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EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of December 2, 1997 (the "EFFECTIVE Date"), by and between
GIGA-TRONICS INCORPORATED, a California corporation ("GIGA-TRONICS") and the
persons listed on Exhibit A hereby (collectively, the "SHAREHOLDERS" and each
individually a "SHAREHOLDER") who immediately prior to the Effective Time of the
Merger (as defined below) are all of the shareholders of Ultracision, Inc., a
California corporation ("ULTRACISION").
R E C I T A L S
A. Ultracision, Giga-tronics and Giga Acquisition Corp. ("SUB") have
entered into an Agreement and Plan of Reorganization (the "PLAN") dated as of
December 2, 1997, pursuant to which Sub will merge with and into Ultracision
with Ultracision to be the surviving corporation of the Merger (the "MERGER").
B. As a condition precedent to the consummation of the Merger,
Section 1.07 of the Plan provides that the Shareholders shall be granted certain
registration rights with respect to the shares of Giga-tronics' Common Stock
that are issued to the Shareholders in the Merger (the "MERGER SHARES"), subject
to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
1. REGISTRATION RIGHTS.
1.1 Definitions. For purposes of this Section 1:
(a) 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 of
1933, as amended (the "1933 ACT"), and the declaration or ordering of
effectiveness of such registration statement.
(b) Registrable Securities. The term "REGISTRABLE
SECURITIES" means: (1) all of the Merger Shares, and (2) any shares of Common
Stock of Giga-tronics issued as a dividend or other distribution with respect
to, or in exchange for or in replacement of, the Merger Shares; excluding in all
cases, however, (i) any Registrable Securities sold by a person in a transaction
in which rights under this Section 1 are not assigned in accordance with Section
2 of this Agreement, (ii) any Registrable Securities sold in a public offering
pursuant to a registration statement filed with the SEC or sold to the public
pursuant to Rule 144 promulgated under the 1933 Act ("RULE 144"); or (iii) any
Registrable Securities which may be sold in the public market in a three-month
period without registration under the 1933 Act pursuant to Rule 144.
(c) Prospectus. The term "PROSPECTUS" shall mean
the prospectus included in any Registration Statement filed pursuant to the
provisions hereof (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the 1933
Act), as amended or supplemented by any prospectus supplement (including,
without limitation, any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement), and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
(d) Holder. For purposes of this Agreement, the
term "HOLDER" means any person owning of record Registrable Securities.
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(e) SEC. The term "SEC" or "COMMISSION" means the
U.S. Securities and Exchange Commission.
1.2 Registration.
(a) Initial Registration. Giga-tronics shall use
its best efforts to prepare and file with the SEC within ninety (90) days
following the Closing (as defined in the Plan), and use its best efforts to have
declared effective as soon as practicable thereafter, a registration statement
(a "REGISTRATION STATEMENT") providing for the resale by the Holders of all of
the Registrable Securities then owned by the Holders. Giga-tronics shall use its
best efforts to keep the Registration Statement continuously effective, pursuant
to the rules, regulations or instructions under the 1933 Act applicable to the
registration statement used by Giga-tronics for such Registration Statement, for
such period (the "EFFECTIVENESS PERIOD") ending on the date that is twelve (12)
months after the date of the Closing or such shorter period ending when the
Registrable Securities cease to meet the definition of Registrable Securities
pursuant to Section 1.1(b).
