TABLE OF CONTENTS

 

1.	Definitions
2.	Shelf Registration
3.	Liquidated Damages
4.	Registration Procedures
5.	Registration Expenses
6.	Indemnification
7.	Rules 144 and 144A
8.	Underwritten Registrations
9.	Miscellaneous

 

i

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “ Agreement ”) is dated as of June 8, 2005, by and between Symmetricom, Inc., a Delaware corporation (the “ Company ”), and Deutsche Bank Securities Inc. and RBC Capital Markets Corporation (the “ Initial Purchasers ”).

 

This Agreement is entered into in connection with the Purchase Agreement dated June 2, 2005 (the “ Purchase Agreement ”) between the Company and the Initial Purchasers, which provides for the sale by the Company to the Initial Purchasers of $100,000,000 aggregate principal amount of the Company’s 3¼% Contingent Convertible Subordinated Notes Due 2025 (the “ Firm Notes ”), plus up to an additional $20,000,000 aggregate principal amount of the same which the Initial Purchasers may subsequently elect to purchase pursuant to the terms of the Purchase Agreement (the “ Option Notes ” and, together with the Firm Notes, the “ Notes ”), which are convertible into common stock, par value $0.0001 per share, of the Company (the “ Underlying Shares ”).  The Notes are being issued pursuant to an Indenture dated as of the date hereof (the “ Indenture ”), by and between the Company and Wells Fargo Bank, National Association, as Trustee.

 

In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Company has agreed to provide the registration rights set forth in this Agreement for the benefit of the Initial Purchasers and subsequent holders of the Notes or Underlying Shares as provided herein.  The execution and delivery of this Agreement is a condition to the Initial Purchasers’ obligation to purchase the Firm Notes under the Purchase Agreement.

 

The parties hereto hereby agree as follows:

 

1.                                        Definitions . As used in this Agreement, the following terms shall have the following meanings:

 

“ Agreement ”:  See the first introductory paragraph hereto.

 

“ Amendment Effectiveness Deadline Date ”:  See Section 2(d)(i) hereof.

 

“ Amount of Registrable Securities ”:  (a) With respect to Notes constituting Registrable Securities, the aggregate principal amount of all such Notes then outstanding, (b) with respect to Underlying Shares constituting Registrable Securities, the aggregate number of such Underlying Shares outstanding multiplied by the Conversion Price (as defined in the Indenture) in effect at the time of computing the Amount of Registrable Securities or, if no Notes are then outstanding, the Conversion Price shall be calculated as if the Notes were continuously outstanding to the date of calculation, giving effect to any adjustments to the Conversion Price set forth in the Indenture as if the Indenture continued to be in effect, and (c) with respect to combinations thereof, the sum of (a) and (b) for the relevant Registrable Securities.

 

“ Business Day ”:  Any day that is not a Saturday, Sunday or a day on which banking institutions in the City of New York are authorized or required by law or executive order to be closed.

 

“ Closing Date ”:  June 8, 2005.

 

 

“ Company ”:  See the first introductory paragraph hereto.

 

“ Controlling Person ”:  See Section 6 hereof.

 

“ Damages Payment Date ”:  See Section 3(c) hereof.

 

“ Deferral Period ”:  See Section 3(b) hereof.

 

“ Depositary ”:  The Depository Trust Company until a successor is appointed by the Company.

 

“ Designated Counsel ”:  One firm of counsel chosen by the Holders of a majority in Amount of Registrable Securities to be included in a Registration Statement for a Shelf Registration and identified to the Company in writing prior to the filing of such Registration Statement.

 

“ Effectiveness Date ”:  The 180 ^th day after the Closing Date.

 

“ Effectiveness Period ”:  See Section 2(a) hereof.

 

“ Exchange Act ”:  The Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

“ Filing Date ”:  The 90 ^th day after the Closing Date.

 

“ Firm Notes ”:  See the second introductory paragraph hereto.

 

“ Holder ”:  Any beneficial owner from time to time of Registrable Securities.

 

“ Indemnified Holder ”:  See Section 6 hereof.

 

“ Indemnified Person ”:  See Section 6 hereof.

 

“ Indemnifying Person ”:  See Section 6 hereof.

 

“ Indenture ”:  See the second introductory paragraph hereto.

