<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
SSE Telecom, Inc.
-----------------
(Name of Issuer)
Common Stock
------------------------------
(Title of Class of Securities)
784652 10 9
--------------
(CUSIP Number)
Martine Funston, Esq.
Legal Counsel
Alcatel Telspace, S.A.
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
--------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 6, 1996
----------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box:
[ ]
Check the following box if a fee is being paid with this statement: [x]
<PAGE> 2
<TABLE>
<S> <C>
CUSIP NO. 784652 10 9
---------------------
- ----------------------------------------------------------------------------------------------
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Alcatel Telspace, S.A.
- ----------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [X]
- ----------------------------------------------------------------------------------------------
3. SEC Use Only
- ----------------------------------------------------------------------------------------------
4. Source of Funds
WC
- ----------------------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e)
[ ]
- ----------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
France
- ----------------------------------------------------------------------------------------------
Number of 7. Sole Voting Power
Shares 925,000
Beneficially ---------------------------------------------------
Owned by 8. Shared Voting Power
Each Reporting -0-
Person With ---------------------------------------------------
9. Sole Dispositive Power
925,000
---------------------------------------------------
10. Shared Dispositive Power
-0-
- ----------------------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
925,000
- ----------------------------------------------------------------------------------------------
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
[ ]
- ----------------------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
14.32%
- ----------------------------------------------------------------------------------------------
14. Type of Reporting Person
CO
- ----------------------------------------------------------------------------------------------
</TABLE>
- 2 -
<PAGE> 3
ITEM 1. SECURITY AND ISSUER
This statement relates to the common stock, par value $.01 per share
(the "Common Stock"), of SSE Telecom, Inc., a Delaware corporation (the
"Company"). The principal executive offices of the Company are located at 8230
Leesburg Pike, Suite 710, Vienna, Virginia 22182.
ITEM 2. IDENTITY AND BACKGROUND
This statement is being filed by Alcatel Telspace, a societe anonyme
organized under the laws of France ("Alcatel"), in connection with Alcatel's
acquisition of (a) 625,000 shares of Common Stock (the "Stock"), and (b) a
warrant exercisable for 300,000 additional shares of Common Stock (the
"Warrant"). The address of Alcatel's principal business and the address of
Alcatel's principal office is 5 rue Noel PONS, 92734 NANTERRE Cedex, France.
Alcatel's principal business is the design, manufacture, assembly and sale of
satellite and microwave telecommunications systems. During the last five years,
Alcatel has, to its knowledge, neither been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), nor been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction,
as a result of which Alcatel was or is subject to a judgment, decree or final
order enjoining further violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violations with
respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Alcatel paid cash, in an aggregate amount of $7,826,510.00, for the
Stock and the Warrant and the source of the cash was the working capital of
Alcatel.
ITEM 4. PURPOSE OF TRANSACTION
Alcatel acquired the Stock and the Warrant for general investment
purposes. Alcatel intends to review on a continuing basis its investment in
the Company. See Item 6 below, which is incorporated herein by reference, for
a description of certain board representation and observation rights granted to
Alcatel. As of the date of this Schedule 13D, no determination has been made
by Alcatel to acquire additional securities of the Company, to dispose of any
of the shares of the Stock that Alcatel currently owns, to transfer the
Warrant, in whole or part, or to exercise the Warrant, in whole or part,
although it reserves the right to decide to take any of such actions in the
future. Any such
- 3 -
<PAGE> 4
determination will depend on market conditions prevailing from time to time,
and on other conditions which may be applicable depending on the nature of the
transaction or transactions involved.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Alcatel currently owns 625,000 shares of Common Stock and the
Warrant represents the right to purchase 300,000 additional shares of Common
Stock at any time prior to September 6, 1999. The 925,000 shares of Common
Stock reported as beneficially owned by Alcatel represents, as of the date
hereof, approximately 14.32% of the issued and outstanding shares of Common
Stock.
