    New Equity Securities

                      D =           Deemed Value of Shares issued to Settlement
                                    Class (based on market price of Company's
                                    stock on day MOU is signed), as adjusted

Upon any adjustment in accordance with the foregoing, D will be adjusted for the
purpose of any future adjustments in accordance with the following, where D(N)
represents the new Deemed Value and D(O) is the Deemed Value immediately prior
to the issuance of the Adjustment Security.



                                       6


                              D  =  D  x    S
                               N     O   -------
                                          S + A


The total number of shares to be contributed to the Settlement Fund will be
adjusted to reflect any changes due to stock splits, stock dividends or reverse
stock splits. All costs, including those of Vari-L's transfer agent, incurred in
issuing and distributing any stock to the recipients shall be borne by Vari-L.

         10. The Stipulation and the Final Order and Judgment to be issued by
the Court shall provide for dismissal of the Action against Vari-L only with
prejudice upon final approval of the Settlement and shall also provide for
release of claims arising out of the purchase of Vari-L common stock during the
Class Period, whether known or unknown, which were or could have been asserted
against Vari-L only for any acts, facts, transactions, occurrences,
representations, or omissions during the Class Period in connection with,
arising out of, or in any way related to the allegations of the Complaint, any
violation of law in connection therewith, or any public statements concerning or
relating to Vari-L only. The release shall extend to the Company and its present
and former parents, subsidiaries, affiliates, predecessors, and successors, and
each of its present and former officers, directors and agents, but excluding the
Individual Defendants identified in paragraph 3 herein. The Company shall
release Plaintiffs, the members of the Settlement Class and Plaintiffs' Counsel
from any claims relating to the institution, prosecution or settlement of the
Action. The Final Order and Judgment to be issued by the Court shall contain a
Settlement Bar Order and other appropriate claim-over protection.



                                       7


         11. Immediately upon execution of this memorandum, the Plaintiffs and
the Company shall advise the Court of this agreement and shall seek a stay of
all pending motions and schedules with regard to Vari-L only pending
effectuation of the Settlement.

         12. Following the execution of this memorandum, the Plaintiffs and the
Company will promptly conduct such reasonable additional discovery as the
Parties agree is appropriate and necessary to confirm the fairness and
reasonableness of the terms of the Settlement. Defendants will produce any
additional documents in their possession, custody or control reasonably
requested by Plaintiffs' Lead Counsel. Plaintiffs shall have the right after the
completion of the discovery to terminate the Settlement if the discovery reveals
that the Settlement is not fair, reasonable, and adequate.

         13. Following execution of this memorandum, the Plaintiffs and the
Company will use their reasonable best efforts to finalize and execute an
appropriate Stipulation and such other documentation as may be required or
appropriate in order to obtain approval by the Court of the settlement of this
Action upon the terms set forth in this memorandum and such other terms upon
which the Parties may agree. Promptly upon execution of the Stipulation, the
Parties shall apply to the Court for preliminary approval of the Settlement and
for the scheduling of a hearing for consideration of final approval of the
Settlement, the Plan of Allocation and Plaintiffs' Counsel's application for an
award of attorneys' fees and expenses on behalf of Plaintiffs' Counsel. The
Parties shall use their reasonable best efforts to obtain final Court approval
of the Settlement.

         14. The Stipulation shall provide (among other terms) that: (1) the
Court shall order preliminary approval of the Stipulation and Settlement and
direct that notice of the settlement be



                                       8


provided to the Settlement Class; (2) the consideration described above shall be
provided; (3) the Company has denied and continues to deny that it has committed
any act or omission giving rise to any liability or violation of law and state
that it is entering into this Settlement to eliminate the burden and expense of
further litigation; (4) neither the MOU, the Settlement, nor any of its terms
shall constitute an admission or finding of wrongful conduct on behalf of the
Company; (5) the Parties will not assert that the Action was brought by
Plaintiffs or defended by the Company in bad faith or without reasonable cause
under Rule 11 of the Federal Rules of Civil Procedure; (6) the allocation of the
Settlement Fund among the members of the Class shall be subject to a plan of
allocation to be proposed by Plaintiffs' Lead Counsel and approved by the Court;
(7) the Company will take no position with respect to such proposed plan of
allocation or such plan as may be approved by the Court; (8) such plan of
allocation is a matter separate and apart from the proposed Settlement between
the Parties and any decision by the Court concerning the plan of allocation
shall not affect the validity or finality of the proposed Settlement; (9)
Plaintiffs' Counsel may apply for and receive an award of attorneys' fees and
reimbursement of expenses from the Settlement Fund in such amounts as may be
approved by the Court and any cash or stock amount included in such award shall
be paid to Plaintiffs' Counsel out of the Settlement Fund immediately upon
Defendants' payment of the Settlement Fund which shall take place no later than
thirty five (35) days after the entry of the Final Order and Judgment by the
District Court, regardless of the existence of any appeal or challenge to the
award of attorneys' fees and reimbursement of expenses, subject to each
counsel's obligation to immediately pay back any such amount if, or to the
extent that, the award is amended or does not become final; and (10)



                                       9


consummation of the Settlement shall be subject to the Court's approval and the
termination of any appeals.

         15. Vari-L shall provide or cause to be provided, within twenty (20)
days of signing the Stipulation of Settlement, its shareholder lists as
appropriate for providing notice to the Class, in a format designated by
Plaintiffs' Lead Counsel for mailings, without cost to any other Party.

         16. Vari-L's execution of this memorandum does not constitute an
admission by the Company: (i) of any wrongdoing, violation of law, or liability
whatsoever; or (ii) that recovery could be had in any amount should the Action
not be settled. The Company vigorously denies any wrongdoing and liability and
maintains that its conduct at all times was legal and proper. Neither this
memorandum, nor any term thereof, may be offered or received into evidence in
any proceeding or used in any manner as an admission or implication of liability
or fault on the part of the Company.

         17. Plaintiffs' execution of this memorandum does not constitute an
admission by any Plaintiff: (i) of the lack of any wrongdoing, violation of law,
or liability on behalf of the Company; or (ii) that recovery could not be had in
any amount should the Action not be settled. Neither this memorandum, nor any
term thereof, may be offered or received into evidence in any proceeding or used
in any manner as an admission or concession by Plaintiffs that the Company has
not engaged in any wrongdoing or that its conduct was at all times legal and
proper.

         18. If the Settlement outlined in this memorandum is not approved by
the Court or is terminated, or a Stipulation effectuating the terms of this
memorandum is not executed: (a) the Settlement shall be without prejudice, and
none of its terms shall be effective or enforceable,



                                       10


except to the extent costs of notice and administration have been incurred in
accordance with this memorandum; (b) the Parties shall revert to their
litigation positions immediately prior to the execution of this memorandum; and
(c) the fact and terms of this Settlement shall not be admissible in any trial
of this Action.

         19. This memorandum may be executed in counterparts, including by
signature transmitted by facsimile. Each counterpart when so executed shall be
deemed to be an original, and all such counterparts together shall constitute
the same instrument. The terms of this memorandum and settlement shall inure to
and be binding upon the Parties and their successors in interest.

IT IS HEREBY AGREED by the undersigned as of October 3, 2002.


                                   /s/ ANDREW L. BARROWAY
                                   ---------------------------------------------
                                   ANDREW L. BARROWAY
                                   MICHAEL YARNOFF
                                   SCHIFFRIN & BARROWAY, LLP
                                   Three Bala Plaza East, Suite 400
                                   Bala Cynwyd, PA  19004
                                   Telephone: 610/667-7706


                                   /s/ SPENCER A. BURKHOLZ
                                   ---------------------------------------------
                                   SPENCER A. BURKHOLZ
                                   MILBERG WEISS BERSHAD
                                   HYNES & LERACH LLP
                                   600 West Broadway, Suite 1800
                                   San Diego, CA  92101
                                   Telephone: 619/231-1058



                                       11



                                   /s/ NORMAN BERMAN
                                   ---------------------------------------------
                                   NORMAN BERMAN
                                   PATRICK T. EGAN
                                   BERMAN, DEVALERIO PEASE
                                   TABACCO BURT & PUCILLO
                                   One Liberty Square
                                   Boston, MA  02109
                                   Telephone: 617/542-8300

                                   CO-LEAD COUNSEL FOR PLAINTIFFS AND THE CLASS

                                   /s/ DAVID A. ZISSER
                                   ---------------------------------------------
                                   DAVID A. ZISSER
                                   BERLINER ZISSER WALTER
                                   & GALLEGOS, P.C.
                                   Wells Fargo Center
                                   1700 Lincoln Street, Suite 4700
                                   Denver, CO   80203
                                   Telephone: 303/830-1700

                                   COUNSEL FOR DEFENDANT VARI-L COMPANY, INC.



                                       12

EX-10.32

                                                                   EXHIBIT 10.32


                                 LOAN AGREEMENT


                                     BETWEEN


                           SIRENZA MICRODEVICES, INC.


                                       AND


                              VARI-L COMPANY, INC.


                                 OCTOBER 7, 2002




                                TABLE OF CONTENTS



                                                                                                                   PAGE
                                                                                                                
ARTICLE 1.        INTERPRETATION......................................................................................1

         1.1      Definitions.........................................................................................1
         1.2      GAAP................................................................................................1
         1.3      Governing Law.......................................................................................1
         1.4      Construction........................................................................................1
         1.5      Entire Agreement....................................................................................1
         1.6      Calculation of Interest and Fees....................................................................1

ARTICLE 2.        LOANS...............................................................................................2

         2.1      Tranche A Loan......................................................................................2
         2.2      Tranche B Loans.....................................................................................2
         2.3      Interest............................................................................................2
         2.4      Maturity............................................................................................2
         2.5      Prepayments.........................................................................................2
         2.6      Application to Acquisition Consideration............................................................4
         2.7      Other Payment Terms.................................................................................4
         2.8      Notes...............................................................................................4
         2.9      Security; Further Assurances........................................................................4

ARTICLE 3.        REPRESENTATIONS AND WARRANTIES OF BORROWER..........................................................5

         3.1      Due Incorporation, Qualification, etc...............................................................5
         3.2      Authority...........................................................................................5
         3.3      Enforceability......................................................................................5
         3.4      Non-Contravention...................................................................................5
         3.5      Approvals...........................................................................................5
         3.6      No Violation or Default.............................................................................5
         3.7      Title...............................................................................................6
         3.8      No Agreements to Sell Assets........................................................................6
         3.9      Other Regulations...................................................................................6
         3.10     Governmental Charges and Other Indebtedness.........................................................6
         3.11     Solvency, Etc.......................................................................................6
         3.12     No Material Adverse Effect..........................................................................6
         3.13     Accuracy of Information Furnished...................................................................6

ARTICLE 4.        CONDITIONS TO EACH LOAN.............................................................................7

         4.1      Closing.............................................................................................7
         4.2      Conditions to Lender's Obligation to Make Each Loan.................................................8
         4.3      Covenant to Deliver.................................................................................8

ARTICLE 5.        COVENANTS OF BORROWER...............................................................................9

         5.1      Affirmative Covenants...............................................................................9
         5.2      Negative Covenants.................................................................................10
         5.3      Financial Covenants................................................................................12

ARTICLE 6.        EVENTS OF DEFAULT..................................................................................12

         6.1      Events of Default..................................................................................12
         6.2      Rights of Lender upon Default......................................................................13




                                       -i-


                                TABLE OF CONTENTS
                                   (CONTINUED)



                                                                                                                   PAGE
                                                                                                                
ARTICLE 7.        MISCELLANEOUS......................................................................................14

         7.1      Notices............................................................................................14
         7.2      Expenses...........................................................................................15
         7.3      Indemnification....................................................................................15
         7.4      Waivers; Amendments................................................................................15
         7.5      Successors and Assigns.............................................................................15
         7.6      Set-off............................................................................................16
         7.7      No Third Party Rights..............................................................................16
         7.8      Partial Invalidity.................................................................................16
         7.9      Jury Trial.........................................................................................16
         7.10     Governing Law......................................................................................16
         7.11     Integration........................................................................................16
         7.12     Counterparts.......................................................................................16




                                      -ii-


                                 LOAN AGREEMENT


         This LOAN AGREEMENT (this "Loan Agreement"), dated as of October 7,
2002 is entered into by and between SIRENZA MICRODEVICES, INC., a Delaware
corporation ("Lender") and VARI-L COMPANY, INC., a Colorado corporation
("Borrower").

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing and of the covenants,
conditions and agreements set forth herein, the parties agree as follows:

ARTICLE 1. INTERPRETATION.

         1.1 Definitions. Unless otherwise indicated in this Loan Agreement,
each term set forth in Schedule I, when used in this Loan Agreement, shall have
the respective meaning given to that term in Schedule I or in the provision of
this Loan Agreement referenced in Schedule I.

         1.2 GAAP. Unless otherwise indicated in this Loan Agreement, all
accounting terms used in this Loan Agreement shall be construed, and all
accounting and financial computations hereunder or thereunder shall be computed,
in accordance with GAAP. The term "GAAP" shall mean generally accepted
accounting principles and practices as in effect in the United States of America
from time to time, consistently applied.

         1.3 Governing Law. This Loan Agreement and each of the other Loan
Documents shall be governed by and construed in accordance with the laws of the
State of California without reference to conflicts of law rules.

         1.4 Construction. Each of this Loan Agreement and the other Loan
Documents is the result of negotiations among, and has been reviewed by,
Borrower, Lender and their respective counsel. Accordingly, this Loan Agreement
and the other Loan Documents shall be deemed to be the product of all parties
hereto, and no ambiguity shall be construed in favor of or against Borrower or
Lender.

         1.5 Entire Agreement. This Loan Agreement and each of the other Loan
Documents, taken together, constitute and contain the entire agreement of
Borrower and Lender and supersede any and all prior agreements, negotiations,
correspondence, understandings and communications among the parties, whether
written or oral, respecting the subject matter hereof.

         1.6 Calculation of Interest and Fees. All calculations of interest and
fees under this Loan Agreement and the other Loan Documents for any period shall
include the first day of such period and exclude the last day of such period.




ARTICLE 2. LOANS

         2.1 Tranche A Loan. Subject to the terms and conditions of this Loan
Agreement, Lender agrees to advance to Borrower a term loan (the "Tranche A
Loan") in an aggregate principal amount not to exceed $1,353,861.80 to be used
to payoff existing Indebtedness to Wells Fargo Business Credit Inc. Borrower may
not reborrow the principal amount of the Tranche A Loan after repayment or
prepayment thereof.

         2.2 Tranche B Loans. Subject to the terms and conditions of this Loan
Agreement, Lender agrees to advance to Borrower, from time to time, term loans
(each, a "Tranche B Loan" and together with the Tranche A Loan, the "Loans", and
each a "Loan") according to Schedule II attached hereto (the "Funding
Schedule"), in an aggregate principal amount not to exceed $3,946,138.20 (the
"Tranche B Commitment"). Each month Borrower may request a Tranche B Loan in a
principal amount up to the sum of (i) the principal amount of Tranche B Loans
permitted to be advanced to the date of requested advance pursuant to the
Funding Schedule plus (ii) any Excess Amount. The term "Excess Amount" shall
mean the aggregate principal amount of Tranche B Loans permitted to be advanced
to the date of requested advance pursuant to the Funding Schedule minus the
aggregate amount of Tranche B Loans actually advanced to the date of requested
advance. In no event shall the aggregate principal amount of Tranche B Loans
advanced pursuant to this Loan Agreement exceed the Tranche B Commitment. No
more than one Tranche B Loan shall be advanced per calendar month (except that
Borrower may make two advances in the month of October 2002, provided that in no
event shall the aggregate principal amount of Loans advanced in such month
exceed $1,200,000) and each Tranche B Loan shall be made on a date at least
three (3) Business Days after the delivery to Lender in the manner specified in
Section 7.1 of a notice of borrowing in the form of Schedule III hereto (the
"Notice of Borrowing"). Borrower may not reborrow the principal amount of any
Tranche B Loan after repayment or prepayment thereof.

         2.3 Interest. Borrower shall pay interest at Maturity on the unpaid
principal amount of the Loans from the date of each such Loan until paid in
full, at a rate per annum equal to twenty five percent (25%). All computations
of such interest shall be based on a year of twelve thirty (30) day months.

         2.4 Maturity. Unless earlier prepaid or accelerated, all outstanding
principal and accrued interest under the Loans are due and payable in full on
September 25, 2003.

         2.5 Prepayments.

                  (a) Optional Prepayment

                           (1) Tranche A Loan. Provided that there are no
outstanding Tranche B Loans, at its option, Borrower may, upon five (5) Business
Days' written notice to Lender, prepay all, but not less than all of the Tranche
A Loan, provided that such prepayment shall include, all outstanding principal
on the Tranche A Loan, all accrued interest to the date of prepayment thereon
and all other fees and expenses due to Lender under the Loan Documents.

                           (2) Tranche B Loans. At its option, Borrower may,
upon five (5) Business Days' written notice to Lender, prepay all or part of any
Tranche B Loan, provided that such prepayment shall include, all outstanding
principal on the Tranche B Loan, all accrued interest to the date of prepayment
and all other fees and expenses due to Lender under the Loan Documents.



                                      -2-


                           (3) Prepayment Fee. In the event that (i) a Change of
Control shall occur within 180 days following a date of prepayment pursuant to
this Section 2.5(a) upon which all outstanding Loans have been paid in full or
(ii) Borrower shall enter into a definitive acquisition agreement with a Person
other than Lender within 180 days following a date of prepayment upon which all
outstanding Loans have been paid in full that would result in a Change of
Control, then in either case, Borrower expressly agrees to pay (whether or not
any Obligations remain outstanding and whether or not Lender has any commitment
to make Loans hereunder) to Lender the Prepayment Fee upon the occurrence of
either event referenced in subsection (i) or (ii) of this sentence. Borrower's
express agreement to pay the Prepayment Fee pursuant to the terms set forth in
the previous sentence shall survive the termination of this Loan Agreement.

                  (b) Mandatory Prepayment of Loans. Upon the earlier of (i) the
fifth Business Day following the date of execution of a definitive agreement
with a Person other than Lender that would result in a Change of Control, or
(ii) the occurrence of a Change of Control, then in either case:

                           (1) Borrower shall, at Lender's option, either (A)
prepay in full all outstanding principal amounts due under the Tranche A Loan,
all accrued interest to the date of prepayment and all other fees and expenses
due under the Loan Documents, or (B) convert all outstanding principal amounts
due under the Tranche A Loan into Borrower's Equity Securities pursuant to the
conversion provisions contained in the Tranche A Note and pay to Lender all
accrued interest to the date of conversion and all other fees and expenses due
under the Loan Documents;

                           (2) Borrower shall prepay in full all outstanding
principal amounts due under the Tranche B Loans, all accrued interest to the
date of prepayment, and all other fees and expenses due under the Loan
Documents; and

                           (3) Borrower shall pay to Lender the Prepayment Fee.

                  (c) Application of Prepayments. All prepayments hereunder
shall be applied first to unpaid fees, costs and expenses then due and payable
under this Loan Agreement or the other Loan Documents, second to accrued
interest then due and payable under this Loan Agreement or the other Loan
Documents, third to the Prepayment Fee, if any, and finally to reduce the
principal amount of outstanding Loans.

                  (d) Conversion. At Lender's option, the principal amount of
the Tranche A Loan may be converted into Borrower's Equity Securities pursuant
to the conversion provisions contained in the Tranche A Note.

         2.6 Application to Acquisition Consideration. In the event that Lender
and Borrower enter into a definitive acquisition agreement that would result in
Lender acquiring Borrower, or all or substantially all of the assets of
Borrower, then all outstanding principal and accrued and unpaid interest under
the Tranche B Loans and all accrued and unpaid interest under the Tranche A Loan
to the date of the closing of such acquisition shall be applied to reduce the
purchase price paid by Lender pursuant to such acquisition agreement at a rate
of $1.00 for every $1.00 of such outstanding principal and accrued and unpaid
interest under the Tranche B Loans and all accrued and unpaid interest under the
Tranche A Loan. Each $1.00 applied in the previous sentence to reduce the
purchase price paid by Lender shall be deemed a $1.00 repayment of the
Obligations and such Obligations shall be deemed cancelled to the extent of such
repayment.



                                      -3-

         2.7 Other Payment Terms

                  (a) Place and Manner. Borrower shall make all payments due to
Lender hereunder at the address specified in Section 7.1, in lawful money of the
United States and in same day or immediately available funds.

                  (b) Date. Whenever any payment due hereunder shall fall due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included in the
computation of interest or fees, as the case may be.

                  (c) Default Rate. From and after the occurrence of an Event of
Default and during the continuance thereof, Borrower shall pay interest on the
aggregate, outstanding balance of the Loans, and on interest (compounded
annually) and other amounts not paid when due hereunder or under the other Loan
Documents, from the date due thereof until those amounts are paid in full at a
per annum rate (the "Default Rate") equal to the lesser of (i) a rate equal to
five percentage points in excess of the rate otherwise applicable to the Loans
at such time or (ii) the maximum rate permitted by law, such rate to change from
time to time as the rate otherwise applicable to the Loans shall change. All
computations of such interest shall be based on a year of twelve thirty (30) day
months for the actual number of days elapsed.