 

“ Initial Purchasers ”:  See the first introductory paragraph hereto.

 

“ Initial Shelf Registration ”:  See Section 2(a) hereof.

 

“ Inspectors ”:  See Section 4(k) hereof.

 

“ Liquidated Damages ”:  See Section 3(a) hereof.

 

“ Notes ”:  See the second introductory paragraph hereto.

 

“ Notice and Questionnaire ”:  means a written notice delivered to the Company containing substantially the information called for by the Form of Selling Securityholder Notice

 

2

 

and Questionnaire attached as Appendix A to the Offering Memorandum of the Company relating to the Notes.

 

“ Option Notes ”:  See the second introductory paragraph hereto.

 

“ Person ”:  An individual, partnership, corporation, limited liability company, unincorporated association, trust or joint venture, or a governmental agency or political subdivision thereof.

 

“ Prospectus ”:  The prospectus included in any Registration Statement (including, without limitation, any prospectus subject to completion and a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, 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.

 

“ Purchase Agreement ”:  See the second introductory paragraph hereto.

 

“ Records ”:  See Section 4(k) hereof.

 

“ Registrable Securities ”:  All Notes and all Underlying Shares upon original issuance thereof and at all times subsequent thereto until the earliest to occur of (i) a Registration Statement covering such Notes and Underlying Shares having been declared effective by the SEC and such Notes or Underlying Shares having been disposed of in accordance with such effective Registration Statement, (ii) such Notes or Underlying Shares having been sold in compliance with Rule 144 or being able to (except with respect to affiliates of the Company within the meaning of the Securities Act) be sold in compliance with Rule 144(k), or (iii) such Notes or Underlying Shares ceasing to be outstanding.

 

“ Registration Default ”:  See Section 3(a) hereof.

 

“ Registration Statement ”:  Any registration statement of the Company filed with the SEC pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all documents incorporated by reference or deemed to be incorporated by reference in such registration statement.

 

“ Rule 144 ”:  Rule 144 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule (other than Rule 144A) or regulation hereafter adopted by the SEC providing for offers and sales of securities made in compliance therewith resulting in offers and sales by subsequent holders that are not affiliates of an issuer of such securities being free of the registration and prospectus delivery requirements of the Securities Act.

 

“ Rule 144A ”:  Rule 144A promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule (other than Rule 144) or regulation hereafter adopted by the SEC.

 

3

 

“ Rule 415 ”:  Rule 415 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.

 

“ SEC ”:  The U.S. Securities and Exchange Commission.

 

“ Securities Act ”:  The Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

“ Selling Holder ”:  On any date, any Holder that has delivered a Notice and Questionnaire to the Company on or prior to such date.

 

“ Shelf Registration ”:  See Section 2(b) hereof.

 

“ Shelf Registration Statement ”:  See Section 2(b) hereof.

 

“ Subsequent Shelf Registration ”:  See Section 2(b) hereof.

 

“ TIA ”:  The Trust Indenture Act of 1939, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

“ Trustee ”:  The Trustee under the Indenture.

 

“ Underlying Shares ”:  See the second introductory paragraph hereto.

 

“ Underwritten Registration ” or “ Underwritten Offering ”:  A registration in which Registrable Securities are sold to an underwriter for reoffering to the public.

 

2.                                        Shelf Registration .

 

(a)                                   Shelf Registration .  The Company shall file with the SEC a Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 covering all of the Registrable Securities (the “ Initial Shelf Registration ”) on or prior to the Filing Date.

 

The Initial Shelf Registration shall be on Form S-3 or another appropriate form permitting registration of the Registrable Securities for resale by Holders in the manner or manners designated by them (excluding Underwritten Offerings).  The Company shall not permit any securities other than the Registrable Securities to be included in the Initial Shelf Registration or any Subsequent Shelf Registration (as defined below).

 

The Company shall use its commercially reasonable efforts to cause the Initial Shelf Registration to be declared effective under the Securities Act on or prior to the Effectiveness Date and to keep the Initial Shelf Registration continuously effective under the Securities Act until the date that is two years after the Closing Date, or if later, the date on which the Option Notes were issued, (such period, as it may be shortened pursuant to clauses (i), (ii) or (iii) immediately following, the “ Effectiveness Period ”), or such shorter period ending when (i) all of the Registrable Securities covered by the Initial Shelf Registration have been sold in the manner set forth and as contemplated in the Initial Shelf Registration, (ii) the date on which all of the Registrable Securities (x) held by Persons who are not affiliates of the Company may be

 

4

 

resold pursuant to Rule 144(k) under the Securities Act or (y) cease to be outstanding, or (iii) all the Registrable Securities have been resold pursuant to Rule 144 under the Securities Act.