(b) Alcatel has sole voting power of all of the shares of Common
Stock that it currently owns and, except for the limitations set forth in the
Stockholder Agreement (as defined in Item 6 below and incorporated herein by
reference), Alcatel has sole disposition power of all of the shares of Common
Stock that it currently owns.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIP WITH RESPECT
TO SECURITIES OF THE ISSUER
On September 6, 1996, the Company and Alcatel executed a Stock
Purchase and Investment Agreement (the "Investment Agreement") pursuant to
which the Company granted Alcatel, subject to the limitations set forth in such
agreement, certain pre-emptive rights with respect to future sales by the
Company of any shares of, or securities convertible into or exchangeable for
any shares of, any class of capital stock of the Company.
On September 6, 1996, the Company and Alcatel executed a Registration
Rights Agreement (the "Registration Rights Agreement") pursuant to which the
Company granted Alcatel, subject to the limitations set forth in such
agreement, certain demand, piggy-back and Form S-3 registration rights with
respect to the Stock and the shares of Common Stock issuable upon exercise of
the Warrant.
On September 6, 1996, the Company, Alcatel and certain other
stockholders of the Company executed a Stockholder Agreement (the "Stockholder
Agreement") pursuant to which the parties thereto granted to each other,
subject to the limitations set forth in such agreement, certain rights of first
refusal and certain co-sale rights with respect to future sales or transfers of
certain capital stock or securities issued by the Company (including, but not
limited to, the Common Stock) which are owned, now or hereafter, by the parties
thereto. In addition, the Company granted to Alcatel, subject to the
limitations set forth in the Stockholder Agreement, the ability to designate
an individual (the "Alcatel Designee") for nomination to the Company's board of
directors (the "Board") and the parties thereto agreed, subject to the
limitations set forth in such agreement, to use their best efforts to cause the
Alcatel Designee to be elected to the Board, including, but not limited to,
voting any capital stock or securities issued by the Company which are owned,
now or hereafter, by the parties thereto in favor of the Alcatel Designee. In
the event that an Alcatel Designee is not serving
- 4 -
<PAGE> 5
on the Board, then Alcatel shall have, subject to the limitations set forth in
the Stockholder Agreement, certain observation rights of the Board and its
proceedings.
On September 6, 1996, the Company, Alcatel and certain other
stockholders of the Company executed a Voting Agreement (the "Voting
Agreement") pursuant to which the parties thereto agreed, subject to the
limitations set forth in such agreement, to use their best efforts to cause the
Alcatel Designee to be elected to the Board, including, but not limited to,
voting any capital stock or securities issued by the Company which are owned,
now or hereafter, by the parties thereto in favor of the Alcatel Designee.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
1. Investment Agreement
2. Registration Rights Agreement
3. Stockholder Agreement
4. Voting Agreement
</TABLE>
- 5 -
<PAGE> 6
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 6, 1996
ALCATEL TELSPACE, S.A.
By: /s/ Jerome de Vitry
------------------------------------
Jerome de Vitry
Director of R & D Product Management
Attorney-in-Fact
<PAGE> 7
================================================================================
STOCK PURCHASE AND INVESTMENT AGREEMENT
BY AND BETWEEN
ALCATEL TELSPACE, S.A.
AND
SSE TELECOM, INC.