         2.8 Notes. The obligation of Borrower to repay the Tranche A Loan and
to pay interest thereon at the rates provided herein shall be evidenced by a
convertible promissory note in the form of Exhibit A (the "Tranche A Note"). The
obligation of Borrower to repay the Tranche B Loans and to pay interest thereon
at the rates provided herein shall be evidenced by a promissory note in the form
of Exhibit B (the "Tranche B Note" and together with the Tranche A Note, the
"Notes" and each a "Note"). With respect to Tranche B Loans, Borrower
irrevocably authorizes Lender to make or cause to be made, an appropriate
notation on Lender's Record reflecting the making of such Tranche B Loan or (as
the case may be) the receipt of a payment or prepayment of such Tranche B Loan.
The outstanding amount of the Tranche B Loans set forth on such Lender's Record
shall be prima facie evidence (absent manifest error) of the principal amount
thereof owing and unpaid to such Lender, but the failure to record, or any error
in so recording, any such amount on such Lender's Record shall not limit or
otherwise affect the obligations of the Borrower hereunder or under the Tranche
B Note to make payments of principal of or interest on the Tranche B Note when
due.

         2.9 Security; Further Assurances

                  (a) Security. The Obligations shall be secured by a Security
Agreement in the form of Exhibit C (the "Security Agreement").

                  (b) Further Assurances. Borrower shall deliver to Lender the
Security Agreement and such other instruments, agreements, certificates and
documents as Lender may reasonably request to create, perfect, evidence and
maintain (i) a first priority security interest of Lender in all of the assets
of Borrower as further set forth in the Security Agreement, subject only to
Permitted Liens and (ii) the rights of Lender under this Loan Agreement and the
other Loan Documents. Borrower shall fully cooperate with Lender and perform all
additional acts reasonably requested by Lender to effect the purposes of the
foregoing and the rights granted to Lender hereunder.



                                      -4-


ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BORROWER.

         To induce Lender to enter into this Loan Agreement and to make Loans
hereunder, Borrower represents and warrants to Lender that, except as set forth
on the disclosure schedule attached hereto as Schedule IV (the "Disclosure
Schedule"):

         3.1 Due Incorporation, Qualification, etc. Each of Borrower and its
Subsidiaries (i) is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation; (ii) has the power and
authority to own, lease and operate its properties and carry on its business as
now conducted; and (iii) is duly qualified, licensed to do business and in good
standing as a foreign corporation in each jurisdiction where the failure to be
so qualified or licensed could reasonably be expected to have a Material Adverse
Effect.

         3.2 Authority. The execution, delivery and performance by Borrower of
each Loan Document to be executed by Borrower and the consummation of the
transactions contemplated thereby (i) are within the power of Borrower and (ii)
have been duly authorized by all necessary actions on the part of Borrower.

         3.3 Enforceability. Each Loan Document executed, or to be executed, by
Borrower has been, or will be, duly executed and delivered by Borrower and
constitutes, or will constitute, a legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms, except as
limited by bankruptcy, insolvency or other laws of general application relating
to or affecting the enforcement of creditors' rights generally and general
principles of equity.

         3.4 Non-Contravention. The execution and delivery by Borrower of the
Loan Documents executed by Borrower and the performance and consummation of the
transactions contemplated thereby do not and will not (i) violate any material
Requirement of Law applicable to Borrower; (ii) violate any provision of, or
result in the breach or the acceleration of, or entitle any other Person to
accelerate (whether after the giving of notice or lapse of time or both), any
material Contractual Obligation of Borrower; or (iii) result in the creation or
imposition of any Lien upon any property, asset or revenue of Borrower (except
such Liens as may be created in favor of Lender pursuant to this Loan Agreement
or the other Loan Documents).

         3.5 Approvals. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority or other
Person (including, without limitation, the shareholders of any Person) is
required in connection with the execution and delivery of the Loan Documents
executed by Borrower and the performance and consummation of the transactions
contemplated thereby, other than filings that may be required under applicable
federal and state securities laws and filings necessary to perfect the Lender's
security interest in the Collateral (as defined in the Security Agreement).

         3.6 No Violation or Default. None of Borrower or Borrower's
Subsidiaries is in violation of or in default with respect to (i) any material
Requirement of Law; (ii) any material Contractual Obligation (nor is there any
waiver in effect which, if not in effect, would result in such a violation or
default), where, in each case, such violation or default, individually, or
together with all such violations or defaults, could reasonably be expected to
have a Material Adverse Effect. Without limiting the generality of the
foregoing, to the best knowledge of Borrower, none of Borrower or Borrower's
Subsidiaries (A) has violated any Environmental Laws, (B) has any liability
under any Environmental Laws or (C) has received notice or other communication
of an investigation or is under investigation by any Governmental Authority
having authority to enforce Environmental Laws, where such violation, liability
or investigation could reasonably be expected to have a Material Adverse Effect.
No Event of Default or Default has occurred and is continuing. Except as set
forth



                                      -5-


(with estimates of the dollar amounts involved) in the Disclosure Schedule, no
actions (including, without limitation, derivative actions), suits, proceedings
or investigations are pending or, to the knowledge of Borrower, threatened
against Borrower at law or in equity in any court or before any other
governmental authority or (ii) seeks to enjoin, either directly or indirectly,
the execution, delivery or performance by Borrower of the Loan Documents or the
transactions contemplated thereby. The executed Memorandum of Understanding (the
"MOU") dated October 3, 2002, regarding a settlement of the certain outstanding
shareholder class action litigation involving Borrower referred to therein,
though it remains subject to court approval, has been entered into by Borrower
and all other necessary parties and is in full force and effect in accordance
with its terms.

         3.7 Title. Borrower and Borrower's Subsidiaries own and have good and
marketable title in fee simple absolute to, or a valid leasehold interest in,
all their respective real properties and good title to their other respective
assets and properties as reflected in the most recent Financial Statements
delivered to Lender (except those assets and properties disposed of in the
ordinary course of business since the date of such Financial Statements) and all
respective assets and properties acquired by Borrower and Borrower's
Subsidiaries since such date (except those disposed of in the ordinary course of
business). Such assets and properties are subject to no Lien, except for
Permitted Liens.

         3.8 No Agreements to Sell Assets. None of Borrower or Borrower's
Subsidiaries has any legal obligation, absolute or contingent, to any Person to
sell a material portion of the assets of Borrower or Borrower's Subsidiaries
(other than sales in the ordinary course of business), or to effect any merger,
consolidation or other reorganization of Borrower or to enter into any agreement
with respect thereto, except those transactions contemplated with Lender.

         3.9 Other Regulations. None of Borrower or its Subsidiaries is subject
to regulation under the Investment Company Act of 1940, the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act,
any state public utilities code or to any federal or state statute or regulation
limiting its ability to incur Indebtedness.

         3.10 Governmental Charges and Other Indebtedness. Each of Borrower and
its Subsidiaries has filed or caused to be filed all tax returns (including
extensions thereof) which are required to be filed by it. Borrower and
Borrower's Subsidiaries have paid, or made provision for the payment of, all
taxes and other Governmental Charges which have or may have become due pursuant
to said returns or otherwise and all other Indebtedness, except such
Governmental Charges or Indebtedness, if any, which are being contested in good
faith and as to which adequate reserves (determined in accordance with GAAP)
have been provided or which could not reasonably be expected to have a Material
Adverse Effect if unpaid.

         3.11 Solvency, Etc. As of the Closing Date, Borrower is Solvent and,
after the execution and delivery of the Loan Documents and the consummation of
the transactions contemplated thereby will be Solvent.

         3.12 No Material Adverse Effect. As of the Closing Date, since June 30,
2002, no event has occurred and no condition exists which could reasonably be
expected to have a Material Adverse Effect, except as disclosed in Borrower's
Draft No. 8 of its Annual Report on Form 10-K for its fiscal year ended June 30,
2002, a copy of which, dated October 4, 2002, has been previously provided to
Lender.

         3.13 Accuracy of Information Furnished. No representation or warranty
or other statement of Borrower in any written certificates, statements or
information furnished to Lender by or on behalf of



                                      -6-


Borrower or Borrower's Subsidiaries in connection with the Loan Documents or the
transactions contemplated thereby contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading (it being
recognized by Lender that the projections and forecasts provided by Borrower
have been prepared in good faith, are based upon reasonable assumptions, are not
to be viewed as facts and that actual results during the period or periods
covered by any such projections and forecasts may differ from the projected or
forecasted results).

ARTICLE 4. CONDITIONS PRECEDENT.

         4.1 Closing. At the time of execution and delivery of this Loan
Agreement, Borrower shall have duly executed and/or delivered to Lender (unless
the Lender has agreed in writing to waive such condition or document):

                  (a) The Security Agreement, together with completed schedules;

                  (b) Account Control Agreements in form and substance
reasonably satisfactory to Lender, duly executed by all applicable parties, to
perfect Lender's security interest in Borrower's deposit and investment
accounts;

                  (c) UCC-1 Financing Statement to be filed with the Secretary
of State of the State of Colorado and Borrower shall have taken such actions and
delivered such documents, if any, as Lender shall reasonably determine are
necessary or desirable to perfect and protect its security interest in the
Collateral;

                  (d) Patent and Trademark Office filings and U.S. Copyright
Office filings, if applicable;

                  (e) Copies, certified by the Secretary, Assistant Secretary or
Chief Financial Officer of Borrower as of the Closing Date, of Borrower's
charter documents and bylaws and of all documents evidencing corporate action
taken by Borrower authorizing the execution, delivery and performance of the
Loan Documents to which Borrower is a party, in form and substance satisfactory
to Lender and its counsel;

                  (f) Good standing certificate from Borrower's state of
incorporation and the state in which Borrower's principal place of business is
located, together with certificates of the applicable governmental authorities
that Borrower is in compliance with the franchise tax laws of each such state,
each dated as of a recent date;

                  (g) Evidence of the insurance coverage required by Section
5.1(c) of this Loan Agreement;

                  (h) Evidence satisfactory to Lender (i) that Borrower's loan
facility with Wells Fargo Business Credit Inc. has been terminated, (ii) that
all obligations of Borrower under such loan facility have been paid in full and
(iii) that all security interests in favor of Wells Fargo Business Credit, Inc.
have been terminated;

                  (i) All necessary consents of shareholders and other third
parties with respect to the execution, delivery and performance of this
Agreement, and the other Loan Documents;

                  (j) Exclusivity And Right of First Refusal Agreement;



                                      -7-


                  (k) Registration Rights Agreement; and

                  (l) A favorable opinion of counsel for Borrower, dated as of
the closing date, in the form attached hereto as Exhibit D;

         4.2 Conditions to Lender's Obligation to Make Each Loan. The making of
each Loan is subject to the further condition that on the date such Loan is made
and after giving effect thereto, the following shall be true and correct:

                  (a) Borrower shall have delivered to Lender the Notice of
Borrowing;

                  (b) Borrower shall have duly executed and delivered to Lender
the applicable Note;

                  (c) The funding date shall not be later than September 25,
2003;

                  (d) Borrower shall have provided to Lender such documents,
instruments and agreements as Lender shall reasonably request to evidence the
perfection and priority of the security interests granted to Lender pursuant to
the Security Agreement;

                  (e) The representations and warranties set forth in this Loan
Agreement and the other Loan Documents shall be true and correct in all material
respects as if made on such date, except to the extent such representations and
warranties address matters as of a particular date (which representations and
warranties shall remain true and correct as of such date);

                  (f) No Default or Event of Default has occurred and is
continuing or will result from the making of the Loan; and

                  (g) Each of the Loan Documents remains in full force and
effect;

The submission by Borrower to Lender of the Notice of Borrowing with respect to
the Loan shall be deemed to be a representation and warranty by Borrower as of
the date thereof as to the above.

         4.3 Covenant to Deliver(a). Borrower agrees (not as a condition but as
a covenant) to deliver to Lender each item required to be delivered to Lender as
a condition to closing under this Article 4. Borrower expressly agrees that the
occurrence of the Closing Date prior to the receipt by Lender of any such item
shall not constitute a waiver by Lender of Borrower's obligation to deliver such
item.

                  (b) Borrower agrees to file or cause to file all necessary
instruments or documents to terminate and release certain filed UCC-1 financing
statements in favor of Bank One, Colorado, NA and Tokai Financial Services
within 10 Business Days of the date of this Loan Agreement.

                  (c) Within 10 Business Days of the date of this Loan
Agreement, Borrower agrees to file or cause to be filed all necessary
assignments with the U.S. Patent and Trademark Office necessary to evidence the
assignment from Asvan Technology, LLC, Ganesh Basawapatna and Varalakshmi
Basawapatna to Borrower of patent application 09/997,468 filed on November 29,
2001 (Ferrite Crystal Resonator Coupling Structure).

                  (d) Borrower agrees not to maintain any bank accounts or
investment accounts, except (i) accounts listed on Section 13 of Schedule B of
the Security Agreement in which Lender has perfected its



                                      -8-


security interest in such accounts and (ii) accounts in which Lender has taken
such action as it deems necessary to obtain a perfected security interest in
such accounts and Borrower agrees to deliver and execute all necessary documents
to effect the intent of the foregoing, including account control agreements.

ARTICLE 5. COVENANTS OF BORROWER.

         5.1 Affirmative Covenants. Until the termination of the commitment to
make Loans under this Loan Agreement and the satisfaction in full by Borrower of
all Obligations, Borrower shall comply, and shall cause compliance, with the
following affirmative covenants unless Lender shall otherwise consent in
writing:

                  (a) Financial Statements, Reports, etc. Borrower shall furnish
to Lender the following, each in such form and such detail as Lender shall
reasonably request:

                           (i) Within ten (10) Business Days after the end of
each fiscal month of Borrower, unaudited Financial Statements of Borrower as of
the last day of such fiscal month, certified by the chief financial officer or
controller of Borrower to present fairly in all material respects the financial
condition, results of operations and other information presented therein and to
have been prepared in accordance with GAAP consistently applied, subject to
normal year end adjustments and except that no footnotes need be included with
such Financial Statements;

                           (ii) Contemporaneously with the monthly financial
statements required by the foregoing clause (i), a certificate of the president
or chief financial officer of Borrower showing compliance with the financial
covenants set forth in Section 5.3 and stating that no Event of Default and no
Default has occurred, or, if any such Event of Default or Default has occurred,
a statement as to the nature thereof and what action Borrower proposes to take
with respect thereto;

                           (iii) As soon as possible and in no event later than
five (5) Business Days after a Responsible Officer becoming aware of the
occurrence or existence of: (A) any Reportable Event under any Employee Benefit
Plan or Multiemployer Plan; (B) any actual or overtly threatened litigation,
suits, claims or disputes against Borrower or its Subsidiaries involving
potential monetary damages payable by Borrower or its Subsidiaries of One
Hundred Thousand Dollars ($100,000) or more (alone or in the aggregate); (C) any
other event or condition which could reasonably be expected to have a Material
Adverse Effect; or (D) any Event of Default or Default; the statement of the
president or chief financial officer of Borrower setting forth details of such
event, condition, Event of Default or Default and the action which Borrower has
taken or proposes to take with respect thereto; and

                           (v) Such other instruments, agreements, certificates,
statements, documents and information relating to the operations or condition
(financial or otherwise) of Borrower or its Subsidiaries, and compliance by
Borrower with the terms of this Loan Agreement and the other Loan Documents as
Lender may from time to time reasonably request.

                  (b) Books and Records. Borrower and its Subsidiaries shall at
all times keep proper books of record and account in which full, true and
correct entries will be made of their transactions in accordance with GAAP.

                  (c) Insurance. Borrower and its Subsidiaries shall (i) carry
and maintain insurance at its expense of the types and in the amounts
customarily carried from time to time during the term of this Loan Agreement by
others engaged in substantially the same business as such Person and operating
in the same



                                      -9-


geographic area as such Person, including, but not limited to, fire, property
damage and worker's compensation, such insurance to be in such form as is
carried with companies and in amounts satisfactory to Lender, and (ii) deliver
to Lender from time to time, as Lender may request, schedules or insurance
certificates setting forth all insurance then in effect. All property policies
shall name Lender as loss payee with respect to the Collateral and all liability
policies shall name Lender as an additional insured in the full amount of
Borrower's or its Subsidiaries' liability coverage limits.

                  (d) Governmental Charges and Other Indebtedness. Borrower and
its Subsidiaries shall (i) promptly pay and discharge when due all taxes and
other Governmental Charges prior to the date upon which penalties accrue
thereon, (ii) promptly pay and discharge when due all Indebtedness which, if
unpaid, could become a Lien upon the property of Borrower or its Subsidiaries
and (iii) promptly pay and discharge when due all other Indebtedness and (iv)
promptly pay and discharge all trade credit and accounts payable in a manner
consistent with Borrower's current practices and but in no event longer than
sixty (60) days (unless Borrower has specifically negotiated different terms
with the obligors of such trade credit and accounts payable), except for such
trade credit or accounts payable for which Borrower or its Subsidiaries is
contesting in good faith and for which adequate reserves are maintained in
accordance with GAAP.

                  (e) Intentionally omitted.

                  (f) General Business Operations. Each of Borrower and its
Subsidiaries shall (i) preserve and maintain its corporate existence and all of
its rights, privileges and franchises reasonably necessary to the conduct of its
business, (ii) conduct its business activities in compliance with all
Requirements of Law and Contractual Obligations applicable to such Person, the
violation of which could reasonably be expected to have a Material Adverse
Effect, (iii) keep all property useful and necessary in its business in good
working order and condition, ordinary wear and tear excepted, and (iv) maintain
its chief executive office and principal place of business at the address
specified in Section 7.1 unless it shall have given Lender thirty (30) days'
prior written notice of its intent to change the location thereof.

                  (g) Notices. Without limiting Borrower's obligations to Lender
in any other Loan Document or any other agreement between Borrower and Lender,
Borrower shall provide Lender with written notice upon: (i) the date of
execution by Borrower of a definitive acquisition agreement with a Person other
than Lender that would result in a Change of Control and (ii) the date of
commencement of a tender offer to purchase the outstanding Equity Securities of
Borrower for cash or other assets, including, but not limited to securities of
the acquiring Person.

         5.2 Negative Covenants. Until the termination of the commitment to make
Loans under this Loan Agreement and the satisfaction in full by Borrower of all
Obligations, Borrower shall comply, and shall cause compliance, with the
following negative covenants unless Lender shall otherwise consent in writing:

                  (a) Indebtedness. Neither Borrower nor any of its Subsidiaries
shall create, incur, assume or permit to exist any Indebtedness except for
Permitted Indebtedness.

                  (b) Liens. Neither Borrower nor any of its Subsidiaries shall
create, incur, assume or permit to exist any Lien on or with respect to any of
its assets or property of any character, whether now owned or hereafter
acquired, except for Permitted Liens.

                  (c) Asset Dispositions. Except pursuant to an acquisition
agreement with Lender, neither Borrower nor any of its Subsidiaries shall sell,
lease, transfer, license or otherwise dispose of (collectively, a



                                      -10-


"Transfer") any of its assets or property, whether now owned or hereafter
acquired, except (i) Transfers of worn-out or obsolete equipment, (ii) Transfers
of inventory in the ordinary course of business, (iii) Transfers of
non-exclusive licenses for the use of Borrower's property in the ordinary course
of business, or (iv) other Transfers in an aggregate amount not to exceed
$100,000, provided that such Transfers are made upon terms at least as favorable
to Borrower or such Subsidiary as an arms-length transaction with a
non-Affiliate.

                  (d) Mergers, Acquisitions, Etc. Except pursuant to an
acquisition agreement with Lender, neither Borrower nor any of its Subsidiaries
shall consolidate with or merge into any other Person or permit any other Person
to merge into it, or acquire all or substantially all of the assets or capital
stock of any other Person; provided that any wholly-owned Subsidiary of Borrower
may merge into Borrower or any other wholly-owned Subsidiary of Borrower.

                  (e) Investments. Neither Borrower nor any of its Subsidiaries
shall make any Investment except for Permitted Investments.

                  (f) Dividends, Redemptions, Etc. Neither Borrower nor any of
its Subsidiaries shall (i) pay any dividends or make any distributions on its
Equity Securities; (ii) purchase, redeem, retire, defease or otherwise acquire
for value any of its Equity Securities (other than repurchases pursuant to the
terms of employee stock purchase plans, employee restricted stock agreements or
similar arrangements existing as of the date of this Loan Agreement in an
aggregate amount not to exceed One Hundred Thousand Dollars ($100,000)); (iii)
return any capital to any holder of its Equity Securities as such; (iv) make any
distribution of assets, Equity Securities, obligations or securities to any
holder of its Equity Securities as such; or (v) set apart any sum for any such
purpose.