 

(b)                                  Subsequent Shelf Registrations .  If the Initial Shelf Registration ceases to be effective for any reason at any time during the Effectiveness Period (other than because of the sale of all of the Registrable Securities registered thereunder), the Company shall use its commercially reasonable efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof, and in any event shall within 45 days of such cessation of effectiveness amend the Initial Shelf Registration in a manner to obtain the withdrawal of the order suspending the effectiveness thereof, or file an additional “shelf” Registration Statement pursuant to Rule 415 covering all of the Registrable Securities (a “ Subsequent Shelf Registration ”).  If a Subsequent Shelf Registration is filed, the Company shall use its commercially reasonable efforts to cause the Subsequent Shelf Registration to be declared effective under the Securities Act as soon as practicable after such filing and to keep such Registration Statement continuously effective for the balance of the Effectiveness Period.  As used herein, the term “ Shelf Registration ” means the Initial Shelf Registration or any Subsequent Shelf Registration and the term “ Shelf Registration Statement ” means any Registration Statement filed in connection with a Shelf Registration.

 

(c)                                   Supplements and Amendments .  The Company shall promptly supplement and amend a Shelf Registration if required by the rules, regulations or instructions applicable to the registration form used for such Shelf Registration, if required by the Securities Act, or if reasonably requested by the Holders of a majority in Amount of Registrable Securities covered by such Shelf Registration Statement.

 

(d)                                  Notice and Questionnaire .  Each Holder agrees that if such Holder wishes to sell Registrable Securities pursuant to a Shelf Registration Statement and related Prospectus, it will do so only in accordance with this Section 2(d) and Section 4A hereof.  Each Holder wishing to sell Registrable Securities pursuant to a Shelf Registration Statement and related Prospectus agrees to deliver a Notice and Questionnaire to the Company at least two (2) Business Days prior to the date that the Initial Shelf Registration Statement is declared effective under the Securities Act.  From and after the date the Initial Shelf Registration Statement is declared effective, the Company shall, as promptly as practicable after the date a Notice and Questionnaire is delivered, and in any event upon the later of (x) ten (10) days after such date, if a supplement to the related Prospectus may be filed, (y) forty-five (45) days after such date, if a post-effective amendment to the Shelf Registration Statement or an additional Shelf Registration Statement is required to be filed, provided, that in no event shall the Company be required to file a post-effective amendment to the Shelf Registration Statement for the purpose of naming Holders as selling securityholders more frequently than once per fiscal quarter, or (z) ten (10) Business Days after the expiration of any Deferral Period in effect when the Notice and Questionnaire is delivered:

 

(i)                                      if required by applicable law, file with the SEC a post-effective amendment to the Shelf Registration Statement or prepare and, if permitted by applicable law, file a supplement to the related Prospectus or a supplement or amendment to any document incorporated therein by reference or file any other required document so that the Holder delivering such Notice and Questionnaire is

 

5

 

named as a selling securityholder in the Shelf Registration Statement and the related Prospectus in such a manner as to permit such Holder to deliver such Prospectus to purchasers of the Registrable Securities (subject to the rights of the Company under Section 3(b) to create a Deferral Period) in accordance with applicable law and, if the Company shall file a post-effective amendment to the Shelf Registration Statement, use its commercially reasonable efforts to cause such post-effective amendment to be declared effective under the Securities Act as promptly as practicable, but in any event by the date (the “ Amendment Effectiveness Deadline Date ”) that is forty-five (45) days after the date such post-effective amendment is required by this clause to be filed;

 

(ii)                                   provide such Holder copies of any documents filed pursuant to Section 2(d)(i); and

 

(iii)                                notify such Holder as promptly as practicable after the effectiveness under the Securities Act of any post-effective amendment filed pursuant to Section 2(d)(i); provided that if such Notice and Questionnaire is delivered during a Deferral Period, the Company shall so inform the Holder delivering such Notice and Questionnaire and shall take the actions set forth in clauses (i), (ii) and (iii) above upon expiration of the Deferral Period.  Notwithstanding anything contained herein to the contrary, (i) the Company shall be under no obligation to name any Holder that has not delivered a Notice and Questionnaire to the Company in accordance with this Section 2(d).