Dated as of September 6, 1996
================================================================================
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
ISSUANCE AND SALE OF STOCK
AND WARRANT
SECTION 2.1 Description of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Organization, Good Standing and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.2 Due Authorization, Execution and Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.5 Consents; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.6 SEC Filings; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.7 Property and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.9 Business Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.10 Employee and Consultant Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.11 Litigation and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.12 Labor Matters, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.13 Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.14 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.15 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.18 Offer or Sale of Shares and Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.19 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.20 Transactions With Directors, Officers, Employees and Affiliates . . . . . . . . . . . . . . . . . . 19
SECTION 3.21 Echostar Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.22 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
<PAGE> 9
<TABLE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
<S> <C> <C>
SECTION 4.1 Organization and Authority of the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.2 Due Authorization, Execution and Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.3 Consents; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.4 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.5 Purchase Entirely for Own Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.6 Investment Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.7 Restricted Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.8 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Limitations on Disposition of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.2 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.3 Proceeds of Sale of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.4 Echostar Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.5 Delivery of Budgets and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.6 Access to Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.7 Right of First Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.8 Special Purchase Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.9 Subsidiary Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.10 Confidential Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.11 Advice of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.12 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
SECTION 6.1 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.2 Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.3 Bring-Down Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.4 Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.5 Opinion of Company Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.6 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.7 No Adverse Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.8 Other Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.9 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.10 Closing Under Selling Stockholder Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.11 Execution of Transaction Documents and Warrant. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
iii
<PAGE> 10
<TABLE>
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
<S> <C> <C>
SECTION 7.1 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7.2 Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.3 Bring-Down Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.4 Purchaser's Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.5 No Adverse Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.6 Other Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.7 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 8.2 Indemnification by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 8.3 Indemnification by the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 8.4 Method of Asserting Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 8.5 Continued Liability for Indemnity Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.6 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.7 Exclusive Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.8 Time Limits on Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE IX
TERMINATION
SECTION 9.1 Grounds for Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9.3 Termination for Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 10.2 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 10.3 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 10.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 10.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 10.6 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
iv
<PAGE> 11
<TABLE>
<S> <C> <C>
SECTION 10.7 Benefits and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 10.8 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 10.9 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 10.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 10.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 10.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 10.13 No Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
v
<PAGE> 12
STOCK PURCHASE AND INVESTMENT AGREEMENT
THIS STOCK PURCHASE AND INVESTMENT AGREEMENT (the "Agreement") is made
as of September 6, 1996, by and between SSE TELECOM, INC., a Delaware
corporation (the "Company"), and ALCATEL TELSPACE, a societe anonyme organized
under the laws of France (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company and its subsidiaries are engaged in the business
of manufacturing and selling satellite telecommunication equipment; and
WHEREAS, shares of the common stock of the Company are publicly traded
on the NASDAQ Exchange; and
WHEREAS, the Purchaser desires to purchase an aggregate of 625,000
shares of the common stock of the Company, 525,000 of which the Purchaser
desires to purchase from the Company and 100,000 of which the Purchaser desires
to purchase from certain existing stockholders of the Company (the "Selling
Stockholders"); and
WHEREAS, the Company desires to issue and sell 525,000 shares of the
common stock of the Company to the Purchaser on the terms and conditions set
forth in this Agreement; and
WHEREAS, simultaneously with the closing under this Agreement, the
Purchaser will purchase 100,000 shares of the common stock of the Company from
the Selling Stockholders pursuant to the terms of that certain Stock Purchase
Agreement dated September 6, 1996 (the "Selling Stockholder Agreement").
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties contained herein and of the mutual benefits to
be derived herefrom, and intending to be legally bound, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. As used in this Agreement, the following
defined terms have the meanings indicated below:
"Affiliate" of a Person means a Person that directly or indirectly
through one or more intermediates, controls, is controlled by, or is under
common control with, the first Person.
<PAGE> 13
"Assets" of a Person means all rights, titles and interests in, to and
under all of the properties, assets, rights, claims and Contracts of every
kind, character and description owned or held by such Person, whether real,
personal or mixed, tangible or intangible (including goodwill), and whether now
owned or hereafter acquired, including, without limitation, all assets
reflected on the financial statements of such Person, as the same may exist on
the Closing Date.
"Agreement" has the meaning set forth in the introductory paragraph
hereof.
"Benefit Plan" means any Plan established by the Company or any of its
Subsidiaries, or any predecessor or Affiliate of the Company or any of its
Subsidiaries, existing at the Closing or prior thereto, to which the Company or
any of its Subsidiaries contribute or have contributed on behalf of any present
or former Employee, officer, director, independent contractor or consultant (in
each case rendering services to the Company or any of its Subsidiaries) or
under which any such individual or any beneficiary thereof is covered, is
eligible for coverage or has benefit rights.