                  (g) Capital Expenditures. Borrower and its Subsidiaries shall
not pay or incur Capital Expenditures which exceed an aggregate amount greater
than Five Hundred Thousand Dollars ($500,000).

                  (h) Change in Business. Neither Borrower nor any of its
Subsidiaries shall engage, either directly or indirectly through Affiliates, in
any business substantially different from its present business.

                  (i) Indebtedness Payments. Neither Borrower nor any of its
Subsidiaries shall (i) prepay, redeem, purchase, defease or otherwise satisfy in
any manner prior to the scheduled repayment thereof any Indebtedness for
borrowed money (other than the Obligations) or lease obligations, (ii) amend,
modify or otherwise change the terms of any Indebtedness for borrowed money
(other than the Obligations) or lease obligations so as to accelerate the
scheduled repayment thereof or (iii) repay any notes to officers, directors or
shareholders (other than the Obligations).

                  (j) Transactions With Affiliates. Neither Borrower nor any of
its Subsidiaries shall enter into any Contractual Obligation with any Affiliate
or engage in any other transaction with any Affiliate except upon terms at least
as favorable to Borrower or such Subsidiary as an arms-length transaction with
unaffiliated Persons. Borrower shall not breach any covenants or agreements
contained in the MOU and no request for preliminary or final approval of the
settlement described in the MOU shall have been denied by a court having
competent jurisdiction over such matter, and no more than ten percent (10%) of
the shareholders of Borrower included in the class of shareholders potentially
subject to the binding effect of such settlement as finally approved shall have
opted out of such settlement.

                  (k) Employees' Salaries. Borrower may not increase the
salaries of any employees of Borrower.



                                      -11-


         5.3 Financial Covenants. Borrower shall maintain:

                  (a) Net Operating Loss. As of the last day of each month, Net
Operating Loss for the three (3) month period ending as of the last day of such
month in an amount not greater than the amount of Net Operating Loss for such
period that is set forth on Schedule V attached hereto. The term "Net Operating
Loss" shall mean for such period net operating income (or loss) determined in
accordance with GAAP (excluding restructuring, severance, extraordinary non-cash
charges, and legal and accounting fees incurred in connection with the
transactions contemplated by this Loan Agreement).

                  (b) Cash Used in Operations. As of the last day of each month,
Cash Used In Operations for the three (3) month period ending as of the last day
of such month in an amount not greater than the amount of Cash Used in
Operations for such period that is set forth on Schedule V attached hereto. The
term "Cash Used in Operations" shall mean for such period cash used in
operations as determined in accordance with GAAP and set forth in Borrower's
statement of cash flows (excluding cash used in connection with restructuring,
severance, and legal and accounting fees incurred in connection with the
transactions contemplated by this Loan Agreement).

ARTICLE 6. EVENTS OF DEFAULT.

         6.1 Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" under this Loan Agreement and the Notes:

                  (a) Failure to Pay. Borrower shall fail to pay (i) when due
any principal or interest payment on the due date hereunder and such payment
shall not have been made within five (5) days of such due date or (ii) any other
payment required under the terms of this Loan Agreement or any other Loan
Document on the date due and such payment shall not have been made within five
(5) days of Borrower's receipt of Lender's written notice to Borrower of such
failure to pay; or

                  (b) Breaches of Certain Covenants. Borrower or any of its
Subsidiaries shall fail to observe or perform any covenant, obligation,
condition or agreement set forth in Section 4.3(b), Section 4.3(c), Section
4.3(d), Section 5.1(a), Section 5.1(c), Section 5.1(g), Section 5.2 or Section
5.3; or

                  (c) Breaches of Other Covenants. Borrower or any of its
Subsidiaries shall fail to observe or perform any other covenant, obligation,
condition or agreement contained in this Loan Agreement or the other Loan
Documents (other than those specified in Sections 6.1(a) and 6.1(b)) and such
failure shall continue for thirty (30) days; or

                  (d) Representations and Warranties. Any representation,
warranty, certificate, or other statement (financial or otherwise) made or
furnished by or on behalf of Borrower to Lender in writing in connection with
this Loan Agreement or any of the other Loan Documents, or as an inducement to
Lender to enter into this Loan Agreement, shall be false, incorrect or
misleading in any material respect when made or furnished in light of the
circumstances when made or deemed made; or

                  (e) Other Payment Obligations. Borrower or any of its
Subsidiaries shall (A)(i) fail to make any payment when due under the terms of
any bond, debenture, note or other evidence of Indebtedness to be paid by such
Person (excluding this Loan Agreement and the other Loan Documents but including
any other evidence of Indebtedness of Borrower or any of its Subsidiaries to
Lender) and such failure shall continue beyond any period of grace provided with
respect thereto, or (ii) default in the observance or



                                      -12-


performance of any other agreement, term or condition contained in any such
bond, debenture, note or other evidence of Indebtedness, and (B) the effect of
such failure or default is to cause, or permit the holder or holders thereof to
cause Indebtedness in an aggregate amount of One Hundred Thousand Dollars
($100,000) or more to become due prior to its stated date of maturity; or

                  (f) Voluntary Bankruptcy or Insolvency Proceedings. Borrower
or any of its Subsidiaries shall (i) apply for or consent to the appointment of
a receiver, trustee, liquidator or custodian of itself or of all or a
substantial part of its property, (ii) be unable, or admit in writing its
inability, to pay its debts generally as they mature, (iii) make a general
assignment for the benefit of its or any of its creditors, (iv) be dissolved or
liquidated in full or in part, (v) commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or consent to any such relief or to the appointment of or taking
possession of its property by any official in an involuntary case or other
proceeding commenced against it, or (vi) take any action for the purpose of
effecting any of the foregoing; or

                  (g) Involuntary Bankruptcy or Insolvency Proceedings.
Proceedings for the appointment of a receiver, trustee, liquidator or custodian
of Borrower or any of its Subsidiaries or of all or a substantial part of the
property thereof, or an involuntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to Borrower or any of
its Subsidiaries or the debts thereof under any bankruptcy, insolvency or other
similar law now or hereafter in effect shall be commenced and an order for
relief entered or such proceeding shall not be dismissed or discharged within
sixty (60) days of commencement; or

                  (h) Judgments. A final judgment or order for the payment of
money in excess of One Hundred Thousand Dollars ($100,000) (exclusive of amounts
covered by insurance issued by an insurer not an Affiliate of Borrower) shall be
rendered against Borrower or any of its Subsidiaries and the same shall remain
undischarged for a period of thirty (30) days during which execution shall not
be effectively stayed, or any judgment, writ, assessment, warrant of attachment,
or execution or similar process shall be issued or levied against a substantial
part of the property of Borrower or any of its Subsidiaries and such judgment,
writ, or similar process shall not be released, stayed, vacated or otherwise
dismissed within thirty (30) days after issue or levy; or

                  (i) Loan Documents. Any Loan Document or any material term
thereof shall cease to be, or be asserted by Borrower not to be, a legal, valid
and binding obligation of Borrower enforceable in accordance with its terms or
if the Liens of Lender in any of the assets of Borrower or its Subsidiaries
shall cease to be or shall not be valid, first priority perfected Liens, subject
only to Permitted Liens, or Borrower or any Subsidiary shall assert that such
Liens are not valid, first priority and perfected Liens, subject only to
Permitted Liens; or

                  (j) ERISA. Any Reportable Event occurs which constitutes
grounds for the termination of any Employee Benefit Plan by the PBGC or for the
appointment of a trustee to administer any Employee Benefit Plan, or any
Employee Benefit Plan shall be terminated within the meaning of Title IV of
ERISA or a trustee shall be appointed to administer any Employee Benefit Plan;
or

                  (k) Change in Control. A Change of Control shall occur.

         6.2 Rights of Lender upon Default. Upon the occurrence or existence of
any Event of Default (other than an Event of Default referred to in Sections
6.1(f) and 6.1(g)) and at any time thereafter during the continuance of such
Event of Default, Lender may, by written notice to Borrower, declare all
outstanding



                                      -13-


Obligations payable by Borrower hereunder to be immediately due and payable
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived, anything contained herein or in the Notes to
the contrary notwithstanding. Upon the occurrence or existence of any Event of
Default described in Sections 6.1(f) and 6.1(g), immediately and without notice,
all outstanding Obligations payable by Borrower hereunder shall automatically
become immediately due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived, anything
contained herein or in the Notes to the contrary notwithstanding. In addition to
the foregoing remedies, upon the occurrence or existence of any Event of
Default, Lender may exercise any other right, power or remedy granted to it by
the Loan Documents or otherwise permitted to it by law, either by suit in equity
or by action at law, or both.

         In the event that (i) a Change of Control shall occur within 180 days
following the date of acceleration of the Loans or the exercise of Lender's
remedies pursuant to the Loan Documents or (ii) Borrower shall enter into a
definitive acquisition agreement within 180 days following the date of
acceleration of the Loans or the exercise of Lender's remedies pursuant to the
Loan Documents with a Person other than Lender that could result in a Change of
Control, then in either case, Borrower expressly agrees to pay (whether or not
any Obligations remain outstanding and whether or not Lender has any commitment
to make Loans hereunder) to Lender the Prepayment Fee upon the occurrence of
either event referenced in subsection (i) or (ii) of this sentence. Borrower's
express agreement to pay the Prepayment Fee pursuant to the terms set forth in
the previous sentence shall survive the termination of this Loan Agreement.

ARTICLE 7. MISCELLANEOUS.

         7.1 Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Lender or Borrower under this Agreement or the other Loan Documents shall be in
writing and telecopied, mailed or delivered to each party at its telecopier
number or address set forth below (or to such other telecopier number or address
for any party as indicated in any notice given by that party to the other
party). All such notices and communications shall be effective (a) when sent by
Federal Express or other overnight service of recognized standing, on the
Business Day following the deposit with such service; (b) when mailed by
registered or certified mail, first class postage prepaid and addressed as
aforesaid through the United States Postal Service, upon receipt; (c) when
delivered by hand, upon delivery; and (d) when telecopied, upon confirmation of
receipt; provided, however, that any notice delivered to Lender under Article 2
shall not be effective until received by Lender.

                  Lender:           SIRENZA MICRODEVICES, INC.
                                    522 Almanor Avenue
                                    Sunnyvale, CA 94085
                                    Attn: Chief Financial Officer
                                    Telephone: (408) 616-5400
                                    Telecopier: (408) 739-0970

                  with a copy to:   Wilson Sonsini Goodrich & Rosati, P.C.
                                    650 Page Mill Road
                                    Palo Alto, CA 94304
                                    Attention: Steven V. Bernard
                                    Telephone No.: 650-493-9300
                                    Facsimile No.: 650-493-6811



                                      -14-


                  Borrower:         VARI-L COMPANY, INC.
                                    4895 Peoria St.
                                    Denver, CO 80239
                                    Attn: Chief Financial Officer
                                    Telephone: (303) 371-1560
                                    Telecopier: (303) 373-3868

                  with a copy to:   Cooley Godward LLP
                                    380 Interlocken Crescent, Suite 900
                                    Broomfield, CO 80021
                                    Attention: James Linfield
                                    Telephone No.: 720-566-4000
                                    Facsimile No.: 720-566-4099

         7.2 Expenses. Borrower shall pay on demand all reasonable fees and
expenses, including reasonable attorneys' fees and expenses, incurred by Lender
with respect to the enforcement or attempted enforcement of any of the
Obligations or in preserving any of Lender's rights and remedies (including,
without limitation, all such fees and expenses incurred in connection with any
bankruptcy or similar proceeding involving Borrower or any of its Subsidiaries).

         7.3 Indemnification. Borrower shall indemnify, defend, and hold
harmless Lender and each of Lender's Subsidiaries, Affiliates, directors,
officers, employees and agents (collectively, the "Indemnified Persons"), and
reimburse the Indemnified Persons for, from, and against all demands, claims,
actions or causes of action, assessments, losses, damages, liabilities, costs
and expenses, including, without limitation, interest, penalties and reasonable
attorneys' fees, disbursements and expenses, arising out of or in connection
with (i) any breach by Borrower of any of the representations and warranties
contained in this Loan Agreement or the other Loan Documents, (ii) any failure
by Borrower to perform any covenant, undertaking or obligation hereunder or
under any Loan Document, or (iii) any matter arising out of any use by Borrower
of any proceeds of the Loans, except to the extent such liability arises from
the gross negligence or willful misconduct of the Indemnified Person seeking
indemnity hereunder.

         7.4 Waivers; Amendments. Any term, covenant, agreement or condition of
this Agreement or any other Loan Document may be amended or waived if such
amendment or waiver is in writing and is signed by Borrower and Lender. No
failure or delay by Lender in exercising any right hereunder shall operate as a
waiver thereof or of any other right nor shall any single or partial exercise of
any such right preclude any other further exercise thereof or of any other
right. A waiver or consent given hereunder shall be effective only if in writing
and in the specific instance and for the specific purpose for which given.

         7.5 Successors and Assigns. This Agreement and the other Loan Documents
shall be binding upon and inure to the benefit of Borrower, Lender, all future
holders of the Notes and their respective successors and permitted assigns,
except that neither Borrower nor Lender may assign or transfer any of their
respective rights or obligations under any Loan Document (other than the Common
Stock of Borrower issuable upon conversion of the Tranche A Note) without the
prior written consent of the non-assigning party, except that Lender may,
without the prior written consent of Borrower, assign or transfer its respective
rights and obligations under the Loan Documents in connection with the merger or
consolidation of Lender with or into another Person. All references in this
Agreement to any Person shall be deemed to include all successors and assigns of
such Person.



                                      -15-


         7.6 Set-off. In addition to any rights and remedies of Lender provided
by law, Lender shall have the right, without prior notice to Borrower, any such
notice being expressly waived by Borrower to the extent permitted by applicable
law, upon the occurrence and during the continuance of an Event of Default, to
set-off and apply against any Obligations, whether matured or unmatured, of
Borrower to Lender (including, without limitation, the Obligations), any amount
owing from Lender to Borrower. Lender agrees promptly to notify Borrower after
any such set-off and application made by Lender, provided that the failure to
give such notice shall not affect the validity of such set-off and application.

         7.7 No Third Party Rights. Nothing expressed in or to be implied from
this Agreement or any other Loan Document is intended to give, or shall be
construed to give, any Person, other than the parties hereto and thereto and
their permitted successors and assigns, any benefit or legal or equitable right,
remedy or claim under or by virtue of this Agreement or any other Loan Document.

         7.8 Partial Invalidity. If at any time any provision of this Agreement
is or becomes illegal, invalid or unenforceable in any respect under the law of
any jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.

         7.9 Jury Trial. EACH OF BORROWER AND LENDER, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY AS TO ANY ISSUE RELATING TO ANY LOAN DOCUMENT IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT.

         7.10 Governing Law. THIS LOAN AGREEMENT, THE OTHER LOAN DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO AND THERETO SHALL BE GOVERNED
BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA. ANY ACTION TO ENFORCE THIS AGREEMENT AGAINST BORROWER MAY BE BROUGHT
IN CALIFORNIA OR, WITH REGARD TO COLLATERAL, MAY ALSO BE BROUGHT WHEREVER SUCH
COLLATERAL IS LOCATED.

         7.11 Integration. This Loan Agreement and the Loan Documents constitute
the entire agreement between the Lender, on the one hand, and the Borrower, on
the other, and supercede any prior written or oral agreements or understandings
of the parties. Borrower acknowledges that it is not relying on any
representation or agreement made by any Lender or any employee, agent or
attorney of any Lender, other than the specific agreements set forth in this
Loan Agreement and the Loan Documents.

         7.12 Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.



                                      -16-


         IN WITNESS WHEREOF, the parties have executed this Loan Agreement as of
the date first set forth above.


         Vari-L Company, Inc.

         By: /s/ CHARLES R. BLAND
            ------------------------

         Name: Charles R. Bland

         Title: CEO


         Sirenza Microdevices

         By: /s/ GERALD L. QUINNELL
            ------------------------

         Name: Gerald L. Quinnell

         Title: EVP Business Development





                       [Signature Page to Loan Agreement]


                                   SCHEDULE I


                                   DEFINITIONS


         "Affiliate" shall mean, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially or as a
trustee, guardian or other fiduciary, five percent (5%) or more of any class of
Equity Securities of such Person, (b) each Person that controls, is controlled
by or is under common control with such Person or any Affiliate of such Person
or (c) each of such Person's officers, directors, joint venturers and partners;
provided, however, that in no case shall Lender be deemed to be an Affiliate of
Borrower or any of its Subsidiaries for purposes of this Loan Agreement. For the
purpose of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise.

         "Borrower" shall have the meaning given to that term in the
introductory paragraph hereof.

         "Business Day" shall mean any day other than a Saturday, Sunday or
public holiday under the laws of the State of California or any other day on
which commercial banks are authorized or required to close in the State of
California.

         "Capital Asset" shall mean, with respect to any Person, tangible
property owned or leased (in the case of a Capitalized Lease Obligation) by such
Person, or any expense incurred by any Person that is required by GAAP to be
reported as an asset on such Person's balance sheet.

         "Capital Expenditures" shall mean, with respect to any Person and any
period, all amounts expended and Indebtedness incurred or assumed by such Person
during such period for the acquisition of real property and other Capital Assets
(including amounts expended and Indebtedness incurred or assumed in connection
with Capitalized Lease Obligations).

         "Capitalized Lease Obligations" shall mean any and all obligations
under leases of property (whether real, personal or mixed) that, in accordance
with GAAP, are required to be reported as a capital lease on the balance sheet
of a lessee.

         "Change of Control" shall mean the occurrence of either of the
following:

                  (a) the acquisition by any Person (other than Lender or its
Affiliates) of beneficial ownership, directly or indirectly, through a purchase,
merger or other acquisition transaction or series of transactions, of shares of
capital stock of Borrower entitling such Person to exercise 20% or more of the
total voting power of all shares of capital stock of Borrower entitled to vote
generally in the elections of directors (any shares of voting stock of which
such Person is the beneficial owner that are not then outstanding being deemed
outstanding for purposes of calculating such percentage) other than any such
acquisition by Borrower or any employee benefit plan of Borrower; or

                  (b) any consolidation or merger of Borrower with or into, any
other Person (other than Lender or its Affiliates), any merger of another Person
with or into Borrower, or any conveyance, transfer, sale, lease or other
disposition of all or substantially all of the assets of Borrower to another
Person (other than (a) any such transaction pursuant to which holders of Common
Stock immediately prior to such transaction have the entitlement to exercise,
directly or indirectly, 80% or more of the total voting power of



                                                                     DEFINITIONS
                                      I-1


all shares of capital stock entitled to vote generally in the election of
directors of the continuing or surviving Person immediately after such
transaction.

         "Charter Documents" shall mean, with respect to any Person, the
Articles or Certificate of Incorporation and Bylaws or any other organizational
or governing documents of such Person, in each case as amended to date.

         "Closing Date" shall mean the date on which each of the conditions set
forth in Articles 4.1 shall have been satisfied or waived in writing and the
initial Loan is made.

         "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.

         "Common Stock" shall mean the common stock of Borrower.

         "Contractual Obligation" of any Person shall mean, any indenture, note,
security, deed of trust, mortgage, security agreement, lease, guaranty,
instrument, contract, agreement or other form of obligation or undertaking to
which such Person is a party or by which such Person or any of its property is
bound.

         "Default" shall mean any event or circumstance not yet constituting an
Event of Default but which, with the giving of any notice or the lapse of any
period of time or both, would become an Event of Default.

         "Default Rate" shall have the meaning given to such term in Section
2.7(c).

         "Dollars" and "$" shall mean the lawful currency of the United States
of America and, in relation to any payment under this Loan Agreement, same day
or immediately available funds.

         "Employee Benefit Plan" shall mean any employee benefit plan within the
meaning of section 3(3) of ERISA maintained or contributed to by Borrower or any
ERISA Affiliate, other than a Multiemployer Plan.

         "Environmental Laws" means all Requirements of Law relating to the
protection of human health or the environment, including, without limitation,
all Requirements of Law, pertaining to reporting, licensing, permitting,
investigation, and remediation of emissions, discharges, releases, or threatened
releases of hazardous materials, chemical substances, pollutants, contaminants,
or hazardous or toxic substances, materials or wastes whether solid, liquid, or
gaseous in nature, into the air, surface water, groundwater, or land, or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of chemical substances, pollutants,
contaminants, or hazardous or toxic substances, materials, or wastes, whether
solid, liquid, or gaseous in nature.

         "Equity Securities" of any Person shall mean (a) all common stock,
preferred stock, participations, shares, partnership interests or other equity
interests in and of such Person (regardless of how designated and whether or not
voting or non-voting) and (b) all warrants, options and other rights to acquire
any of the foregoing.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may from time to time be amended or supplemented, including any
rules or regulations issued in connection therewith.

         "ERISA Affiliate" shall mean any Person which is treated as a single
employer with Borrower under section 414 of the Code.



                                                                     DEFINITIONS
                                      I-2


         "Event of Default" shall have the meaning given to that term in Section
6.1.