 

3.                                        Liquidated Damages .

 

(a)                                   The Company and the Initial Purchasers agree that the Holders of Registrable Securities will suffer damages if the Company fails to fulfill its obligations under Section 2 hereof and that it would not be feasible to ascertain the extent of such damages with precision.  Accordingly, the Company agrees to pay liquidated damages on the Registrable Securities (“ Liquidated Damages ”) under the circumstances and to the extent set forth below (each of which shall be given independent effect; each a “ Registration Default ”):

 

(i)                                      if the Initial Shelf Registration is not filed on or prior to the Filing Date, then commencing on the day after the Filing Date, Liquidated Damages shall accrue on the Registrable Securities at a rate of 0.25% per annum on the Amount of Registrable Securities;

 

(ii)                                   if a Shelf Registration is not declared effective by the SEC on or prior to the Effectiveness Date, then commencing on the day after the Effectiveness Date, Liquidated Damages shall accrue on the Registrable Securities at a rate of 0.50% per annum on the Amount of Registrable Securities;

 

(iii)                                if a Shelf Registration has been declared effective and such Shelf Registration ceases to be effective at any time during the Effectiveness Period (other than as permitted under Section 3(b)), then commencing on the day after the date such Shelf Registration ceases to be effective, Liquidated Damages shall

 

6

 

accrue on the Registrable Securities held by Selling Holders at a rate of 0.50% per annum on the Amount of Registrable Securities held by Selling Holders;

 

(iv)                               if any post-effective amendment filed pursuant to Section 2(d)(i) has not become effective under the Securities Act on or prior to the Amendment Effectiveness Deadline Date, then commencing on the day after the Amendment Effectiveness Deadline Date, Liquidated Damages shall accrue on the Registrable Securities held by Selling Holders at a rate of 0.50% per annum on the Amount of Registrable Securities held by Selling Holders; and

 

(v)                                  if the aggregate duration of Deferral Periods in any period exceeds the number of days permitted in respect of such period pursuant to Section 3(b), then commencing on the day that caused the limit on the aggregate duration of Deferral Periods to be exceeded, Liquidated Damages shall accrue on the Registrable Securities held by Selling Holders at a rate of 0.50% per annum on the Amount of Registrable Securities held by Selling Holders;

 

provided that Liquidated Damages on the Registrable Securities may not accrue under more than one of the foregoing clauses (i), (ii), (iii), (iv) and (v) at any one time; and provided further that (1) upon the filing of the Initial Shelf Registration as required hereunder (in the case of clause (a)(i) of this Section 3), (2) upon the effectiveness of a Shelf Registration as required hereunder (in the case of clause (a)(ii) of this Section 3), (3) upon the effectiveness of a Shelf Registration which had ceased to remain effective (in the case of clause (a)(iii) of this Section 3), (4) upon the effectiveness of a post-effective amendment as required hereunder (in the case of clause (a)(iv) of this Section 3), or (5) upon the termination of the Deferral Period that caused the limit on the aggregate duration of Deferral Periods to be exceeded (in the case of clause (a)(v) of this Section 3), Liquidated Damages on the Registrable Securities as a result of such clause shall cease to accrue.  It is understood and agreed that, notwithstanding any provision to the contrary, no Liquidated Damages shall accrue on any Registrable Securities that are then covered by, and may be sold under, an effective Shelf Registration Statement.

 

(b)                                  Notwithstanding Section 3(a), the Company, upon written notice to the Holders, shall be permitted to suspend the availability of a Registration Statement covering the Registrable Securities for any bona fide reason whatsoever for up to 30 consecutive days (the “ Deferral Period ”) in any 90-day period without being obligated to pay Liquidated Damages; provided that Deferral Periods may not total more than 90 days in the aggregate in any twelve-month period.  The Company shall not be required to specify in the written notice to the Holders the nature of the event giving rise to the Deferral Period.