(b) Suspension. If Giga-tronics shall determine
pursuant to the good faith judgment of the Board of Directors of Giga-tronics,
that it would be seriously detrimental to Giga-tronics and its shareholders for
resales of Registrable Securities to be made pursuant to the Registration
Statement, due to (A) the existence of a material development or potential
material development with respect to or involving Giga-tronics which
Giga-tronics would be obligated to disclose in the Prospectus contained in the
Registration Statement, which disclosure would in the good faith judgment of the
Board of Directors of Giga-tronics be premature or otherwise inadvisable at such
time and would have a material adverse affect upon Giga-tronics and its
shareholders, or (B) the occurrence of any event that makes any statement made
in such Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect in the light of the circumstances under which they were made or
which requires the making of any changes in the Registration Statement or
Prospectus so that it will not contain any untrue statement of a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, then Giga-tronics shall deliver a certificate in writing
to the Holders to the effect of the foregoing and, upon receipt of such
certificate, the use of the Registration Statement and Prospectus will be
deferred or suspended and will not recommence until (1) such Holder's receipt
from Giga-tronics of copies of the supplemented or amended Prospectus, or (2)
such Holders are advised in writing by Giga-tronics that the Prospectus may be
used. Giga-tronics will use its best efforts to ensure that the use of the
Registration Statement and Prospectus may be resumed, as soon as practicable
and, in the case of a pending development or event referred to in (A) above, as
soon, in the judgment of Giga-tronics, as disclosure of the material information
relating to such pending development would not have a material adverse effect on
Giga-tronics. Notwithstanding the foregoing or any other provision of this
Agreement, the period during which Giga-tronics shall be required to maintain
the effectiveness of the Registration Statement shall be extended by one (1) day
for each full or partial day during which the use of such Registration Statement
or Prospectus is deferred or suspended by Giga-tronics in accordance with this
Section 1.2(b).
(c) Expenses. All reasonable expenses, other than
underwriting discounts and brokers commissions, incurred in connection with the
Registration Statement shall be borne by Giga-tronics.
1.3 Obligations of Giga-tronics. Giga-tronics shall, as
expeditiously as reasonably possible:
(a) Prepare promptly and file with the SEC the
Registration Statement as provided in Section 1.2(a), which Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading and cause such Registration Statement to become effective
as soon as practicable.
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(b) Prepare promptly 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 1933 Act with respect to the disposition of
all securities covered by such registration statement.
(c) Furnish to Holders such number of copies of a
Prospectus, including a preliminary Prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as reasonably requested
in order to facilitate the disposition of the Registrable Securities owned by it
that are included in such registration.
(d) Use its best efforts to register 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 Holders, provided that Giga-tronics 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) Notify Holders promptly (i) of any request by
the SEC or any other federal or state governmental authority during the period
of effectiveness of the Registration Statement for amendments or supplements to
such Registration Statement or related prospectus or for additional information,
(ii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose, (iii) of the
receipt by Giga-tronics 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 or the initiation or threatening of any
proceeding for such purpose, (iv) of the happening of any event which makes any
statement made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or which requires the making of any changes in the Registration
Statement or Prospectus so that it will not contain any untrue statement of a
material fact required to be stated therein or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (v) of Giga-tronics' determination that a post-effective
amendment to the Registration Statement would be appropriate.
1.4 Furnish Information. It shall be a condition
precedent to the obligations of Giga-tronics to take any action pursuant to
Section 1.2 that each Holder shall furnish to Giga-tronics such information
regarding Holder, the Registrable Securities held by Holder, and the intended
method of disposition of such securities as shall be required to timely effect
the registration of Holder's Registrable Securities.
1.5 Indemnification
(a) By Giga-tronics. To the extent permitted by
law, Giga-tronics will indemnify and hold harmless each of the Holders, officers
and directors, employees and agents of a Holder or underwriter (as defined in
the 0000 Xxx) and each person, if any, who controls a Holder within the meaning
of the 1933 Act or the Securities Exchange Act of 1934 (the "1934 ACT"), against
any losses, claims, damages, or liabilities (joint or several) to which they or
any of them may become subject under the 1933 Act, the 1934 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"):
(i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement, including any preliminary prospectus or final
prospectus contained therein or in any amendments or
supplements thereto;
(ii) the omission or alleged omission to state in
the Registration Statement, including any preliminary
prospectus or final prospectus contained therein or in any
amendments or supplements thereto, 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
Giga-tronics of the 1933 Act, the 1934 Act, any federal or
state securities law or any rule or regulation promulgated
under
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the 1933 Act, the 1934 Act or any federal or state
securities law in connection with the offering covered by
such Registration Statement.
Giga-tronics will reimburse each Holder, such officer, director, employee or
agent, 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 1.5(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of Giga-tronics (which
consent shall not be unreasonably withheld), nor shall Giga-tronics be liable in
any such case for any such loss, claim, damage, liability or action 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 expressly for
use in connection with such registration by Holder, or by such, officer,
director, employee, agent, underwriter or controlling person of any Holder.