         "Exclusivity and Right of First Refusal Agreement" shall mean the
Exclusivity and Right of First Refusal Agreement, dated as of the date hereof,
by and between Lender and Borrower.

         "Financial Statements" shall mean, with respect to any accounting
period for any Person, statements of income and of cash flow of such Person for
such period, and balance sheets of such Person as of the end of such period,
setting forth in each case in comparative form figures for the corresponding
period in the preceding fiscal year if such period is less than a full fiscal
year or, if such period is a full fiscal year, corresponding figures from the
preceding fiscal year, all prepared in reasonable detail and in accordance with
GAAP. Unless otherwise indicated, each reference to Financial Statements of any
Person shall be deemed to refer to Financial Statements prepared on a
consolidated basis.

         "GAAP" shall have the meaning given to such term in Section 1.2.

         "Governmental Authority" shall mean any domestic or foreign national,
state or local government, any political subdivision thereof, any department,
agency, authority or bureau of any of the foregoing, or any other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

         "Governmental Charges" shall mean all taxes, levies, assessments, fees,
claims or other charges imposed by any Governmental Authority upon or relating
to (i) Borrower or its Subsidiaries, (ii) the Loans, (iii) employees, payroll,
income or gross receipts of Borrower or its Subsidiaries, (iv) the ownership or
use of any of its assets by Borrower or its Subsidiaries or (v) any other aspect
of the business of Borrower or its Subsidiaries.

         "Governmental Rule" shall mean any law, rule, regulation, ordinance,
order, code interpretation, judgment, decree, directive, guidelines, policy or
similar form of decision of any Governmental Authority.

         "Guaranty Obligations" shall mean, with respect to any Person, any
direct or indirect liability of that Person with respect to any Indebtedness,
lease, dividend, letter of credit or other obligation (the "primary
obligations") of another Person (the "primary obligor"), including any
obligation of that Person, whether or not contingent, (a) to purchase,
repurchase or otherwise acquire such primary obligations or any property
constituting direct or indirect security therefor, or (b) to advance or provide
funds (i) for the payment or discharge of any such primary obligation, or (ii)
to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligor, or (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) otherwise to assure or hold harmless
the holder of any such primary obligation against loss in respect thereof.
Notwithstanding the foregoing, the term "Guaranteed Obligations" shall not
include any indemnification or expense advancement obligations, direct or
indirect, arising under or in connection with Borrower's articles of
incorporation, bylaws, Colorado law, or any agreements providing for
indemnification or expense advancement between Borrower and its current or
former officers, directors, employees or agents.

         "Indebtedness" of any Person shall mean and include the aggregate
amount of, without duplication (a) all obligations of such Person for borrowed
money, (b) all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (c) all obligations of such Person to pay the
deferred purchase



                                                                     DEFINITIONS
                                      I-3


price of property or services (other than accounts payable incurred in the
ordinary course of business determined in accordance with GAAP), (d) all
Capitalized Lease Obligations of such Person, (e) all obligations or liabilities
of others secured by a lien on any asset of such Person, whether or not such
obligation or liability is assumed, (f) all Guaranty Obligations of such Person;
(g) all obligations created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even if
the rights and remedies of the seller or lender under such agreement upon an
event of default are limited to repossession or sale of such property), (h) net
exposure under interest rate interest rate swap, currency swap, currency swap,
forward, cap, floor or other similar contract that is not entered to in
connection with a bona fide hedging operation that provides offsetting benefits
to such Person, which agreements shall be marked to market on a current basis,
(i) all reimbursement and other payment obligations, contingent or otherwise, in
respect of letters of credit. Unless otherwise indicated, the term
"Indebtedness" shall include all Indebtedness of Borrower and its Subsidiaries.

         "Indemnified Persons" has the meaning given in Section 7.3.

         "Investment" of any Person shall mean any loan or advance of funds by
such Person to any other Person (other than advances to employees of such Person
for moving and travel expense, drawing accounts and similar expenditures in the
ordinary course of business), any purchase or other acquisition of any Equity
Securities or Indebtedness of any other Person, any capital contribution by such
Person to or any other investment by such Person in any other Person (including,
without limitation, any Indebtedness incurred by such Person of the type
described in clauses (b) and (c) of the definition of "Indebtedness" on behalf
of any other Person); provided, however, that Investments shall not include
accounts receivable or other indebtedness owed by customers of such Person which
are current assets and arose from sales in the ordinary course of such Person's
business.

         "Lender" shall have the meaning given in the introductory paragraph
hereof.

         "Lien" shall mean, with respect to any property, any security interest,
mortgage, pledge, lien, claim, charge or other encumbrance in, of, or on such
property or the income therefrom, including, without limitation, the interest of
a vendor or lessor under a conditional sale agreement, Capitalized Lease
Obligation or other title retention agreement, and the filing of any financing
statement or similar instrument under the Uniform Commercial Code or comparable
law of any jurisdiction.

         "Loan" shall have the meaning given in Section 2.1.

         "Loan Agreement" shall mean this Loan Agreement.

         "Loan Documents" shall mean and include this Loan Agreement, the Notes,
the Security Agreement, the Exclusivity And Right of First Refusal Agreement,
the Letter Agreement regarding mutual non-disclosure, dated as of October 3,
2002, between Lender and Borrower, the Registration Rights Agreement and all
other documents, instruments and agreements delivered to Lender in connection
with this Loan Agreement, including, without limitation, any account control
agreements or grant of security interests in patents, trademarks or copyrights.

         "Loans" shall have the meaning given in Section 2.1.

         "Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, operations, financial or other condition of Borrower and
its Subsidiaries, taken as a whole (except for continuing losses as



                                                                     DEFINITIONS
                                      I-4


contemplated by Borrower's business plan and projections as previously delivered
to Lender); (b) the rights and remedies of Lender under this Loan Agreement, the
other Loan Documents or any related document, instrument or agreement.

         "Maturity" shall mean, with respect to any Loan, interest, fees or
other amount payable by Borrower under this Loan Agreement or the other Loan
Documents, the date on which such Loan, interest, fee or other amount becomes
due, whether upon the stated maturity or due date, upon acceleration or
otherwise.

         "Multiemployer Plan" shall mean any multiemployer plan within the
meaning of section 3(37) of ERISA maintained or contributed to by Borrower or
any ERISA Affiliate.

         "Notes" shall have the meaning given in Section 2.8.

         "Notice of Borrowing" shall have the meaning given in Section 2.2.

         "Obligations" shall have the meaning given in the Security Agreement.

         "PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.

         "Permitted Indebtedness" shall mean and include:

                  (a) Indebtedness of Borrower to Lender;

                  (b) Indebtedness of Borrower existing as of the date hereof
and as described on the Disclosure Schedule;

                  (c) Indebtedness arising from the endorsement of instruments
in the ordinary course of business;

                  (d) Indebtedness of Borrower under Capitalized Lease
Obligations and operating leases (including any such Indebtedness referenced in
subsection (b) of this definition of Permitted Indebtedness) in an aggregate
amount not to exceed Five Hundred Thousand Dollars ($500,000) at any time; and

                  (e) Other Indebtedness in an aggregate amount not to exceed
Fifty Thousand Dollars ($50,000) at any time.

         "Permitted Investments" shall mean and include:

                  (a) Deposits with commercial banks organized under the laws of
the United States or a state thereof to the extent such deposits are fully
insured by the Federal Deposit Insurance Corporation;

                  (b) Investments in marketable obligations issued or fully
guaranteed by the United States and maturing not more than one (1) year from the
date of issuance; and

                  (c) Investments in open market commercial paper rated at least
"A1" or "P1" or higher by a national credit rating agency and maturing not more
than one (1) year from the creation thereof.

                  (d) Investments pursuant to or arising under currency
agreements or interest rate agreements entered into in the ordinary course of
business;



                                                                     DEFINITIONS
                                      I-5


                  (e) Investments of Borrower existing as of the date hereof and
as described on the Disclosure Schedule;

                  (f) Investments consisting of deposit accounts of Borrower in
which Lender has a perfected security interest; and

                  (g) Other Investment in an aggregate amount not to exceed
Fifty Thousand Dollars ($50,000) at any time.

         "Permitted Liens" shall mean and include:

                  (a) Liens for taxes or other Governmental Charges not at the
time delinquent or thereafter payable without penalty or being contested in good
faith, provided adequate reserves therefore are made in accordance with GAAP;

                  (b) Liens of carriers, warehousemen, mechanics, materialmen,
vendors, and landlords incurred in the ordinary course of business for sums not
overdue or being contested in good faith, provided adequate reserves therefore
are made in accordance with GAAP;

                  (c) Deposits under workers' compensation, unemployment
insurance and social security laws or to secure the performance of bids,
tenders, contracts (other than for the repayment of borrowed money) or leases,
or to secure statutory obligations of surety or appeal bonds or to secure
indemnity, performance or other similar bonds in the ordinary course of
business;

                  (d) Liens arising out of a judgment or award in circumstances
not constituting an Event of Default under Section 6.1(h);

                  (e) Liens securing obligations under a Capitalized Lease
Obligation if such lease is Permitted Indebtedness pursuant to clause (d) of the
definition thereof and such Liens do not extend to property other than the
property leased under such Capitalized Lease Obligation; and

                  (f) Easements, reservations, rights of way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances affecting real property in a manner not materially or adversely
affecting the value or use of such property;

                  (g) Liens in favor of Lender;

                  (h) Leases or subleases and licenses and sublicenses granted
in the ordinary course of business for Borrower or its Subsidiaries;

                  (i) Liens in favor of financial institutions arising in
connection with Borrower's deposit accounts held at such institutions, provided
that Lender has a first priority perfected security interest in the amounts held
in such deposit accounts;

                  (j) Bankers' liens, rights of setoff and similar Liens
incurred on deposits made in the ordinary course of business, provided that with
respect to deposit accounts and investment accounts Lender has a first priority
perfected security interest in the amounts held in such accounts; and

                  (k) Liens existing as of the date hereof and as described on
the Disclosure Schedule.



                                                                     DEFINITIONS
                                      I-6


         "Person" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, a limited
liability company, an unincorporated association, a joint venture or other
entity or a Governmental Authority.

         "Prepayment Fee" means an amount equal to One Million Dollars
($1,000,000).

         "Record" The grid attached to a Tranche B Note, or the continuation of
such grid, or any other similar record, including computer records, maintained
by any Lender with respect to any Tranche B Loan referred to in such Tranche B
Note.

         "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, by and between Borrower and Lender.

         "Reportable Event" shall have the meaning given to that term in ERISA
and applicable regulations thereunder.

         "Requirement of Law" applicable to any Person shall mean (a) the
Charter Documents of such Person, (b) any Governmental Rule applicable to such
Person, (c) any license, permit, approval or other authorization granted by any
Governmental Authority to or for the benefit of such Person and (d) any
judgment, decision or determination of any Governmental Authority or arbitrator,
in each case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.

         "Responsible Officer" shall mean, with respect to any Person, the chief
executive officer, chief financial officer or treasurer of such Person or any
other officer of such Person involved principally in its financial
administration.

         "Securities Act" shall mean the Securities Act of 1933, as amended.

         "Security Agreement" shall have the meaning given in Section 2.10.

         "Solvent" shall mean, with respect to any Person on any date, that on
such date (a) the fair value of the property of such Person is greater than the
fair value of the liabilities (including, without limitation, contingent
liabilities) of such Person, (b) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature and (d) such Person is not engaged in business or a
transaction, and is not about in business or a transaction, for which such
Person's property would constitute an unreasonably small capital.

         "Subsidiary" of any Person shall mean (a) any corporation of which more
than 50% of the issued and outstanding Equity Securities having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Person's other Subsidiaries, (b) any partnership, joint venture, or
other association of which more than 50% of the equity interest having the power
to vote, direct or control the management of such partnership, joint venture or
other association is at the time owned and controlled by such Person, by such
Person and one or more of the other Subsidiaries or by one or more of such
Person's other subsidiaries and (c) any other Person included in the Financial
Statements of such Person on a consolidated basis. Any reference to a Subsidiary
without designation of the ownership of such Subsidiary shall be deemed to refer
to a Subsidiary of Borrower.



                                                                     DEFINITIONS
                                      I-7


                                   SCHEDULE II

                                FUNDING SCHEDULE




   TRANCHE B LOANS AVAILABLE
        ON OR AFTER:(1)                                   AMOUNT AVAILABLE
   -------------------------                              ----------------
                                                       
         October __, 2002                                  $   1,200,000

         November 15, 2002                                 $     600,000

         December 15, 2002                                 $     300,000

         January 15, 2003                                  $     600,000

         February 15, 2003                                 $     150,000

         March 15, 2003                                    $     200,000

         April 15, 2003                                    $     400,000

         May 15, 2003                                      $     300,000

         June 15, 2003                                     $      50,000

         July 15, 2003                                     $      50,000

         August 15, 2003                                   $      50,000

         September 15, 2003                                $      48,000

         TOTAL LOANS                                       $3,948,000.00




- ----------

         (1) To the extent that a date does not fall on a Business Day, then
such Tranche B Loan shall be available on or after the first Business Day
following the date specified above.



                                                                FUNDING SCHEDULE
                                      II-1


                                  SCHEDULE III

                               NOTICE OF BORROWING


                          _____________________, 200__


SIRENZA MICRODEVICES, INC.
522 Almanor Avenue
Sunnyvale, CA 94085
Attn: Chief Financial Officer

         1. Reference is made to that certain Loan Agreement, dated as of
October __, 2002 of (the "Loan Agreement"), between VARI-L COMPANY, INC.
("Borrower") and SIRENZA MICRODEVICES, INC. ("Lender"). Unless otherwise
indicated, all terms defined in the Loan Agreement have the same respective
meanings when used herein.

         2. Pursuant to Section 2.1 and 2.2 of the Loan Agreement, Borrower
hereby requests a Loan upon the following terms:

                  a. The type of Loan shall be a [Tranche A Loan][Tranche B
         Loan].

                  b. The principal amount of the requested Loan is to be
         $__________;

                  c. The date of the requested Loan is to be __________, 200__.

         3. Borrower hereby certifies to Lender that, on the date of such
borrowing and after giving effect to the requested borrowing:

                  a. The representations and warranties set forth in Article 3
         of the Loan Agreement will be true and correct in all material respects
         as if made on such date, except to the extent such representations and
         warranties address matters as of a particular date (which
         representations and warranties shall remain true and correct as of such
         date).

                  b. No Event of Default or Default has occurred and is
         continuing.

                  c. Each of the Loan Documents remains in full force and
         effect.

         4. Please disburse the proceeds of the requested Loan to
________________________.



                                                             NOTICE OF BORROWING
                                     III-1


         IN WITNESS WHEREOF, Borrower has executed this Notice of Borrowing on
the date set forth above.


                                       VARI-L COMPANY, INC.


                                       By:
                                          --------------------------------------

                                       Name:
                                            ------------------------------------

                                       Title:
                                             -----------------------------------



                                                             NOTICE OF BORROWING
                                     III-2


                                   SCHEDULE IV

                               DISCLOSURE SCHEDULE


         Litigation




         Existing Indebtedness




         Existing Investments




         Existing Liens



                                                             DISCLOSURE SCHEDULE
                                      IV-1


                                   SCHEDULE V

                               FINANCIAL COVENANTS




             CALENDAR MONTH                        NET OPERATING LOSS(2)                 CASH USED IN OPERATIONS(3)
             --------------                        ---------------------                 --------------------------
                                                                                   
   As of the last day of October 2002                     $(2,454)                                $(2,174)

   As of the last day of November 2002                    $(1,994)                                $(1,987)

   As of the last day of December 2002                    $(1,585)                                $(2,532)

   As of the last day of January 2003                     $(1,529)                                $(1,734)

   As of the last day of February 2003                    $(1,568)                                $(1,174)

   As of the last day of March 2003                       $(1,489)                                $(1,114)

   As of the last day of April 2003                       $(1,294)                                $  (749)

   As of the last day of May 2003                         $  (700)                                $(1,382)

   As of the last day of June 2003                        $  (274)                                $(1,019)

   As of the last day of July 2003                        $  (246)                                $(1,078)

   As of the last day of August 2003                      $  (376)                                $  (671)




- ----------

         (2) The figures in this column represent the aggregate Net Operating
Loss for the three month period ending on the last day of the calendar month set
forth in the corresponding row above.

         (3) The figures in this column represent the aggregate Cash Used in
Operations for the three month period ending on the last day of the calendar
month set forth in the corresponding row above.



                                                             FINANCIAL COVENANTS
                                      V-1


                                    EXHIBIT A

                       FORM OF TRANCHE A CONVERTIBLE NOTE






         THIS NOTE AND THE COMMON STOCK ISSUABLE UPON ITS CONVERSION HAVE NOT
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

                              VARI-L COMPANY, INC.

                           TRANCHE A CONVERTIBLE NOTE

October 7, 2002                                                    $1,353,861.80

         Vari-L Company, Inc., a Colorado corporation (the "Borrower"), for
value received, hereby promises to pay to Sirenza Microdevices, Inc., the
principal sum of One Million Three Hundred Fifty Three Thousand Eight Hundred
Sixty One Dollars and 80/100 Cents ($1,353,861.80) on September 25, 2003 (the
"Maturity Date") and to pay interest thereon, at the rate of 25% per annum until
the principal hereof is paid in full, and at the Default Rate after the
occurrence and during the continuance of an Event of Default. Borrower shall
make all payments hereunder to Lender as indicated in the Loan Agreement, in
lawful money of the United States and in same day or immediately available
funds. Capitalized terms used and not otherwise defined herein, shall have the
respective meanings given to those terms in the Loan Agreement, dated as of
October 7, 2002 (as amended from time to time, the "Loan Agreement"), by and
between Vari-L Company, Inc. and Sirenza Microdevices, Inc. This Note is the
Tranche A Note referred to in the Loan Agreement. This Note is subject to the
terms of the Loan Agreement, including the rights of prepayment and the rights
of acceleration of maturity.

         1. Payments. All outstanding principal and all accrued interest thereon
shall be due and payable on the Maturity Date.

         2. Prepayments. This Note shall be subject to the prepayment provisions
(both optional prepayment and mandatory prepayment) set forth in Section 2.5 of
the Loan Agreement.

         3. Security. THE OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY A
SECURITY AGREEMENT DATED AS OF THE DATE HEREOF AND EXECUTED BY BORROWER IN FAVOR
OF LENDER. ADDITIONAL RIGHTS OF Lender ARE SET FORTH IN SUCH security AGREEMENT.

         4. Conversion.

                  (a) At Lender's sole option, Lender may convert the
outstanding principal amount due under this Note into the number of shares of
fully paid and nonassessable Common Stock as is determined pursuant to Section
4(b) below, at any time after the earliest to occur of the following:

                           (i) the fifth Business Day prior to Maturity of this
Note;





                           (ii) upon receipt of Borrower's written notice of
Borrower's election to prepay this Note pursuant to Section 2.5(a) of the Loan
Agreement;

                           (iii) upon the date of the commencement of a tender
offer by a Person (other than Lender) to purchase the Common Stock of Borrower
for cash or other assets, including, but not limited to securities of the
acquiring Person; and

                           (iv) the date of execution of a definitive
acquisition agreement with a Person other than Lender that will result in a
Change of Control.

                  (b) The outstanding principal amount due under this Note shall
be convertible into the number of shares of fully paid and nonassessable Common
Stock that constitutes 19.9% of the fully diluted outstanding Common Stock as of
the date of conversion. For purposes of the preceding sentence, the "fully
diluted outstanding Common Stock" shall be determined immediately prior to the
conversion of this Note (except as noted in subsection (iv) below) and shall be
deemed to include:

                           (i) the number of shares of Common Stock actually
outstanding; plus

                           (ii) the number of shares of Common Stock deliverable
upon exercise or conversion of options to purchase or rights to subscribe for
Common Stock; plus

                           (iii) the number of shares of Common Stock
deliverable upon conversion of or in exchange for convertible or exchangeable
securities (other than this Note), or upon exercise of options to purchase or
rights to subscribe for such convertible or exchangeable securities and
subsequent conversion or exchange thereof; plus

                           (iv) the number of shares of Common Stock issuable
pursuant to any memorandum of understanding, settlement agreement or court order
regarding any shareholder class action litigation involving Borrower (giving
full effect to any antidilution adjustments thereto, whether resulting from the
conversion of this Note or otherwise).

         In the event that Borrower declares a record date for a distribution of
Equity Securities to its shareholders prior to the date of conversion which
distribution will occur after the date of conversion, then such Equity
Securities shall be deemed outstanding and included on a Common Stock equivalent
basis in the calculation of Borrower's "fully diluted outstanding Common Stock."