 

(c)                                   So long as Notes that are Registrable Securities remain outstanding, the Company shall notify the Trustee within five Business Days after each and every date on which an event occurs in respect of which Liquidated Damages are required to be paid.  Any amounts of Liquidated Damages due pursuant to clause (a)(i), (a)(ii), (a)(iii), (a)(iv) or (a)(v) of this Section 3 will be payable in cash semiannually on December 15 and June 15 of each year (each, a “ Damages Payment Date ”), commencing with the first such Damages Payment Date occurring after any such Liquidated Damages commences to accrue, to Holders to whom regular interest is payable on the Damages Payment Date, with respect to Notes that are Registrable Securities, and

 

7

 

to Persons that are registered Holders on December 1 and June 1 immediately prior to a Damages Payment Date with respect to Underlying Shares that are Registrable Securities, provided that any Liquidated Damages accrued with respect to any Note or portion thereof called for redemption by the Company on a redemption date or converted into Underlying Shares on a conversion date prior to the Damages Payment Date, shall, in any such event, be paid instead to the Holder who submitted such Note or portion thereof for redemption or conversion on the applicable redemption date or conversion date, as the case may be, on such date (or promptly following the conversion date, in the case of conversion).  The amount of Liquidated Damages for Registrable Securities will be determined by multiplying the applicable rate of Liquidated Damages by the Amount of Registrable Securities outstanding on the first Damages Payment Date following such Registration Default in the case of the first such payment of Liquidated Damages with respect to a Registration Default (and thereafter at the next succeeding Damages Payment Date until the cure of such Registration Default), multiplied by a fraction, the numerator of which is the number of days such Liquidated Damages rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months and, in the case of a partial month, the actual number of days elapsed), and the denominator of which is 360.

 

4.                                        Registration Procedures .

 

In connection with its registration obligations pursuant to Section 2 hereof, the Company shall:

 

(a)                                   Prepare and file with the SEC, on or prior to the Filing Date, a Registration Statement or Registration Statements as prescribed by Section 2 hereof, and use its commercially reasonable efforts to cause each such Registration Statement to become effective and remain effective as provided herein; provided that before filing any Registration Statement or Prospectus or any amendments or supplements thereto, the Company shall furnish to and afford the Initial Purchasers a reasonable opportunity to review copies of all such documents proposed to be filed (in each case, where possible, at least three Business Days prior to such filing, or such later date as is reasonable under the circumstances) and to reflect in each such document when so filed reasonable comments of the Initial Purchasers.  The Company shall not file any Registration Statement or Prospectus or any amendments or supplements thereto if the Holders of a majority in Amount of Registrable Securities shall reasonably object in writing within such period.  The Company shall be deemed not to have used all reasonable efforts to keep a Registration Statement effective during the Effectiveness Period if it voluntarily takes any action that would result in Selling Holders of the Registrable Securities covered thereby not being able to sell such Registrable Securities during that period unless such action is required by applicable law or unless the Company complies with this Agreement, including without limitation the provisions of Section 4(i) hereof.

 

(b)                                  Prepare and file with the SEC such amendments and post-effective amendments to each Shelf Registration, as may be necessary to keep such Registration Statement continuously effective for the Effectiveness Period; cause the related Prospectus to be supplemented by any prospectus supplement required by applicable law, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; and comply with the provisions of the Securities Act applicable to it with respect

 

8

 

to the disposition of all Registrable Securities covered by such Registration Statement as so amended or in such Prospectus as so supplemented.

 

(c)                                   Notify the Selling Holders and Designated Counsel, if any, promptly (but in any event within two Business Days), (i) when a Prospectus or any prospectus supplement or post-effective amendment to a Registration Statement has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective under the Securities Act (including in such notice a written statement that any Holder may, upon request, obtain, at the sole expense of the Company, one conformed copy of such Registration Statement or post-effective amendment, including financial statements and schedules, documents incorporated or deemed to be incorporated by reference and exhibits), (ii) of the issuance by the SEC of any stop order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of any Prospectus or the initiation of any proceedings for that purpose, (iii) of the happening of any event, the existence of any condition or any information becoming known (but not the nature or details concerning such event, condition or information) 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 or that requires the making of any changes in or amendments or supplements to such Registration Statement, Prospectus or documents so that, in the case of the 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 untr