(b) By Holders. To the extent permitted by law,
each Holder will indemnify and hold harmless Giga-tronics, each of its
directors, each of its officers who have signed the Registration Statement, each
person, if any, who controls Giga-tronics within the meaning of the 1933 Act,
any other employee or agent of Giga-tronics, against any losses, claims, damages
or liabilities (joint or several) to which Giga-tronics or any such director,
officer, or controlling person, employee or agent may become subject under the
1933 Act, the 1934 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 expressly for use in connection
with such Registration Statement; and such Holder will reimburse any legal or
other expenses reasonably incurred by Giga-tronics or any such director,
officer, or controlling person, employee or agent in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this subsection
1.5(b) 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 such Holder, which consent shall not be unreasonably withheld; and provided
further, that the total amounts payable in indemnity by Holder under this
Section 1.5(b) in respect of any Violation shall not exceed the net proceeds
received by Holder in the registered offering out of which such Violation
arises.
(c) Notice. Promptly after receipt by an
indemnified party under this Section 1.5 of notice of the commencement of any
action (including any governmental action), such indemnified party will, if a
claim for indemnification in respect thereof is to be made against any
indemnifying party under this Section 1.5, deliver to the indemnifying party a
written notice of the commencement of such an action 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 time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall (to the
extent of such prejudice) relieve such indemnifying party of any liability to
the indemnified party under this Section 1.5, 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 1.5.
(d) Defect Eliminated in Final Prospectus. The
foregoing indemnity agreements of Giga-tronics and such Holders are subject to
the condition that, insofar as they relate to any Violation made in a
preliminary prospectus but eliminated or remedied in the amended prospectus on
file with the SEC at the time the Registration Statement becomes effective or in
the amended prospectus filed with the SEC pursuant to SEC Rule 424(b) (the
"FINAL PROSPECTUS"), such indemnity agreements shall not inure to the benefit of
any person if a copy of the Final Prospectus was furnished to the indemnified
party and was not furnished to the person asserting the loss, liability, claim
or damage at or prior to the time such action is required by the 1933 Act.
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(e) Contribution. In order to provide for just
and equitable contribution to joint liability under the 1933 Act in any case in
which either (i) Holder (and/or any officer, director, employee, agent,
underwriter or controlling person who may be indemnified under Section 1.5(a)),
makes a claim for indemnification pursuant to this Section 1.5 but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 1.5 provides for indemnification in
such case, or (ii) contribution under the 1933 Act may be required on the part
of such Holder (and/or any officer, director, employee, agent, underwriter or
controlling person who may be indemnified under Section 1.5 (a)) in
circumstances for which indemnification is provided under this Section 1.5;
then, and in each such case, Giga-tronics and such Holder (and/or such other
person) will contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) in proportion to
their relative fault as determined by a court of competent jurisdiction;
provided however, that in no event, except in instances of fraud by the Holder
in which case there is no limitation, (i) shall any Holder be responsible for
more than the portion represented by the percentage that the public offering
price of its Registrable Securities offered by and sold under the Registration
Statement bears to the public offering price of all securities offered by and
sold under such Registration Statement or (ii) shall a Holder be required to
contribute any amount in excess of the public offering price of all such
securities offered and sold by such Holder pursuant to such Registration
Statement; and in any event, no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
(f) Survival. The obligations of Giga-tronics and
such Holder under this Section 1.5 shall survive the completion of any offering
of Registrable Securities in a registration statement, and otherwise.
1.6 "Market Stand-Off" Agreement. Each Holder hereby agrees
that it shall not, to the extent requested in writing by Giga-tronics or the
managing underwriter(s) of securities of Giga-tronics and in connection with an
underwritten public offering of securities of Giga-tronics with gross proceeds
to Giga-tronics of at least Ten Million Dollars ($10,000,000), sell or otherwise
transfer or dispose of any Registrable Securities or any shares of capital stock
of Giga-tronics then owned by such Holder (other than to donees or partners of
the Holder who agree to be similarly bound) for up to ninety (90) days following
the effective date of the Registration Statement for such underwritten offering;
provided, however, that such agreement shall not apply:
(a) to a Holder who beneficially owns less than
one and one-half percent (11/2%) of the outstanding Common Stock of
Giga-tronics; and
(b) unless all officers, directors and key
employees of Giga-tronics then holding Common Stock of Giga-tronics and
shareholders beneficially owning at least one and one-half percent (1 1/2%) of
Giga-tronics Common Stock enter into substantially similar agreements of at
least the same time duration.