                  (c) If Lender elects to convert the outstanding principal
amount of this Note into Common Stock, then Lender shall:

                           (i) deliver to Borrower at Borrower's address set
forth in Section 7.1 of the Loan Agreement a Conversion Notice in the form
attached hereto as Exhibit A; and

                           (ii) surrender this Note to Borrower, duly endorsed
or assigned to Borrower or in blank, at Borrower's address set forth in Section
7.1 of the Loan Agreement, on or prior to the close of business on the date of
conversion; provided that any failure by Lender to



                                      -2-


surrender this Note as provided herein shall not invalidate the conversion or
the effective date thereof.

         Borrower shall deliver to the Lender not more than three (3) Business
Days' after delivery by Lender of this Note to Borrower the certificates
representing shares of Common Stock issuable upon conversion of this Note. No
fractions of shares or scrip representing fractions of shares will be issued on
conversion, but instead of any fractional interest, Borrower shall round down to
the next higher whole share.

         Upon the date of conversion, Borrower shall pay to Lender all accrued
interest to the date of conversion with respect to this Note.

                  (d) Borrower shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued Common Stock,
for the purpose of effecting the conversion of this Note, the full number of
shares of Common Stock then issuable upon the conversion of this Note.

                  (e) Except as provided in the next sentence, Borrower will pay
any and all taxes and duties that may be payable in respect of the issue or
delivery of Common Stock on conversion of this Note. Borrower shall not,
however, be required to pay any tax or duty which may be payable in respect of
any transfer involved in the issue and delivery of Common Stock in a name other
than that of the holder of this Note, and no such issue or delivery shall be
made unless and until the Person requesting such issue has paid to Borrower the
amount of any such tax or duty, or has established to the satisfaction of
Borrower that such tax or duty has been paid.

                  (f) Borrower agrees that all Common Stock which may be
delivered upon conversion of this Note, upon such delivery, will have been duly
authorized and validly issued and will be fully paid and nonassessable and free
of preemptive rights (and shall be issued out of Borrower's authorized but
unissued Common Stock) and, except as provided in Section 4(e), Borrower will
pay all taxes, liens and charges with respect to the issue thereof.

                  (g) Borrower (i) will effect all registrations with, and
obtain all approvals by, all governmental authorities that may be necessary
under any United States Federal or state law (including the Securities Act, the
Exchange Act and state securities and Blue Sky laws) for the Common Stock
issuable upon conversion of this Note to be lawfully issued and delivered as
provided herein, and thereafter publicly traded (if permissible under the
Securities Act) and qualified or listed as contemplated by clause (ii) (it being
understood that Borrower shall not be required to register the offer, sale or
resale of Common Stock issuable on conversion hereof under the Securities Act
except pursuant to the Registration Rights Agreement between Borrower and
Lender); and (ii) if required, will list the Common Stock required to be issued
and delivered upon conversion of Securities, prior to such issuance or delivery,
on each national securities exchange on which outstanding Common Stock is listed
or quoted at the time of such delivery, or if the Common Stock is not then
listed on any securities exchange, to qualify the Common Stock for quotation on
the Nasdaq National Market or such other inter-dealer quotation system, if any,
on which the Common Stock is then quoted.



                                      -3-


         4. Definitions. The following capitalized terms shall have the
following respective meanings when used herein:

         "Common Stock" means the Common Stock, par value $0.01 per share, of
Borrower authorized at the date of this Note as originally executed. Shares
issuable on conversion of this Note shall include only Common Stock or shares of
any class or classes of common stock resulting from any reclassification or
reclassifications thereof; provided, however, that if at any time there shall be
more than one such resulting class, the shares so issuable on conversion of this
Note shall include shares of all such classes, and the shares of each such class
then so issuable shall be substantially in the proportion which the total number
of shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Trading Day" means (i) if the Common Stock is admitted to trading on
the Nasdaq National Market or any other system of automated dissemination of
quotations of securities prices, a day on which trades may be effected through
such system; (ii) if the Common Stock is listed or admitted for trading on the
New York Stock Exchange or any other national securities exchange, a day on
which such exchange is open for business; or (iii) if the Common Stock is not
admitted to trading on the Nasdaq National Market or listed or admitted for
trading on any national securities exchange or any other system of automated
dissemination of quotation of securities prices, a day on which the Common Stock
is traded regular way in the over-the-counter market and for which a closing bid
and a closing asked price for the Common Stock are available.

         5. Miscellaneous.

                  (a) No provision of this Note shall alter or impair the
obligation of Borrower, which is absolute and unconditional, to pay the
principal of and interest, if any, on this Note at the times, places and rate,
and in the coin or currency, herein prescribed or to convert this Note as herein
provided.

                  (b) This Note and the Common Stock issuable upon conversion of
this Note have not been registered under the Securities Act, or the securities
laws of any state or other jurisdiction. Neither this Note nor the Common Stock
issuable upon conversion of this Note nor any interest or participation herein
may be reoffered, sold, assigned, transferred, or otherwise disposed of (a
"Transfer") in the absence of such registration or unless such transaction is
exempt from, or not subject to the registration requirements of the Securities
Act.

                  (c) Lender by acceptance of this Note, represents that it is
an "accredited investor" within the meaning of Rule 501 of the Securities Act.
Lender by acceptance of this Note, acknowledges that it has been advised that
this Note has not been registered under the Securities Act, or any state
securities laws and, therefore, cannot be resold unless it is registered under
the Securities Act and applicable state securities laws or unless an exemption
from such registration requirements is available. Lender



                                      -4-


by acceptance of this Note, acknowledges that it is aware that Borrower is under
no obligation to effect any such registration or to file for or comply with any
exemption from registration (other than Borrower's obligations under the
Registration Rights Agreement). Lender by acceptance of this Note, represents
that it has not been formed solely for the purpose of making this investment and
is acquiring this Note for its own account for investment, and not with a view
to, or for resale in connection with, the distribution thereof. Lender by
acceptance of this Note, acknowledges that it has such knowledge and experience
in financial and business matters that Lender is capable of evaluating the
merits and risks of such investment, is able to incur a complete loss of such
investment and is able to bear the economic risk of such investment for an
indefinite period of time.

                  (d) Upon receipt by Borrower of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Note,
and in the case of loss, theft or destruction, receipt of indemnity or Note
reasonably satisfactory to Borrower, and upon reimbursement to Borrower of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
such Note, if mutilated, Borrower will deliver a new Note of like tenor and
dated as of such cancellation, in lieu of such Note.

                  (e) If Borrower shall have paid any interest on this Note in
excess of that permitted by law, then it is the express intent of Borrower and
Lender that all excess amounts previously collected by Borrower be applied to
reduce the principal balance of this Note, and the provisions hereof immediately
be deemed reformed and the amounts thereafter collectable as interest hereunder
be reduced, without the necessity of the execution of any new document, so as to
comply with the then applicable law, but so as to permit the recovery of the
fullest amount otherwise called for hereunder.

                  (f) Neither Borrower nor Lender shall Transfer this Note or
delegate any of their respective obligations or rights hereunder without the
prior written consent of the non-assigning party, except that Lender may assign
or transfer, without Borrower's prior written consent, its respective rights and
obligations under this Note in connection with the merger or consolidation of
Lender with or into another Person.

                  (g) Borrower hereby waives presentment, demand, notice of
dishonor, protest, notice of protest and all other demands, protests and notices
relative to the enforcement of this Note. (h) This Note shall be governed by and
construed in accordance with the laws of the State of California.

                  [Remainder of page intentionally left blank.]



                                      -5-


         IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed
as of the date first written above.



                                       VARI-L COMPANY, INC.

                                       By: /s/ CHARLES R. BLAND
                                          --------------------------------------

                                       Name: Charles R. Bland
                                            ------------------------------------

                                       Title: C.E.O.
                                             -----------------------------------



                       [Signature Page to Tranche A Note]


                                    EXHIBIT A

                                CONVERSION NOTICE

         The undersigned holder of this Note hereby:

         [ ]      elects to exercise the option to convert $[_________] of the
                  principal amount of the Tranche A Note into Common Stock in
                  accordance with the terms of the Tranche A Note, and directs
                  that such shares, together with a check in payment for any
                  fractional share, be delivered to and be registered in the
                  name of the undersigned unless a different name has been
                  indicated below.

         [ ]      elects, contingent upon and effective immediately prior to the
                  closing of [insert reference to Change of Control
                  transaction], to exercise the option to convert $[__________]
                  of the principal amount of the Tranche A Note into Common
                  Stock in accordance with the terms of the Tranche A Note, and
                  directs that such shares, together with a check in payment for
                  any fractional share, be delivered to and be registered in the
                  name of the undersigned unless a different name has been
                  indicated below.

         If Common Stock or Securities are to be registered in the name of a
         Person other than the undersigned, the undersigned will pay all
         transfer taxes payable with respect thereto.

         The undersigned directs Borrower to pay Lender all accrued interest to
         the date of conversion upon the date of conversion.

                                       Dated:
                                             -----------------------------------

                                       SIRENZA MICRODEVICES, INC.

                                       By:
                                          --------------------------------------
                                       Name:
                                            ------------------------------------
                                       Title:
                                             -----------------------------------

If shares or Securities are to be registered in the name of a Person other than
the holder, please print such Person's name and address:

- -----------------------------
Name

- -----------------------------
Address

- -----------------------------
Social Note or other Taxpayer Identification Number, if any





                                    EXHIBIT B

                             FORM OF TRANCHE B NOTE





                                 TRANCHE B NOTE


October 7, 2002                                                    $3,946,138.20


         VARI-L COMPANY, INC., a Colorado corporation (the "Borrower"), for
value received, hereby promises to pay to SIRENZA MICRODEVICES, INC., the lesser
of the principal sum of Three Million Nine Hundred Forty Six Thousand One
Hundred Thirty Eight Dollars and 20/100 Cents ($3,946,138.20) or the principal
amount outstanding under this Note on September 25, 2003 (the "Maturity Date")
and to pay interest thereon, at the rate of 25% per annum until the principal
hereof is paid in full, and at the Default Rate after the occurrence and during
the continuance of an Event of Default. Borrower shall make all payments
hereunder to Lender as indicated in the Loan Agreement, in lawful money of the
United States and in same day or immediately available funds. Capitalized terms
used and not otherwise defined herein, shall have the respective meanings given
to those terms in the Loan Agreement, dated as of October 7, 2002 (as amended
from time to time, the "Loan Agreement"), by and between VARI-L COMPANY, INC.
and SIRENZA MICRODEVICES, INC.. This Note is the Tranche B Note referred to in
the Loan Agreement. This Note is subject to the terms of the Loan Agreement,
including the rights of prepayment and the rights of acceleration of maturity.

         1. Payments. All outstanding principal and all accrued interest thereon
shall be due and payable on the Maturity Date.

         2. Prepayments. This Note shall be subject to the prepayment provisions
(both optional prepayment and mandatory prepayment) set forth in Section 2.5 of
the Loan Agreement.

         3. Security. THE OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY A
SECURITY AGREEMENT DATED AS OF THE DATE HEREOF AND EXECUTED BY BORROWER IN FAVOR
OF LENDER. ADDITIONAL RIGHTS OF Lender ARE SET FORTH IN SUCH security AGREEMENT.

         4. Miscellaneous.

                  (a) Borrower irrevocably authorizes Lender to make or cause to
be made, an appropriate notation on the grid attached to this Note, or the
continuation of such grid, or any similar record, including computer records,
reflecting the making of such Tranche B Loan or (as the case may be) the receipt
of a payment or prepayment of such Tranche B Loan. The outstanding amount of the
Tranche B Loans set forth on the grid attached to this Note, or the continuation
of such grid, or any other similar record, including computer records,
maintained by Lender with respect to any Tranche B Loan shall be prima facie
evidence (absent manifest error) of the principal amount thereof owing and
unpaid to such Lender, but the failure to record, or any error in so recording,
any such amount on such Lender's Record shall not limit or otherwise affect the
obligations of the Borrower hereunder or under the Loan Agreement to make
payments of principal of or interest on this Note or the Tranche B Loans when
due.

                  (b) No provision of this Note shall alter or impair the
obligation of Borrower, which is absolute and unconditional, to pay the
principal of and interest, if any, on this Note at the times, places and rate,
and in the coin or currency, herein prescribed or to convert this Note as herein
provided.



                                      B-1


                  (c) Upon receipt by Borrower of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Note,
and in the case of loss, theft or destruction, receipt of indemnity or Note
reasonably satisfactory to Borrower, and upon reimbursement to Borrower of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
such Note, if mutilated, Borrower will deliver a new Note of like tenor and
dated as of such cancellation, in lieu of such Note.

                  (d) If Borrower shall have paid any interest on this Note in
excess of that permitted by law, then it is the express intent of Borrower and
Lender that all excess amounts previously collected by Borrower be applied to
reduce the principal balance of this Note, and the provisions hereof immediately
be deemed reformed and the amounts thereafter collectable as interest hereunder
be reduced, without the necessity of the execution of any new document, so as to
comply with the then applicable law, but so as to permit the recovery of the
fullest amount otherwise called for hereunder.

                  (e) Borrower hereby waives presentment, demand, notice of
dishonor, protest, notice of protest and all other demands, protests and notices
relative to the enforcement of this Note.

                  (f) This Note shall be governed by and construed in accordance
with the laws of the State of California.



                  [Remainder of page intentionally left blank.]



                                      B-2


         IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed
as of the date first written above.


         Vari-L Company, Inc.

         By: /s/ CHARLES R. BLAND
            ------------------------

         Name: Charles R. Bland

         Title: CEO



                                      B-3





                       Amount of Tranche B          Amount of Tranche B        Balance of
        Date                  Loan                     Loan Prepaid         Principal Unpaid           Notation Made By
        ----           -------------------          -------------------     ----------------           ----------------
                                                                                           















                                      B-4


                                    EXHIBIT C

                           FORM OF SECURITY AGREEMENT



                                      C-1


                                    EXHIBIT D

                           FORM OF OPINION OF COUNSEL



                                      D-1

EX-10.33

                                                                   EXHIBIT 10.33


                               SECURITY AGREEMENT


         This Security Agreement (as amended, modified or otherwise supplemented
from time to time, this "SECURITY AGREEMENT"), dated as of October 7, 2002, is
executed by Vari-L Corporation, Inc., a Colorado corporation (together with its
successors and assigns, "DEBTOR"), in favor of Sirenza Microdevices, Inc., a
Delaware corporation as secured party (together with its successors and assigns,
"SECURED PARTY").

                                    RECITALS

         A. Debtor and Secured Party have entered into a Loan Agreement, dated
as of the date hereof, which provides up to $5.3 million in term loans (as
amended, modified or otherwise supplemented from time to time, the "LOAN
AGREEMENT").

         B. In order to induce Secured Party to extend the credit evidenced by
the Loan Agreement, Debtor has agreed to enter into this Security Agreement and
to grant Secured Party the security interest in the Collateral described below.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Debtor hereby agrees with Secured Party as follows:

         1. Definitions and Interpretation. When used in this Security
Agreement, the following terms have the following respective meanings:

                  "COLLATERAL" has the meaning given to that term in Section 2
hereof.

                  "OBLIGATIONS" means all loans, advances, debts, liabilities
and obligations, howsoever arising, owed by Debtor to the Secured Party of every
kind and description (whether or not evidenced by any note or instrument and
whether or not for the payment of money), now existing or hereafter arising
under or pursuant to the terms of the Loan Agreement, the Notes or any other
Loan Document, including, all interest, fees, charges, expenses, attorneys' fees
and costs and accountants' fees and costs chargeable to and payable by Debtor
hereunder and thereunder, in each case, whether direct or indirect, absolute or
contingent, due or to become due, and whether or not arising after the
commencement of a proceeding under Title 11 of the United States Code (11 U.S.C.
Section 101 et seq.), as amended from time to time (including post-petition
interest) and whether or not allowed or allowable as a claim in any such
proceeding.

                  "UCC" means the Uniform Commercial Code as in effect in the
State of California from time to time (and each reference in this Security
Agreement to an Article or Division thereof shall refer to that Article or
Division as from time to time in effect); provided, however, in the event that,
by reason of mandatory provisions of law, any or all of the perfection or
priority of the Secured Party's security interest in any Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other than the
State of California, the term "UCC" shall mean the Uniform Commercial Code
(including the Articles or Divisions thereof) as in effect at such time in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or priority and for purposes of definitions related to such
provisions.




All capitalized terms not otherwise defined herein shall have the respective
meanings given in the Loan Agreement. Terms defined in the UCC and not otherwise
defined herein shall have the respective meanings set forth in the UCC.


         2. Grant of Security Interest. As security for the Obligations, Debtor
hereby pledges to Secured Party and grants to Secured Party a security interest
of first priority, subject only to Permitted Liens, in all right, title and
interests of Debtor in and to the property described in Attachment 1 hereto,
whether now existing or hereafter from time to time acquired (collectively, the
"COLLATERAL"). Notwithstanding the foregoing provisions of this Section 2, the
pledge and grant of a security interest as provided herein shall not extend to,
and the term "Collateral" shall not include: "intent-to-use" trademarks at all
times prior to the first use thereof, whether by the actual use thereof in
commerce, the recording of a statement of use with the United States Patent and
Trademark Office or otherwise.

         3. Representations and Warranties. Debtor represents and warrants to
Secured Party that:

                  (a) Collateral. (i) Except as set forth in Article 3.7 of the
Disclosure Schedule (as defined in and attached to the Loan Agreement) (the
"DISCLOSURE SCHEDULE") the Debtor is the owner of the Collateral (or, in the
case of after-acquired Collateral, at the time Debtor acquires rights in the
Collateral, will be the owner thereof) and that no other Person has (or, in the
case of after-acquired Collateral, at the time Debtor acquires rights therein,
will have) any right, title, claim or interest (by way of Lien or otherwise) in,
against or to the Collateral, other than Permitted Liens; (ii) upon the filing
of UCC-1 financing statements in the appropriate filing offices, Secured Party
has (or in the case of after-acquired Collateral, at the time Debtor acquires
rights therein, will have) a first priority perfected security interest in the
Collateral to the extent that a security interest in the Collateral can be
perfected by such filing, except for Permitted Liens; (iii) all inventory has
been (or, in the case of hereafter produced inventory, will be) produced in
compliance with the Fair Labor Standards Act and all other material applicable
laws; (iv) all accounts receivable and payment intangibles are bona fide and
existing obligations; (v) the originals of all documents evidencing all accounts
receivable and payment intangibles of Debtor and the only original books of
account and records of Debtor relating thereto are, and will continue to be,
kept at the chief executive office of Debtor set forth on Schedule B or at such
other locations as Debtor may establish in accordance with Section 4(d), and (f)
all information set forth in Schedules A and B hereto is true and correct.

                  (b) Intellectual Property. (i) Debtor does not own any
patents, trademarks, copyrights or mask works registered in, or the subject of
pending applications in, the Patent and Trademark Office or the Copyright Office
or any similar offices or agencies in any other country or any political
subdivision thereof, other than those described on Schedule A hereto; (ii)
Debtor has, except for Permitted Liens, the sole, full and unencumbered right,
title and interest in and to the trademarks shown on Schedule A and the goods
and services covered by the registrations thereof and, such trademarks are valid
and enforceable and in full force and effect; (iii) except as set forth in
Article 3.7 of the Disclosure Schedule, Debtor has, except for Permitted Liens,
the sole, full and unencumbered right, title and interest in and to each of the
patents shown on Schedule A, such patents are valid and enforceable and in full
force and effect; (iv) Debtor has, except for Permitted Liens, the sole, full
and unencumbered right, title and interest in and to each of the copyrights
shown on Schedule A, such copyrights are valid and enforceable and in full force
and effect; (v) Debtor has, except for Permitted Liens, the sole, full and
encumbered right, title and interest in and to the mask works shown on Schedule
A such mask works are valid and enforceable and in full force and effect; (vi)
except as set forth in Article 3.6 of the Disclosure Schedule, there is no claim
by any third party that any such patents, trademarks, copyrights or mask works
are invalid and unenforceable or do or may violate the rights of any Person;
(vii) all licenses (other than non-exclusive licenses to end-users) of patents,
trademarks, copyrights, mask works and trade secrets which Debtor has granted to
any Person are set forth in Schedule A hereto; (viii) all licenses of patents,
trademarks, copyrights, mask works and trade secrets which any Person has
granted to



                                      -2-



Debtor are set forth on Schedule A hereto, other than those licenses of patents,
trademarks, copyrights, mask works and trade secrets consisting of "off the
shelf" software or standard products; (ix) except as set forth in Article 3.7 of
the Disclosure Schedule, Debtor has obtained from each employee who may be
considered the inventor of patentable inventions (invented within the scope of
such employee's employment) an assignment to Debtor of all rights to such
inventions, including patents; and (x) Debtor has taken all reasonable steps
necessary to protect the secrecy and the validity under applicable law of all
material trade secrets.

         4. Covenants Relating to Collateral. Debtor hereby agrees, except as
otherwise permitted by the terms hereof or the terms of the Loan Agreement (a)
to perform all acts that may be necessary to maintain, preserve, protect and
perfect the Collateral, the Lien granted to Secured Party therein and the
perfection and priority of such Lien, except for Permitted Liens; (b) not to use
or permit any Collateral to be used (i) in violation in any material respect of
any applicable law, rule or regulation of any Governmental Authority, or (ii) in
violation of any policy of insurance covering the Collateral; (c) to pay
promptly when due all taxes and other Governmental Charges, unless contested in
good faith and for which adequate reserves therefor are made in accordance with
GAAP, all Liens and all other charges now or hereafter imposed upon or affecting
any Collateral, other than Permitted Liens; (d) without 30 days' written notice
to Secured Party, (i) not to change Debtor's name or place of business (or, if
Debtor has more than one place of business, its chief executive office), or the
office in which Debtor's records relating to accounts receivable and payment
intangibles are kept, (ii) not to change Debtor's state of incorporation, (iii)
not to keep Collateral consisting of chattel paper at any location other than
its chief executive office set forth in item 1 of Schedule B hereto, and (iv)
not to keep Collateral consisting of equipment or inventory at any location
other than the locations set forth in item 6 of Schedule B hereto, (f) to
procure, execute and deliver from time to time any endorsements, assignments,
financing statements and other writings reasonably deemed necessary or
appropriate by Secured Party to perfect, maintain and protect its Lien hereunder
and the priority thereof and to deliver promptly to Secured Party all originals
of Collateral consisting of instruments; (g) to appear in and defend any action
or proceeding which may adversely affect its title to or Secured Party's
interest in the Collateral; (h) if Secured Party gives value to enable Debtor to
acquire rights in or the use of any Collateral, to use such value for such
purpose; (i) to keep separate, accurate and complete records of the Collateral
and to provide Secured Party with such records and such other reports and
information relating to the Collateral as Secured Party may reasonably request
from time to time; (j) not to surrender or lose possession of (other than to
Secured Party), sell, encumber, lease, rent, or otherwise dispose of or transfer
any Collateral or right or interest therein except as otherwise permitted in the
Loan Agreement, and to keep the Collateral free of all Liens except Permitted
Liens; (k) if requested by Secured Party, to type, print or stamp conspicuously
on the face of all original copies of all Collateral consisting of chattel paper
a legend satisfactory to Secured Party indicating that such chattel paper is
subject to the security interest granted hereby; (l) to collect, enforce and
receive delivery of the accounts receivable and payment intangibles in
accordance with past practice until otherwise notified by Secured Party; (m) to
comply with all material Requirements of Law relating to the production,
possession, operation, maintenance and control of the Collateral (including the
Fair Labor Standards Act); and (n) to permit Secured Party and its
representatives the right, at any time during normal business hours, upon
reasonable prior notice, to visit and inspect the properties of Debtor and its
corporate, financial and operating records, and make abstracts therefrom, and to
discuss Debtor's affairs, finances and accounts with its directors, officers and
independent public accountants.

         5. Covenants Regarding Intellectual Property. Debtor hereby agrees:

                  (a) Debtor will perform all acts and execute all documents,
including notices of security interest for each relevant type of intellectual
property in forms suitable for filing with the Patent and Trademark Office or
the Copyright Office, that may be necessary or desirable to record, maintain,
preserve, protect and perfect Secured Party's interest in the Collateral, the
Lien granted to Secured Party in the Collateral and the first priority of such
Lien;



                                      -3-




                  (b) Except to the extent that Secured Party gives its prior
written consent:

                           (i) Debtor (either itself or through licensees) will
continue to use its material trademarks in connection with each and every
trademark class of goods or services applicable to its current line of products
or services as reflected in its current catalogs, brochures, price lists or
similar materials in order to maintain such trademarks in full force and effect
free from any claim of abandonment for nonuse, and Debtor will not (and will not
permit any licensee thereof to) do any act or knowingly omit to do any act
whereby any material trademark may become invalidated;

                           (ii) Debtor will not do any act or omit to do any act
whereby any material patent registrations may become abandoned or dedicated to
the public domain or the remedies available against potential infringers
weakened and shall notify Secured Party immediately if it knows of any reason or
has reason to know that any material patent registration may become abandoned or
dedicated; and

                           (iii) Debtor will not do any act or omit to do any
act whereby any material registered copyrights or mask works may become
abandoned or dedicated to the public domain or the remedies available against
potential infringers weakened and shall notify Secured Party immediately if it
knows of any reason or has reason to know that any material copyright or mask
work may become abandoned or dedicated to the public domain.

                  (c) Debtor will promptly (and in any event within 5 Business
Days) notify Secured Party upon the filing, either by Debtor or through any
agent, employee, licensee or designee, of (i) an application for the
registration of any patent, trademark, copyright or mask work with the Patent
and Trademark Office or the Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, (ii) any assignment of
any patent or trademark, which Debtor may acquire from a third party, with the
Patent and Trademark Office or any similar office or agency in any other country
or any political subdivision thereof, or (iii) any assignment of any copyright
or mask work, which Debtor may acquire from a third party, with the Copyright
Office or any similar office or agency in any other country or any political
subdivision thereof. Debtor will promptly (and in any event within 5 Business
Days) notify Secured Party of the registration of any patent, trademark,
copyright or mask work with the Patent and Trademark Office or the Copyright
office or any similar office or agency in any other country or any political
subdivision thereof. Upon the request of Secured Party, Debtor shall execute and
deliver any and all assignments, agreements, instruments, documents and papers
as Secured Party may request to evidence Secured Party's security interest in
such patent, trademark (and the goodwill and general intangibles of Debtor
relating thereto or represented thereby), copyright or mask work, and Debtor
authorizes Secured Party to amend an original counterpart of the applicable
notice of security interest executed pursuant to Section 6(a) of this Security
Agreement without first obtaining Debtor's approval of or signature to such
amendment and to record such document with the Patent and Trademark Office or
Copyright Office, as applicable.

                  (d) Debtor will take all necessary steps in any proceeding
before the Patent and Trademark Office, the Copyright Office or any similar
office or agency in any other country or any political subdivision thereof, to
diligently prosecute or maintain, as applicable, each material application and
registration of the patents, trademarks, copyrights and mask works, including
filing of renewals, affidavits of use, affidavits of incontestability and
opposition, interference and cancellation proceedings (except to the extent that
dedication, abandonment or invalidation is permitted hereunder);

                  (e) While any Obligations are outstanding, Debtor shall (i)
make application to the Patent and Trademark Office to register any material
unpatented but patentable inventions developed by Debtor or its employees
(within the scope of their employment), unless Debtor, in the exercise of its
reasonable business judgment, deems any such patent not to have any significant
commercial value or determines that its rights



                                      -4-



thereunder are better preserved as a trade secret; (ii) make application to the
Patent and Trademark Office to register any registerable but unregistered
material trademarks used by Debtor in connection with its products or services;
and (iii) upon Secured Party's written request, make application to the
Copyright Office to register any material unregistered copyright or mask work to
which Debtor has rights;

                  (f) Debtor shall (i) use proper statutory notice in connection
with its use of the material patents, trademarks, copyrights and mask works,
(ii) maintain consistent standards of quality in its manufacture of products
sold under the trademarks or provision of services in connection with the
trademarks, and (iii) take all steps necessary to protect the secrecy and the
validity under applicable law of all material trade secrets;

                  (g) Debtor agrees that if it learns of any use by any Person
of any term or design likely to cause confusion with any material trademark,
Debtor shall promptly notify Secured Party of such use and of all steps taken
and to be taken to remedy any infringement of any material trademark; and

                  (h) Debtor shall maintain with each employee who may have
access to the trade secrets of Debtor an agreement by which such employee agrees
not to disclose such trade secrets and with each employee who may be the
inventor of patentable inventions (invented within the scope of such employee's
employment) an invention assignment agreement requiring such employee to assign
all rights to such inventions, including patents and patent applications, to
Debtor and further requiring such employee to cooperate fully with Debtor, its
successors in interest, including Secured Party, and their counsel, in the
prosecution of any patent application or in any litigation involving the
invention, whether such cooperation is required during such employee's
employment with Debtor or after the termination of such employment.

         6. Authorized Action by Secured Party. Debtor hereby irrevocably
appoints Secured Party as its attorney-in-fact (which appointment is coupled
with an interest) and agrees that Secured Party may perform (but Secured Party
shall not be obligated to and shall incur no liability to Debtor or any third
party for failure so to do) any act which Debtor is obligated by this Security
Agreement to perform, and to exercise such rights and powers as Debtor might
exercise with respect to the Collateral, including the right to (a) collect by
legal proceedings or otherwise and endorse, receive and receipt for all
dividends, interest, payments, proceeds and other sums and property now or
hereafter payable on or on account of the Collateral; (b) enter into any
extension, reorganization, deposit, merger, consolidation or other agreement
pertaining to, or deposit, surrender, accept, hold or apply other property in
exchange for the Collateral; (c) make any compromise or settlement, and take any
action it deems advisable, with respect to the Collateral; (d) insure, process
and preserve the Collateral; (e) pay any indebtedness of Debtor relating to the
Collateral; and (f) execute UCC financing statements and other documents,
instruments and agreements required hereunder; provided, however, that Secured
Party shall not exercise any such powers granted pursuant to subsections (a)
through (c) prior to the occurrence of an Event of Default and shall only
exercise such powers during the continuance of an Event of Default. Debtor
agrees to reimburse Secured Party upon demand for any reasonable costs and
expenses, including attorneys' fees, Secured Party may incur while acting as
Debtor's attorney-in-fact hereunder, all of which costs and expenses are
included in the Obligations. It is further agreed and understood between the
parties hereto that such care as Secured Party gives to the safekeeping of its
own property of like kind shall constitute reasonable care of the Collateral
when in Secured Party's possession; provided, however, that Secured Party shall
not be required to make any presentment, demand or protest, or give any notice
and need not take any action to preserve any rights against any prior party or
any other person in connection with the Obligations or with respect to the
Collateral.

         7. Litigation and Other Proceedings. Upon the occurrence and during the
continuation of an Event of Default, Secured Party shall have the right but not
the obligation to bring suit or institute proceedings in the name of Debtor or
Secured Party to enforce any rights in the Collateral, including any license
thereunder, in



                                      -5-



which event Debtor shall at the request of Secured Party do any and all lawful
acts and execute any and all documents reasonably required by Secured Party in
aid of such enforcement. If Secured Party elects not to bring suit to enforce
any right under the Collateral, including any license thereunder, Debtor agrees
to use all reasonable measures, whether by suit, proceeding or other action, to
cause to cease any infringement of any right under the Collateral by any Person
and for that purpose agrees to diligently maintain any action, suit or
proceeding against any Person so infringing necessary to prevent such
infringement.

         8. Default and Remedies.

                  (a) Default. Debtor shall be deemed in default under this
Security Agreement upon the occurrence and during the continuance of an Event of
Default.

                  (b) Remedies. Upon the occurrence and during the continuance
of any such Event of Default, Secured Party shall have the rights of a secured
creditor under the UCC, all rights granted by this Security Agreement and by
law, including the right to: (a) require Debtor to assemble the Collateral and
make it available to Secured Party at a place to be designated by Secured Party;
and (b) prior to the disposition of the Collateral, store, process, repair or
recondition it or otherwise prepare it for disposition in any manner and to the
extent Secured Party deems appropriate and in connection with such preparation
and disposition, without charge, use any trademark, trade name, copyright,
patent or technical process used by Debtor. Debtor hereby agrees that ten (10)
days' notice of any intended sale or disposition of any Collateral is
reasonable. In furtherance of Secured Party's rights hereunder, Debtor hereby
grants to Secured Party an irrevocable, non-exclusive license (exercisable
without royalty or other payment by Secured Party, but only in connection with
the exercise of remedies hereunder) to use, license or sublicense any patent,
trademark, trade name, copyright or other intellectual property in which Debtor
now or hereafter has any right, title or interest together with the right of
access to all media in which any of the foregoing may be recorded or stored.


         9. Miscellaneous.

                  (a) Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Debtor or Secured Party under this Security Agreement shall be made in
accordance with Section 7.1 of the Loan Agreement.

                  (b) Nonwaiver. No failure or delay on Secured Party's part in
exercising any right hereunder shall operate as a waiver thereof or of any other
right nor shall any single or partial exercise of any such right preclude any
other further exercise thereof or of any other right.

                  (c) Amendments and Waivers. This Security Agreement may not be
amended or modified, nor may any of its terms be waived, except by written
instruments signed by Debtor and Secured Party. Each waiver or consent under any
provision hereof shall be effective only in the specific instances for the
purpose for which given.

                  (d) Assignments. This Security Agreement shall be binding upon
and inure to the benefit of Secured Party and Debtor and their respective
successors and assigns; provided, however, that neither Secured Party nor Debtor
may sell, assign or delegate their respective rights and obligations hereunder
without the prior written consent of the other party hereto, except that Lender
may assign or transfer, without Debtor's prior written consent, its respective
rights and obligations under this Security Agreement in connection with the
merger or consolidation of Lender with or into another Person.

                  (e) Cumulative Rights, etc. The rights, powers and remedies of
Secured Party under this Security Agreement shall be in addition to all rights,
powers and remedies given to Secured Party by virtue of



                                      -6-



any applicable law, rule or regulation of any governmental authority, the Loan
Documents or any other agreement, all of which rights, powers, and remedies
shall be cumulative and may be exercised successively or concurrently without
impairing Secured Party's rights hereunder. Debtor waives any right to require
Secured Party to proceed against any Person or to exhaust any Collateral or to
pursue any remedy in Secured Party's power.

                  (f) Payments Free of Taxes, Etc. All payments made by Debtor
under the Loan Documents shall be made by Debtor free and clear of and without
deduction for any and all present and future taxes, levies, charges, deductions
and withholdings. In addition, Debtor shall pay upon demand any stamp or other
taxes, levies or charges of any jurisdiction with respect to the execution,
delivery, registration, performance and enforcement of this Security Agreement.
Upon request by Secured Party, Debtor shall furnish evidence satisfactory to
Secured Party that all requisite authorizations and approvals by, and notices to
and filings with, governmental authorities and regulatory bodies have been
obtained and made and that all requisite taxes, levies and charges have been
paid.

                  (g) Partial Invalidity. If at any time any provision of this
Security Agreement is or becomes illegal, invalid or unenforceable in any
respect under the law or any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Security Agreement nor the
legality, validity or enforceability of such provision under the law of any
other jurisdiction shall in any way be affected or impaired thereby.

                  (h) Expenses. Debtor shall pay on demand all reasonable fees
and expenses, including reasonable attorneys' fees and expenses, incurred by
Secured Party in connection with custody, preservation or sale of, or other
realization on, any of the Collateral or the enforcement or attempt to enforce
any of the Obligations which is not performed as and when required by this
Security Agreement.

                  (i) Headings. Headings in this Security Agreement and each of
the other Loan Documents are for convenience of reference only and are not part
of the substance hereof or thereof.

                  (j) Plural Terms. All terms defined in this Security Agreement
or any other Loan Document in the singular form shall have comparable meanings
when used in the plural form and vice versa.

                  (k) Construction. Each of this Security Agreement and the
other Loan Documents is the result of negotiations among, and has been reviewed
by, Debtor, Secured Party and their respective counsel. Accordingly, this
Security Agreement and the other Loan Documents shall be deemed to be the
product of all parties hereto, and no ambiguity shall be construed in favor of
or against Debtor or Secured Party.

                  (l) Entire Agreement. This Security Agreement and each of the
other Loan Documents, taken together, constitute and contain the entire
agreement of Debtor and Secured Party and supersede any and all prior
agreements, negotiations, correspondence, understandings and communications
among the parties, whether written or oral, respecting the subject matter
hereof.

                  (m) Other Interpretive Provisions. References in this Security
Agreement and each of the other Loan Documents to any document, instrument or
agreement (a) includes all exhibits, schedules and other attachments thereto,
(b) includes all documents, instruments or agreements issued or executed in
replacement thereof, and (c) means such document, instrument or agreement, or
replacement or predecessor thereto, as amended, modified and supplemented from
time to time and in effect at any given time. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Security Agreement or
any other Loan Document refer to this Security Agreement or such other Loan
Document, as the case may be, as a whole and not to any particular provision of
this Security Agreement or such other Loan Document,



                                      -7-



as the case may be. The words "include" and "including" and words of similar
import when used in this Security Agreement or any other Loan Document shall not
be construed to be limiting or exclusive.

                  (a) Governing Law. This Security Agreement shall be governed
by and construed in accordance with the laws of the State of California without
reference to conflicts of law rules (except to the extent governed by the UCC).

            [The remainder of this page is intentionally left blank]



                                      -8-





         IN WITNESS WHEREOF, Debtor has caused this Security Agreement to be
executed as of the day and year first above written.


                                          Vari-L Company, Inc.

                                          By: /s/ CHARLES R. BLAND
                                             ------------------------

                                          Name: Charles R. Bland

                                          Title: CEO

Agreed To:

Sirenza Microdevices

By: /s/ Gerald L. Quinnell
   -------------------------

Name: Gerald L. Quinnell

Title: EVP Business Development



                     [Signature Page to Security Agreement]







                                  ATTACHMENT 1

                              TO SECURITY AGREEMENT

         All right, title, interest, claims and demands of Debtor in and to the
following property:

                  (i) All goods and equipment now owned or hereafter acquired,
including, without limitation, all laboratory equipment, computer equipment,
office equipment, machinery, fixtures, vehicles, and any interest in any of the
foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing, wherever
located;

                  (ii) All inventory now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Debtor's custody or possession or in transit
and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and Debtor's
books relating to any of the foregoing;

                  (iii) All contract rights, general intangibles, health care
insurance receivables, payment intangibles and commercial tort claims, now owned
or hereafter acquired, including, without limitation, all patents, patent rights
(and applications and registrations therefor), trademarks and service marks (and
applications and registrations therefor), inventions, copyrights, mask works
(and applications and registrations therefor), trade names, trade styles,
software and computer programs, trade secrets, methods, processes, know how,
drawings, specifications, descriptions, and all memoranda, notes, and records
with respect to any research and development, goodwill, license agreements,
franchise agreements, blueprints, drawings, purchase orders, customer lists,
route lists, infringements, claims, computer programs, computer disks, computer
tapes, literature, reports, catalogs, design rights, income tax refunds,
payments of insurance and rights to payment of any kind and whether in tangible
or intangible form or contained on magnetic media readable by machine together
with all such magnetic media;

                  (iv) All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations owing to
Debtor arising out of the sale or lease of goods, the licensing of technology or
the rendering of services by Debtor (subject, in each case, to the contractual
rights of third parties to require funds received by Debtor to be expended in a
particular manner), whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Debtor and Debtor's books relating to any of the
foregoing;

                  (v) All documents, cash, deposit accounts, letters of credit,
letter of credit rights, supporting obligations, certificates of deposit,
instruments, chattel paper, electronic chattel paper, tangible chattel paper and
investment property, including, without limitation, all securities, whether
certificated or uncertificated, security entitlements, securities accounts,
commodity contracts and commodity accounts, and all financial assets held in any
securities account or otherwise, wherever located, now owned or hereafter
acquired and Debtor's books relating to the foregoing; and

                  (vi) Any and all claims, rights and interests in any of the
above and all substitutions for, additions and accessions to and proceeds
thereof, including, without limitation, insurance, condemnation, requisition or
similar payments and the proceeds thereof.







                                   SCHEDULE A
                              TO SECURITY AGREEMENT

                                   COPYRIGHTS




Description                                Registration Date                       Registration No.
- -----------                                -----------------                       ----------------
                                                                             

None.