In order to enforce the foregoing covenant, Giga-tronics
shall have the right to place restrictive legends on the certificates
representing the shares subject to this Section and to impose stop transfer
instructions with respect to the shares of stock of each Holder (and the shares
or securities of every other person subject to the foregoing restriction).
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2. ASSIGNMENT.
2.1 Assignment. Notwithstanding anything herein to the
contrary, the registration rights of a Holder under Section 1 hereof may be
assigned only to a party who acquires from Holder at least Twenty Thousand
(20,000) shares of Common Stock that constitute the original number of
Registrable Securities (as such number may be adjusted to reflect subdivisions,
combinations and stock dividends of Giga-tronics' Common Stock) or as a
distribution made by a Holder which is a partnership to the limited partners of
such Holder of Registrable Securities; provided, however that no party may be
assigned any of the foregoing rights until Giga-tronics is given written notice
by the assigning party at the time of such assignment stating the name and
address of the assignee and identifying the securities of Giga-tronics as to
which the rights in question are being assigned; provided, further that any such
assignee shall receive such assigned rights subject to all the terms and
conditions of this Agreement, including without limitation the provisions of
this Section 2.
3. GENERAL PROVISIONS.
3.1 Notices. Any notice, request or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered or if deposited in the U.S. mail by
registered or certified mail, return receipt requested, postage prepaid, as
follows:
(a) if to Giga-tronics, at:
Giga-tronics Incorporated
0000 Xxxxxx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Xx.
Chief Executive Officer
Facsimile: 510/328-4700
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
Pacific Telesis Tower
Xxx Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: 415/986-5309
(b) If to Holders:
To the address set forth on Exhibit A hereto
with a copy to:
Xxxxxxx & Xxxxxx, a Law Corporation
Eighth Floor, 00 Xxxxxxx Xxxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. XxXxxxxx, Esq.
Facsimile: 408/998-4790
Any party hereto (and such party's permitted assigns) may by notice so given
provide and change its address for future notices hereunder. Notice shall
conclusively be deemed to have been given when personally delivered or when
deposited in the mail in the manner set forth above.
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3.2 Entire Agreement. This Agreement and the Plan
constitute and contains the entire agreement and understanding of the parties
with respect to the subject matter hereof and supersede any and all prior
negotiations, correspondence, agreements, understandings, duties or obligations
between the parties respecting the subject matter hereof.
3.3 Amendment of Rights. Any provision of this Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of Giga-tronics and Holders of a majority of all Registrable
Securities then outstanding. Any amendment or waiver effected in accordance with
this Section 3.3 shall be binding upon each Holder, each permitted successor or
assignee of such Holder and Giga-tronics.
3.4 Governing Law. This Agreement shall be governed by and
construed exclusively in accordance with the laws of the State of California,
excluding that body of law relating to conflict of laws.
3.5 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, then such
provision(s) shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision(s) were so excluded and
shall be enforceable in accordance with its terms.
3.6 Third Parties. Nothing in this Agreement, express or
implied, is intended to confer upon any person, other than the parties hereto
and their successors and assigns, any rights or remedies under or by reason of
this Agreement.
3.7 Successors And Assigns. Subject to the provisions of
Section 2.1, the provisions of this Agreement shall inure to the benefit of, and
shall be binding upon, the successors and permitted assigns of the parties
hereto.
3.8 Captions. The captions to sections of this Agreement
have been inserted for identification and reference purposes only and shall not
be used to construe or interpret this Agreement.
3.9 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.10 Costs And Attorneys' Fees. In the event that any
action, suit or other proceeding is instituted concerning or arising out of this
Agreement or any transaction contemplated hereunder, the prevailing party shall
recover all of such party's costs and attorneys' fees incurred in each such
action, suit or other proceeding, including any and all appeals or petitions
therefrom.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
GIGA-TRONICS INCORPORATED SHAREHOLDERS
By: /s/ Xxxxxx X. Xxxxx, Xx. /s/ Ultracision shareholders
Title: Chief Executive Officer
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
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