                                     PATENTS



Title                                            Date Issued              Country                  Patent No.
- -----                                            -----------              -------                  ----------
                                                                                          
Wide Range Electronic Oscillator                 November 4, 1986         USA                      4,621,241

Wide Range Electronic Oscillator                                          Singapore                95  90657-4

Wide Range Electronic Oscillator                                          Hong Kong                821/1995

Wide Range Electronic Oscillator                                          Canada                   1,267,941

Wide Range Electronic Oscillator                                          United Kingdom           0,207,650

Wide Range Electronic Oscillator                                          Austria                  0,207,650

Wide Range Electronic Oscillator                                          Sweden                   86304343

Wide Range Electronic Oscillator                                          Belgium                  0,207,650

Wide Range Electronic Oscillator                                          Italy                    0,207,650

Wide Range Electronic Oscillator                                          France                   0,207,650

Wide Range Electronic Oscillator                                          Germany                  0,207,650

Wide Range Electronic Oscillator                                          Netherlands              0,207,650

Wide Range Electronic Oscillator                                          Switzerland              0,207,650

Multiple Single Layer Monolithic Passive
Integrated Circuits and Methods                  May 11, 1999             USA                      5,903,431

Oscillator Voltage Regulator                     October 7, 1997          USA                      5,675,478

Oscillator Voltage Regulator                                              Eurasian                 199900014

OSCILLATOR VOLTAGE REGULATOR                                              EPC APP. NO.             97924617.0

Oscillator Voltage Regulator                                              Australia                29998/97

Oscillator Voltage Regulator                                              Norway                   19990202

Oscillator Voltage Regulator                                              China                    97196418.1

Oscillator Voltage Regulator                                              Canada                   2,259,662

High Impedance Ratio Wideband Transformer
Circuit                                          April 8, 1997            USA                      2,619,172

High Impedance Ratio Wideband Transformer
Circuit                                                                   Australia                704537

High Impedance Ratio Wideband Transformer
Circuit                                                                   Canada                   2,231,832








Title                                            Date Issued              Country                  Patent No.
- -----                                            -----------              -------                  ----------
                                                                                          
High Impedance Ratio Wideband Transformer
Circuit                                                                   EPC                      96930789.1

High Impedance Ratio Wideband Transformer
Circuit                                                                   Brazil                   PI9610500-3

High Impedance Ratio Wideband Transformer
Circuit                                                                   China                    96197553.9

High Impedance Ratio Wideband Transformer
Circuit                                                                   Norway                   19981086

Unbalanced to Balanced High Impedance Ratio
Wideband Transformer Circuit                     April 21, 1998           USA                      5,742,213

Orthogonally Mounted Substrate Based Resonators  February 2, 1999         USA                      5,867,069

Orthogonally Mounted Substrate Based Resonators                           EPC                      98925304.2

Orthogonally Mounted Substrate Based Resonators                           China                    98805934.7

Orthogonally Mounted Substrate Based Resonators                           Singapore                9906005-5

Orthogonally Mounted Substrate Based Resonators                           Norway                   19996139

Orthogonally Mounted Substrate Based Resonators                           Australia                77289/98

Orthogonally Mounted Substrate Based Resonators                           Canada                   2,289,538

Oscillator Selectively Operable with a
Parallel Tuned or a Series Tuned Resonant
Circuit (Switched Mode Oscillator)               November 9, 1999         USA                      5,982,243

Continuously Adjustable Resonator                January 5, 1999          USA                      5,856,769

Continuously Adjustable Resonator                                         China                    98806014.0

Continuously Adjustable Resonator                                         EPC                      98926521.0

Continuously Adjustable Resonator                                         Canada                   2,293,357

Continuously Adjustable Resonator                                         Norway                   19996138

Continuously Adjustable Resonator                                         Australia                78340/98

Continuously Adjustable Resonator                                         Japan                    503159/99

Continuously Adjustable Resonator                                         Singapore                9906033-7

First and Second Oscillator Circuits Selectively
Coupled Through Passive Output Circuit to a Loan
(Passive Switched Oscl. Output Circuit)          December 19, 2000        USA                      5,999,061

Oscillator with Power Conservation Mode          December 19, 2000        USA                      6,163,228





                               PATENT APPLICATIONS




Title                                      Application Date                        Application No.
- -----                                      -----------------                       ---------------
                                                                             
Ferrite Crystal Resonator Structure        11/29/01                                [_______]


                                   TRADEMARKS



Mark                                             Registration Date        Country                  Registration No.
- ----                                             -----------------        -------                  ----------------
                                                                                          
VARI-L                                           March 17, 1998           USA                      2,144,712

VARI-L Trademark                                 March 10, 1998           USA                      2,142,727

VARI-L Trademark                                                          Korea                    457,609

VARI-L Trademark                                                          Australia                776,901

VARI-L Trademark                                                          Puerto Rico              44,792

VARI-L Trademark                                                          Norway                   196,837

VARI-L Trademark                                                          Israel                   124,416

VARI-L Trademark                                                          China                    1,417,320

VARI-L TRADEMARK                                                          COMMUNITY                001008978

VARI-L Trademark                                                          Canada                   528,046

VARI-L Trademark                                                          Hong Kong                00420


                             TRADEMARK APPLICATIONS



Mark                                             Application Date         Country                  Application No.
- ----                                             ----------------         -------                  ---------------
                                                                                          
PLAMAG                                           January 30, 2001         USA                      78045586


                                   MASK WORKS



Description                                Registration Date                       Registration No.
- -----------                                -----------------                       ----------------
                                                                             
None.


            LICENSES OF PATENTS, TRADEMARKS, COPYRIGHTS OR MASK WORKS
                (other than non-exclusive licenses to end-users)







                                   SCHEDULE B
                              TO SECURITY AGREEMENT

                                 DEBTOR PROFILE

1. NAME. The legal name of Debtor is and the address of its chief executive
office is:

                           VARI-L COMPANY, INC.
                           4895 PEORIA STREET
                           DENVER CO 80239

2. ORGANIZATIONAL IDENTIFICATION NUMBER; FEDERAL EMPLOYER IDENTIFICATION NUMBER.
The Debtor's organizational identification number in its state of incorporation
is 01-65949-000 and Debtor's federal employer identification number is
06-0679347.

3. STATE OF INCORPORATION; PRIOR NAMES. Debtor was incorporated on June 27, 1985
in the state of Colorado. Since its incorporation Debtor has had the following
legal names (other than its current legal name):

                                                   Date Debtor's Name
         Prior Name                                Was Changed From Such Name

         NONE

4. DEBTOR DOES BUSINESS UNDER THE FOLLOWING TRADE NAMES:



         Trade Name        Is This Name Registered?           Registration No.          Registration Date
         ----------        ------------------------           ----------------          -----------------
                                                                               
         NONE


5. PLACE OF BUSINESS. Debtor has the following places of business:



         Address                                                       Owner of Location
         -------                                                       -----------------
                                                                    
         11101 E. 51st Ave.                                            Kenneth L. & Jean M. Bettenhausen
         Denver, CO

         5165 Peoria Street                                            J.C. Enterprises
         Denver, CO

         4895 Peoria Street                                            Five K Investments
         Denver, CO

         4955 Peoria Street, Unit D                                    First Industrial, LP
         Denver, CO


6. ASSETS IN POSSESSION OF THIRD PARTIES. The following are names and addresses
of all persons or entities other than Debtor, such as lessees, consignees,
warehousemen or purchasers of chattel paper, which have possession or are
intended to have possession of any of the Collateral consisting of instruments,
chattel paper, inventory or equipment:



         Name              Mailing Address           County                     State
         ----              ---------------           ------                     -----
                                                                       
         NONE





7. QUALIFICATION TO DO BUSINESS. Debtor is qualified to do business in the
following states: Colorado and Washington.

8. EXISTING SECURITY INTERESTS. Debtor's assets are subject to the following
security interest of Persons other than the Collateral Agent:

         Assets                                      Name of Secured Party

         SEE ATTACHED

9. TAX ASSESSMENTS. The following tax assessments are currently outstanding and
unpaid:



         Assessing Authority                         Amount and Description
         -------------------                         ----------------------
                                                  
         State of Colorado                           Monthly use tax of approx. $3,000
         City of Denver                              Monthly use tax of approx. $1,000


10. GUARANTIES. Debtor has directly or indirectly guaranteed the following
obligations of third parties:



         Creditor                           Amount                     Debtor
         --------                           ------                     ------
                                                                 
         Carolyn Kiser                      $94,113                    Joseph H. Kiser & David G. Sherman


11. SUBSIDIARIES. Debtor has the following subsidiaries (list jurisdiction and
date of incorporation, federal employer identification number, type and value of
assets): NONE

12. SECURITIES; INSTRUMENTS. The following is a complete list of all stocks,
bonds, debentures, notes and other securities and investment property owned by
Debtor (provide name of issuer, whether certificated or uncertificated,
certificate no. (if applicable), number of shares): NONE

13. BANK ACCOUNTS; SECURITIES ACCOUNTS: The following is a complete list of all
bank accounts and securities accounts maintained by Debtor (provide name and
address of depository bank (or brokerage firm), type of account and account
number):



Name and Address                                             Type of Account                           Account Number
- ----------------                                             ---------------                           --------------
                                                                                                 
Wells Fargo Bank                                               Collateral                                850579707
1740 Broadway, Denver, CO

Wells Fargo Bank                                                Operating                                1010874603
1740 Broadway, Denver, CO

Wells Fargo Bank                                              Money Market                               1018061084
1740 Broadway, Denver, CO

Wells Fargo Bank                                        Controlled Disbursements                         8012700636
1740 Broadway, Denver, CO







                           EXISTING SECURITY INTERESTS



         Creditor                                Collateral
         --------                                ----------
                                              
         Glesby-Marks Corporation                Toyota Truck, VIN 4TAPM62N9WZ165382

         Dell Financial Services                 No. 245813-500 Computer Equipment

         Dell Financial Services                 No. 245813-502 Computer Equipment

         Dell Financial Services                 No. 245813-503 Computer Equipment

         Dell Financial Services                 No. 245813-507 Computer Equipment

         Dell Financial Services                 No. 245813-508 Computer Equipment

         Dell Financial Services                 No. 245813-509 Computer Equipment

         Dell Financial Services                 No. 245813-510 Computer Equipment

         Dell Financial Services                 No. 245813-511 Computer Equipment

         Dell Financial Services                 No. 245813-513 Computer Equipment

         Dell Financial Services                 No. 245813-514 Computer Equipment

         Dell Financial Services                 No. 245813-515 Computer Equipment

         Dell Financial Services                 No. 245813-517 Computer Equipment

         Dell Financial Services                 No. 245813-518 Computer Equipment

         Dell Financial Services                 No. 245813-521 Computer Equipment

EX-10.34

                                                                   EXHIBIT 10.34



                EXCLUSIVITY AND RIGHT OF FIRST REFUSAL AGREEMENT


         This EXCLUSIVITY AND RIGHT OF FIRST REFUSAL AGREEMENT (the "Agreement")
is made and entered into as of October 7, 2002 among Sirenza Microdevices, Inc.,
a Delaware corporation ("Parent"), and Vari-L Company, Inc., a Colorado
corporation (the "Company").

                                    RECITALS

         A. Parent and Company wish to mutually evaluate a potential acquisition
by Parent of all or substantially all of the assets of the Company (the
"Transaction"), on terms to be set forth in a definitive and binding written
agreement between the Company and Parent (the "Definitive Agreement").

         B. In order to assist the Company in meeting certain working capital
requirements and to secure the promises of the Company contained herein, Parent
has agreed to lend the Company up to $5,300,000 upon the terms and subject to
the conditions set forth in that certain Loan Agreement between the parties
dated the date hereof regarding such loan facility (together with the related
security agreement any and all exhibits, attachments and other agreements and
instruments contemplated thereby, the "Loan Agreement").

         C. As an inducement to Parent to make the Loan Agreement and to
evaluate the potential Transaction, the Company wishes to make the covenants and
enter into the agreements set forth below.

         NOW, THEREFORE, in consideration of the substantial amount of resources
Parent has and will expend in evaluating and negotiating the terms of the
Transaction, the Loan Agreement and the covenants, promises and representations
set forth herein, and for other good and valuable consideration, intending to be
legally bound hereby, the parties agree as follows:

                                    ARTICLE I
                                   EXCLUSIVITY

         1.1 No Solicitation.

             (a) No Solicitation or Negotiation. From and after the date of this
Agreement until March 31, 2003, unless earlier terminated pursuant to Section
1.2 hereof (the "Exclusivity Period"), and except as set forth in this Section
1.1, the Company shall not, nor shall it authorize or permit any of its
subsidiaries or any of its or its subsidiaries' respective directors, officers,
investment bankers, attorneys, accountants or other advisors or representatives
retained by them






(such directors, officers, employees, investment bankers, attorneys,
accountants, other advisors and representatives, collectively,
"Representatives") to directly or indirectly:

             (i) solicit, initiate, or knowingly encourage or induce the making
of any Acquisition Proposal (as defined in Section 1.1(e)), including without
limitation to amend or grant any waiver or release under any standstill or
similar agreement with respect to any equity securities of the Company; or

             (ii) enter into, continue or otherwise participate in any
discussions or negotiations regarding, furnish to any person any information
with respect to, assist or participate in any effort by any person with respect
to, or otherwise cooperate in any way with, any Acquisition Proposal.

         Notwithstanding the foregoing, during the Exclusivity Period, the
Company may, to the extent required by the fiduciary obligations of the board of
directors of the Company (the "Company Board"), as determined in good faith by
the Company Board after consultation with outside counsel, in response to a
Superior Proposal (as defined in Section 1.1(e)) that did not result from a
breach by Company of this Section 1.1, and subject to compliance with Section
1.1(c), (x) furnish information with respect to the Company to the person making
such Superior Proposal and its Representatives pursuant to a customary
confidentiality agreement not less restrictive of the other party than the
Confidentiality Agreement (as defined in Section 1.1(e)), provided that any such
information not previously provided to Parent shall be concurrently provided to
Parent as well, (y) participate in discussions or negotiations with such person
and its Representatives regarding any Superior Proposal, and (z) enter into a
definitive agreement or other documents with respect to such Superior Proposal
with such person after complying with all applicable obligations of the Company
set forth in Article II hereof. Without limiting the foregoing, it is agreed
that any violation of the restrictions set forth in this Section 1.1(a) by any
Representative of the Company or any of its subsidiaries, whether or not such
person is purporting to act on behalf of the Company or otherwise, shall be
deemed to be a breach of this Section 1.1(a) by the Company.

         (b) No Alternative Acquisition Agreement. During the Exclusivity
Period, neither the Company Board nor any committee thereof shall:

             (i) cause or permit the Company to enter into any letter of intent,
memorandum of understanding, agreement in principle, acquisition agreement,
merger agreement or similar agreement constituting or relating to any
Acquisition Proposal (other than a confidentiality agreement referred to in
Section 1.1(a) entered into in the circumstances referred to in Section 1.1(a));
or

             (ii) adopt, approve or recommend, or propose to adopt, approve or
recommend, any Acquisition Proposal.

         Notwithstanding the foregoing, during the Exclusivity Period, the
Company Board may, in response to a Superior Proposal that did not result from a
breach by the Company of this Section 1.1, take any action described in clauses
(i) or (ii) of the first sentence of this Section 1.1(b), but only to the extent
that the Company Board determines in good faith (after consultation with outside
counsel)


                                      -2-



that its fiduciary obligations require it to do so, and only after (A) the fifth
business day following receipt by Parent of written notice advising it that the
Company Board desires to take such action due to the existence of a Superior
Proposal, specifying the action proposed to be taken by the Company Board, the
material terms and conditions of such Superior Proposal and the identity of the
person making such Superior Proposal, and (B) the Company has satisfied in all
respects any and all of its applicable obligations to Parent pursuant to Article
II hereof. Nothing in this Section 1.1 shall be deemed to affect any obligation
of the Company under this Agreement except as explicitly set forth above.
Notwithstanding the foregoing, the notice contemplated by clause (A) above need
not be given with respect to any Third Party Offer (as defined in Section 2.2)
during any period in which Article II is not applicable by virtue of Section
2.4.

             (c) Notices; Additional Negotiations. The Company shall promptly
advise Parent orally, with written confirmation to follow promptly (and in any
event within one business day), of any Acquisition Proposal or any request for
nonpublic information, or of any inquiry with respect to, or that could
reasonably be expected to lead to, any Acquisition Proposal, the material terms
and conditions of any such Acquisition Proposal or inquiry and the identity of
the person making any such Acquisition Proposal or inquiry. The Company shall
not provide any information to or participate in discussions or negotiations
with the person or entity making any Superior Proposal until two business days
after the Company has first notified Parent of such Acquisition Proposal as
required by the preceding sentence. The Company shall (i) keep Parent fully
informed, on a current basis, of the status and details (including any change to
the terms) of any such Acquisition Proposal or inquiry, (ii) provide to Parent
as soon as practicable after receipt or delivery thereof copies of all
correspondence and other written material (A) sent or provided to the Company
from any third party in connection with any Acquisition Proposal (other than
confidential due diligence materials regarding such third party sent to the
Company by such third party in connection with an Acquisition Proposal) or (B)
sent or provided by the Company to any third party in connection with any
Superior Proposal, and (iii) if Parent shall make a counterproposal, consider
and cause its financial and legal advisors to negotiate on its behalf in good
faith with respect to the terms of such counterproposal. Contemporaneously with
providing any information to a third party in connection with any such Superior
Proposal or inquiry, the Company shall furnish a copy of such information to
Parent to the extent that such copy has not previously been provided to Parent.
In addition to the foregoing, the Company shall provide Parent with at least 24
hours prior notice (or such lesser prior notice as provided to the members of
the Company Board but in no event less than eight hours) of any meeting of the
Company Board at which the Company Board is reasonably expected to consider a
Superior Proposal or to recommend a Superior Proposal to its stockholders and
together with such notice a copy of the definitive documentation relating to
such Superior Proposal to the extent that such copy has not previously been
provided to Parent.

             (d) Cessation of Ongoing Discussions. The Company shall, and shall
cause its subsidiaries and its and their Representatives to, cease immediately
all discussions and negotiations existing as of the date of this Agreement
regarding any proposal that constitutes, or could reasonably be expected to lead
to, an Acquisition Proposal. As of the date of this Agreement, the Company
represents that neither it nor any of its subsidiaries nor their Representatives
is engaged, directly or indirectly, in any discussions or negotiations with any
other party (other than Parent) with respect to an Acquisition Proposal.


                                      -3-



             (e) Definitions. For purposes of this Agreement:

         "Acquisition Proposal" means (i) any inquiry, proposal or offer for a
merger, consolidation, dissolution, sale of substantial assets, tender offer,
recapitalization, share exchange or other business combination involving the
Company or any of its subsidiaries, (ii) any proposal for the issuance by the
Company or any of its subsidiaries of over 15% of its equity securities or (iii)
any proposal or offer to acquire in any manner, directly or indirectly, over 15%
of the equity securities or assets (on a book or market value basis) of the
Company, in each case other than a proposal or offer by Parent.

         "Confidentiality Agreement" means that certain letter agreement between
the parties hereto and dated the date hereof regarding their mutual
non-disclosure obligations.

         "Superior Proposal" means any unsolicited, bona fide written proposal
made by a third party to acquire more than 50% of the equity securities or
assets of the Company, pursuant to a tender or exchange offer, a merger, a
consolidation or a sale of its assets or otherwise, (i) on terms which the
Company Board determines in its good faith judgment to be materially more
favorable to the stockholders of the Company than the Transaction as then
currently proposed by Parent in a Definitive Agreement or otherwise, taking into
account all the terms and conditions of such third party proposal and the
Transaction as then currently proposed by Parent in a Definitive Agreement or
otherwise (including any proposal by Parent to amend the terms of the
Transaction or the Definitive Agreement in response to the third party proposal)
and (ii) that in the good faith judgment of the Company Board is reasonably
capable of being completed on the terms proposed, taking into account all
financial, regulatory, legal and other aspects of such proposal; provided,
however, that no Acquisition Proposal shall be deemed to be a Superior Proposal
if any financing required to consummate the Acquisition Proposal is not
committed, unless the Company Board determines in its good faith judgment (after
consultation with a nationally recognized financial adviser) that such financing
is more likely than not to be obtained upon reasonable terms and on a timely
basis.

             (f) Anti-Takeover Statutes. The Company hereby represents to Parent
that the entry by the parties into this Agreement, the Loan Agreement and the
other documents and instruments contemplated thereby will not result in the
applicability of any State of Colorado super-majority vote requirement,
interested stockholder statute, anti-takeover statute or similar law or
regulation to the parties or the Transaction.

         1.2 Termination. This Article I shall terminate upon the earlier of the
date that Parent advises the Company in writing that (i) Parent is terminating
all negotiations with the Company regarding a Transaction, (ii) Parent is no
longer interested in pursuing the Transaction with the Company, or (iii) Parent
defaults on its obligations to make loans pursuant to the Loan Agreement.

                                   ARTICLE II

                             RIGHT OF FIRST REFUSAL

         2.1 Grant of Right of First Refusal. The Company hereby grants to
Parent a right of first refusal ("Right of First Refusal") as follows: the
Company shall not execute or enter into any definitive agreement providing for,
or redeem, amend or otherwise make its Rights Plan inapplicable


                                      -4-



to, an Acquisition Proposal unless a Third Party Sale Notice (as defined below)
shall have first been provided to Parent and all applicable terms of this
Article II shall have first been complied with by the Company. As used herein,
"Rights Plan" shall mean that certain Rights Agreement dated as of March 15,
1996 between the Company and American Securities Transfer, Inc., as amended from
time to time.

         2.2 Notice of Offer. The "Third Party Sale Notice" required to be
delivered to Parent under Section 2.1 hereof shall include the following
elements: (a) a bona fide, written offer to the Company from a third party that
sets forth in reasonable detail the material terms of the contemplated
Acquisition Proposal, including, without limitation, the structure of the
proposed transaction, the form and amount of consideration to be received by the
Company and/or its shareholders, the material conditions to closing and pre and
post closing covenants, any indemnity, escrow and termination fee terms, the
material terms of any related agreements to be entered into in connection
therewith and the name and address of the offeror (collectively, a "Third Party
Offer"), (b) if such approval would be required to consummate the transaction
contemplated by the Acquisition Proposal under the terms of the Company's
charter documents or applicable law, written confirmation by an authorized
representative of the Company that the Third Party Offer has been approved by
resolution of the Company Board, (c) written confirmation by an authorized
representative of the Company that Parent has the right to exercise its Right of
First Refusal with regard to the Third Party Offer, and (d) copies of any
correspondence and other materials available to the Company relating to such
Third Party Offer (to the extent not previously provided).

         2.3 Exercise of Right of First Refusal. Upon delivery of a Third Party
Sale Notice and within ten (10) business days of delivery thereof, Parent may
elect to exercise its Right of First Refusal by providing the Company with an
offer on terms and conditions which are in all material respects not less
favorable from a financial point of view to the stockholders of the Company than
those proposed by the Third Party Offer (the "Parent Offer"). The determination
of whether the terms and conditions of a Parent Offer are in all material
respects not less favorable from a financial point of view to the stockholders
of the Company than those proposed by the Third Party Offer shall be made in
good faith by the Company Board. Parent shall exercise its Right of First
Refusal, if at all, by delivery of written notice to the Company on or before
that date which is ten (10) business days following delivery of a Third Party
Sale Notice (the "Expiration Date"). Failure to deliver such written notice by
the Expiration Date shall be deemed conclusive evidence of Parent's intent not
to exercise such Right of First Refusal with respect to the Acquisition Proposal
specified in the Third Party Sale Notice. In the event that Parent exercises its
Right of First Refusal in accordance with this Article II, the Company shall use
its commercially reasonable efforts in good faith to negotiate and execute a
Definitive Agreement that reflects the Parent Offer, and the Company and its
Representatives shall, consistent with the fiduciary duties of the Company
Board, immediately terminate all current discussions with the third party
regarding the Third Party Offer.

         2.4 Non-Exercise of a Right of First Refusal. In the event Parent does
not affirmatively exercise its Right of First Refusal by the Expiration Date,
the Company shall have the right, but not the obligation, to effect the
transaction contemplated by the Acquisition Proposal proposed in the Third Party
Offer on terms and conditions that are the same in all material respects to the
terms and conditions described in the Third Party Sale Notice and the Third
Party Offer. In the event such Acquisition Proposal is not (a) set forth in a
definitive and binding written agreement executed by all


                                      -5-



necessary parties thereto within thirty (30) days following the Expiration Date,
and (b) consummated within one hundred fifty (180) days following the Expiration
Date, then the provisions of this Article II shall once again apply to such
transaction and the Company shall be required to deliver a new Third Party Sale
Notice with respect thereto and to otherwise comply with the terms hereof with
respect thereto. If any new or modified Acquisition Proposal arises during the
pendency of such a Third Party Offer, such Acquisition Proposal shall be subject
to Article I (to the extent stated therein), Parent's Right of First Refusal and
this Article II as well.

         2.5 Termination. Parent's Right of First Refusal shall expire at the
earlier of: (i) the date that Parent advises the Company in writing that Parent
is terminating all negotiations with the Company regarding a Transaction, (ii)
the date that Parent advises the Company in writing that Parent is no longer
interested in pursuing the Transaction with the Company, (iii) such time as the
Loan Agreement has terminated and no loans remain outstanding thereunder, or
(iv) such time as Parent defaults on its obligations to make loans pursuant to
the Loan Agreement.

                                   ARTICLE III

                                  MISCELLANEOUS

         3.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of complete transmission)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):

             (a) if to Parent, to:

             Sirenza Microdevices, Inc.
             522 Almanor Avenue
             Sunnyvale, CA 94085
             Attention: Chief Financial Officer
             Telephone No.:  (408) 616-5441
             Facsimile No.:  (408) 739-0952

                      with a copy to:

             Wilson Sonsini Goodrich & Rosati, P.C.
             650 Page Mill Road
             Palo Alto, California 94304
             Attention: Steven V. Bernard
             Telephone No.:  (650) 493-9300
             Facsimile No.:  (650) 493-6811

             (b) if to the Company, to:


                                      -6-



             Vari-L Company, Inc.
             4895 Peoria Street
             Denver, CO 80239
             Attention: Chief Financial Officer
             Telephone No.:  (303) 371-1560
             Facsimile No.:  (303) 373-3870

                      with a copy to:

             Cooley Godward LLP
             380 Interlocken Crescent, Suite 900
             Broomfield, CO 80021
             Attention: James Linfield
             Telephone No.:  (720) 566-4000
             Facsimile No.:  (650) 566-4099

         3.2 Interpretation. The word "agreement" when used herein shall be
deemed in each case to mean any contract, commitment or other agreement, whether
oral or written, that is legally binding. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

         3.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.

         3.4 Entire Agreement; Assignment. This Agreement and the documents and
instruments and other agreements among the parties hereto referenced herein: (a)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof;
(b) are not intended to confer upon any other person any rights or remedies
hereunder; and (c) shall not be assigned by operation of law or otherwise except
as otherwise specifically provided, except that Parent may assign its rights and
delegate its obligations hereunder to its affiliates.

         3.5 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the greatest extent possible, the
economic, business and other purposes of such void or unenforceable provision.

         3.6 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other


                                      -7-



remedy conferred hereby, or by law or equity upon such party, and the exercise
by a party of any one remedy will not preclude the exercise of any other remedy.

         3.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
Each of the parties hereto agrees that process may be served upon them in any
manner authorized by the laws of the State of Delaware for such persons and
waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction and such process.

         3.8 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.

         3.9 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.

         3.10 Termination. This Agreement may be terminated at any time by
mutual written consent of the Company and Parent, and otherwise shall terminate
at such time as all agreements contained in Articles I and II hereof have
terminated by their terms.

         3.11 Amendment and Waiver. This Agreement may be amended (and
compliance with any provision hereof may be waived) by the parties hereto at any
time by execution of an instrument in writing signed on behalf of each of the
parties hereto.

         3.12 No Obligation. The Company and Parent acknowledge and agree that
except as otherwise expressly provided herein, neither this Agreement nor any
action taken in connection with this Agreement will give rise to any obligation
on the part of either party (a) to continue discussions or negotiations with the
other with respect to the Transaction, or (b) to pursue or enter into the
Transaction or any other relationship of any nature with the other party.



                  [Remainder of page intentionally left blank]


                                      -8-

         IN WITNESS WHEREOF, Parent and the Company have caused this Agreement
to be signed by their duly authorized respective officers, all as of the date
first written above.


         Sirenza Microdevices

         By: GERALD L. QUINNELL
            -----------------------

         Name: Gerald L. Quinnell

         Title: EVP Business Development



         Vari-L Company, Inc.

         By: /s/ CHARLES R. BLAND
            -----------------------

         Name: Charles R. Bland

         Title: CEO











                                      -9-

EX-10.35

                                                                   EXHIBIT 10.35




                              VARI-L COMPANY, INC.

                      RESALE REGISTRATION RIGHTS AGREEMENT

                                 OCTOBER 7, 2002






                              VARI-L COMPANY, INC.

                      RESALE REGISTRATION RIGHTS AGREEMENT

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

                                    RECITALS

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

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

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

         1. RIGHTS OF INVESTORS

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

         2. REGISTRATION RIGHTS.

                  2.1 DEFINITIONS.

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

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

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






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

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

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

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

                           (h) Registration Expenses. "REGISTRATION EXPENSES"
shall mean all expenses incurred by the Company in complying with Section 2.2
hereof, including, without limitation, all registration and filing fees, listing
fees, printing expenses, fees and disbursements of counsel and accountants for
the Company, fees and expenses of one counsel for all the Holders (not to exceed
$25,000), blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company, which shall be paid in any event by the
Company).

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

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

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

                  2.2 RESALE REGISTRATION.

                           (a) Required Registration. The Company shall:



                                      -2-


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

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

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

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

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

                  2.3 LIQUIDATED DAMAGES.

                           (a) Triggers and Amounts. If:

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

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

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



                                      -3-


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

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

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

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

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

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

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

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



                                      -4-


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

                           (c) Acknowledgement of Reasonableness. The parties
hereto agree that the Holders of Registrable Securities will suffer damages, and
that it will not be feasible to ascertain the extent of such damages with
precision, if a Registration Default occurs. The parties hereto further agree
that the Liquidated Damages provided for in this Section constitute a reasonable
estimate of the damages that may be incurred by Holders of Registrable
Securities by reason of a Registration Default. Therefore, the parties hereto
agree that the sole damages payable for a violation of the terms of this
Agreement with respect to which Liquidated Damages is expressly provided for
(including any non-compliance with a covenant that results, directly or
indirectly, in a Registration Default) shall be such Liquidated Damages.

                  2.4 EXPENSES OF REGISTRATION. All Registration Expenses
incurred in connection with any registration or attempted registration pursuant
hereto shall be borne by the Company, and all Selling Expenses shall be borne by
the Holders of the Registrable Securities so registered pro rata on the basis of
the number of their shares so registered by each such Holder.

                  2.5 OBLIGATIONS OF THE COMPANY. Whenever required to effect
the registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as reasonably possible:

                           (a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its reasonable
efforts to cause such registration statement to become effective, and keep such
registration statement effective until the distribution is completed.

                           (b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.

                           (c) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and all amendments and supplements thereto,
and such other documents as they may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by them that are included in
such registration.

                           (d) Use its reasonable efforts to register, list on
the same exchange as all other listed company shares and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the



                                      -5-


Holders, provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.

                           (e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter(s) of such offering. Each
Holder participating in such underwriting shall also enter into and perform its
obligations under such an agreement.

                           (f) Notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing and, following such notification, promptly deliver to each Holder
copies of all amendments or supplements referred to in paragraphs (b) and (c) of
this Section.

                           (g) Furnish, at the request of any Holder registering
Registrable Securities, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters, (i) an opinion, dated as of such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering addressed to the underwriters, if any, and if there are no
underwriters, to the Holders requesting registration of Registrable Securities
and (ii) a "comfort" letter dated as of such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering and reasonably satisfactory to a majority in
interest of the Holders requesting registration, addressed to the underwriters.

                           (h) Notwithstanding the foregoing, in the event (i)
of the happening of any Suspension Event (as defined below) or (ii) that, in the
good faith judgment of the board of the directors of the Company, it is
advisable to suspend the use of the prospectus for a discrete period of time due
to pending material Company developments that have not yet been publicly
disclosed and as to which the board of directors of the Company determines in
good faith that public disclosure would be materially prejudicial to the
Company, the Company shall deliver a certificate in writing, signed by an
authorized executive officer of the Company, to the Holders (a "SUSPENSION
NOTICE"), to the effect of the foregoing and thereafter the use of the
prospectus shall be suspended, and the Company, subject to the terms of this
Section 2.5(h), shall thereafter not be required to maintain the effectiveness
or update the Shelf Registration Statement. The Company will use its
commercially reasonable efforts to ensure that the use of the prospectus may be
resumed as soon as practicable, in the case of suspension under Section
2.5(h)(i) hereof, and, in the case of a pending material Company development
referred to in Section 2.5(h)(ii) hereof, as soon as, in the good faith judgment
of the board of directors of the Company, public disclosure of such pending
material Company development would not have a material adverse effect on the
Company. Notwithstanding the



                                      -6-


foregoing, the Company shall not under any circumstances be entitled to exercise
its right under this Section 2.5(h) to suspend the use of the prospectus
(whether as a result of events referred to in Section 2.5(h)(i) hereof or as a
result of the pending development or event referred to in Section 2.5(h)(ii)
hereof) for more than 30 days in any particular instance and 60 days in the
aggregate in any consecutive twelve-month period. The Company shall not be
required to specify in the Suspension Notice to the Holders the nature of the
event giving rise to the suspension of the use of the prospectus, though it
shall be required to restate the standard set forth in this subsection and
certify that such standard has been met. A "SUSPENSION EVENT" shall mean any of
the following: (i) any request by the SEC or any other federal or state
governmental authority for amendments or supplements to Shelf Registration
Statement or related prospectus, (ii) the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending the
effectiveness of the Shelf Registration Statement, (iii) the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, and (iv) the existence of any fact or happening of any event
which makes any statement of a material fact in the Shelf Registration Statement
or related prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue or which would require the making of any changes in
the Shelf Registration Statement or prospectus in order that, in the case of the
Shelf Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and that in the case
of the prospectus, it will not contain any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

                  2.6 FURNISH INFORMATION. It shall be a condition precedent to
the obligation of the Company to register the Registrable Securities held by
each Holder that such Holder shall furnish to the Company such information as
the Company may reasonably request in writing regarding such Holder, the
Registrable Securities held by them, and the intended method of disposition of
such securities as shall be required under the Securities Act to be disclosed in
the Shelf Registration Statement to timely effect the registration of
Registrable Securities, which writing shall be delivered to each Holder at its
address as listed in the Company's stock records, or at such other address as
the Holder may provide.

                  2.7 INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement hereunder:

                           (a) By the Company. To the extent permitted by law,
the Company will indemnify and hold harmless each Holder, the partners, members,
officers and directors of each Holder, any underwriter (as defined in the
Securities Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the Exchange
Act against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"VIOLATION"):



                                      -7-



                                (i) any untrue statement or alleged untrue
statement of a material fact contained or incorporated by reference in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto;

                                (ii) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading, or

                                (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any federal or state securities
law or any rule or regulation promulgated under the Securities Act, the Exchange
Act or any federal or state securities law in connection with the offering
covered by such registration statement;

and the Company will reimburse each such Holder, partner, member, officer or
director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them, as incurred, in connection with investigating or
defending any such loss, claim, damage, liability or action; provided however,
that the indemnity agreement contained in this subsection shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable to any such
Holder, partner, member, officer or director, underwriter or controlling person
for any such loss, claim, damage, liability or action to the extent (and only to
the extent) that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished in writing
and expressly stated for use in connection with such registration by such person
or entity.

                           (b) By Selling Holders. To the extent permitted by
law, each selling Holder will, severally and not jointly, if Registrable
Securities held by such Holder are included in the securities as to which such
registration is being effected, indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed the registration statement,
each person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter (as defined in the Securities Act) and any other
Holder selling securities under such registration statement or any of such other
Holder's partners, members, directors or officers or any person who controls
such underwriter or other Holder within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling person,
underwriter or other such Holder, member, partner or director, officer or
controlling person of such underwriter or other Holder may become subject under
the Securities Act, the Exchange Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder by an instrument
duly executed by such Holder and stated to be specifically for use in such
registration; and each such Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person, underwriter or other Holder, partner, member, officer, director or
controlling person of such other Holder or underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement



                                      -8-


contained in this subsection shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld; and provided further, that the total amounts payable in indemnity by a
Holder under this Section in respect of any Violation shall not exceed the net
proceeds received by such Holder in the registered offering out of which such
Violation arises.

                           (c) Notice. Promptly after receipt by an indemnified
party under this Section of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section, deliver
to the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential conflict of interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable period of time of
the commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of liability to the
indemnified party under this Section only to the extent that the indemnifying
party's ability to defend such action is so materially prejudiced, but the
omission so to deliver written notice to the indemnifying party will not relieve
it of any liability that it may have to any indemnified party otherwise than
under this Section.

                           (d) Survival. The obligations of the Company and
Holders under this Section shall survive the completion of any offering of
Registrable Securities in a registration statement, and otherwise.

                  2.8 RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Securities to the public without
registration, the Company agrees to:

                           (a) Make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities Act, at
all times (it being understood that the Company's failure to include in any
filing with the Commission the report of an independent accountant expressing an
unqualified opinion of the Company's statements of operations, cash flows and
shareholders' equity for periods ending on or before June 30, 2000, or on its
balance sheet as of any date prior to June 30, 2000, shall not be considered a
violation hereof);

                           (b) Use its reasonable efforts to file with the
Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act; and



                                      -9-


                           (c) So long as a Holder owns any Registrable
Securities, to furnish to the Holder forthwith upon request a written statement
by the Company as to its compliance with the reporting requirements of Rule 144,
and of the Securities Act and the Exchange Act, a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents of the
Company as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration.

                  2.9 ASSIGNMENT OF REGISTRATION RIGHTS. The rights of a Holder
under this Agreement may be assigned by any Holder in connection with any
transfer or assignment by a Holder of Registrable Securities provided that: (i)
such transfer may otherwise be effected in accordance with applicable securities
laws, and (ii) such other party agrees in writing with the Company to be bound
by all of the provisions of this Agreement.

         3. LEGENDS. The Investor understands that the share certificates
evidencing any Registrable Securities shall be endorsed with the following
legends (in addition to any legends required under applicable state securities
laws):

                           (a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED."

         4. MISCELLANEOUS

                  4.1 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and permitted
transferees and permitted assigns of the parties. The Company may not assign its
obligations hereunder by operation of law or otherwise without the prior written
consent of Investor.

                  4.2 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of Delaware as applied to contracts made and
to be performed entirely within that state between residents of that state.

                  4.3 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, and all of which
together shall constitute one instrument. Facsimile copies of signature pages
hereto shall be deemed binding originals hereunder.

                  4.4 TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.



                                      -10-


                  4.5 STOCK SPLITS, ETC. All share numbers used in this
Agreement are subject to adjustment in the case of any stock split, reverse
stock split, combination or similar events.

                  4.6 NOTICES. Any notice required or permitted to be given to a
party pursuant to the provisions of this Agreement will be in writing and will
be deemed given and effective on the earlier of (i) the date of delivery by
facsimile, (ii) the business day after deposit with a nationally-recognized
courier or overnight service, including Express Mail, for United States
deliveries, or (iii) five (5) business days after deposit in the United States
mail by registered or certified mail for United States deliveries. All notices
not delivered personally or by facsimile will be sent with postage and other
charges prepaid and properly addressed to the party to be notified at the
address set forth below such party's signature on this Agreement or at such
other address as such party may designate by ten (10) days advance written
notice to the other parties hereto. All notices for delivery outside the United
States will be sent by facsimile, or by nationally recognized courier or
overnight service. Any notice given hereunder to more than one person will be
deemed to have been given, for purposes of counting time periods hereunder, on
the date given to the last party required to be given such notice. Notices to
the Company will be marked to the attention of the Chief Financial Officer.

                  4.7 ATTORNEYS' FEES. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.

                  4.8 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of all parties hereto; provided,
however that with respect to any Holder, the consent of the Investor shall be
sufficient to bind such Holder.

                  4.9 SEVERABILITY. If any provision of this Agreement is held
to be unenforceable under applicable law, then such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision was so excluded and shall be enforceable in accordance with its
terms.

                  4.10 ENTIRE AGREEMENT. This Agreement constitutes the full and
entire understanding and agreement between the parties with respect to the
subject matter hereof and supersedes all prior negotiations, correspondence,
agreements, understandings, duties or obligations among the parties with respect
to the subject matter hereof.

                  4.11 FURTHER ASSURANCES. From and after the date of this
Agreement, upon the request of a party, the other parties shall execute and
deliver such instruments, documents or other writings as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement.



                                      -11-



                  4.12 TERMINATION. This Agreement shall terminate upon the
earlier of (i) the date that all parties hereto agree in writing to so terminate
the Agreement, and (ii) the date that all outstanding Registrable Securities
have either been repurchased by the Company for cash pursuant to Section 2.3
hereof or sold by the Holders pursuant to a Shelf Registration Statement or
pursuant to Rule 144 promulgated under the Securities Act.

                  [Remainder of Page Intentionally Left Blank]



                                      -12-


         IN WITNESS WHEREOF, the parties hereto have executed this Resale
Registration Rights Agreement as of the date first above written.


Vari-L Company, Inc.

By: /s/ CHARLES R. BLAND
   ------------------------

Name: Charles R. Bland

Title: CEO

Address:

4895 Peoria Street
Denver, CO 80239
Attention: Chief Financial Officer
Telephone No.: (303) 371-1560
Facsimile No.: (303) 373-3870


Investor

Sirenza Microdevices, Inc.

By: /s/ GERALD L. QUINNELL
   ------------------------

Name: Gerald L. Quinnell

Title: EVP Business Development

Address:

522 Almanor Avenue
Sunnyvale, CA 94085
Attention: Chief Financial Officer
Telephone No.: (408) 616-5441
Facsimile No.: (408) 739-0952

EX-23

                                                                      EXHIBIT 23

                          Independent Auditors' Consent

The Board of Directors
Vari-L Company, Inc.:

We consent to incorporation by reference in the registration statement (Nos.
33-88666, 33-81045, 333-45137, and 333-81915) on Form S-8 of Vari-L Company,
Inc. of our report dated August 23, 2002, except for notes 3 , 13 and 14 as to
which the date is October 7, 2002, with respect to the balance sheets of Vari-L
Company, Inc. as of June 30, 2002 and 2001, and the related statements of
operations, stockholders' equity and cash flows for each of the years in the
two-year period ended June 30, 2002, and the related Schedule II--Valuation and
Qualifying Accounts for the years ended June 30, 2002 and 2001, which report
appears in the June 30, 2002, annual report on Form 10-K of Vari-L Company, Inc.


(signed) KPMG LLP


Denver, Colorado
October 7, 2002