"Board of Arbitration" has the meaning set forth in Section 8.4(c).
"Business" means the business and activities currently conducted by
the Company and its Subsidiaries and such business and activities as are
conducted at any time hereafter.
"Business Day" means any day which is not a Saturday, Sunday or legal
holiday in New York, New York or Paris, France.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, and the rules and regulations
promulgated thereunder.
"CERCLIS" means the Comprehensive Environmental Response and Liability
Information System, as provided for by 40 C.F.R. Section 300.5.
"Claim Notice Period" has the meaning set forth in Section 8.4(b).
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Commercial Agreement" means that certain Joint Product Identification
and Supply Agreement to be entered into between the Company and the Purchaser
in the form of Exhibit A hereto.
"Common Stock" means the authorized common stock of the Company, par
value $.01 per share, whether or not issued and outstanding.
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"Company" has the meaning set forth in the introductory paragraph
hereof.
"Contracts" means all contracts, agreements, license agreements,
leases, assignments, purchase agreements, indentures, mortgages, instruments of
indebtedness, security agreements, guaranties, purchase orders, sales orders,
and distribution agreements.
"Control" (whether or not capitalized) means, with respect to a
Person, the possession, directly or indirectly, of the power to direct or cause
the direction of the management policies of such Person whether through the
ownership of voting securities, by Contract or otherwise and, in any event, and
without limitation of the foregoing, any Person fifty percent (50%) or more of
whose voting securities are owned by another Person shall be deemed to be
controlled that Person.
"Echostar" has the meaning set forth in Section 3.21.
"Echostar Debenture" has the meaning set forth in Section 3.21.
"Echostar Letter" has the meaning set forth in Section 3.21.
"Echostar Stock" has the meaning set forth in Section 3.21.
"Employee" means each full time employee of the Company or any of its
Subsidiaries.
"Environmental Law" means all Laws and Orders concerning pollution or
protection of the environment, public health and safety, or employee health and
safety, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water,
groundwater, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes including, without limitation, CERCLA, the Resource
Conservation and Recovery Act, as amended, the Clean Air Act, as amended, the
Clean Water Act, as amended, and the Occupational Safety and Health Act, as
amended, and similar state and local laws, rules and regulations.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Financial Investor" means a Person meeting the requirements of Rule
13d-1(b)(1)(i) under the Exchange Act.
"Financial Statements" has the meaning set forth in Section 3.6.
"First Offer Notice" has the meaning set forth in Section 5.7(a).
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"GAAP" means generally accepted accounting principles, consistently
applied.
"Governmental Authority" means any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision.
"Hazardous Materials" means (i) any petroleum or petroleum products,
flammable or explosive materials, radioactive materials, asbestos in any form
that is friable, urea formaldehyde foam insulation and transformers or other
equipment that contain dielectric fluid containing levels of polychlorinated
biphenyls (PCBs), (ii) any chemicals or other materials or substances which are
now or hereafter become defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants"
or words of similar import under any Environmental Law, and (iii) any other
chemical or other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated by any Governmental Authority under any
Environmental Law.
"Income Taxes" means all Taxes relating to income, profits, gross
receipts, net worth or capital.
"Indemnified Party" means any Person claiming indemnification under
any provision of Article VIII.
"Indemnifying Party" means any Person against whom a claim for
indemnification is being asserted under any provision of Article VIII.
"Indemnity Notice" has the meaning set forth in Section 8.4(b).
"Indemnity Response Period" has the meaning set forth in Section
8.4(b).
"Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service mark rights, service names and service name rights, brand
names, inventions, processes, formulae, copyrights and copyright rights, trade
dress, business and product names, logos, slogans, trade secrets, industrial
models, processes, designs, methodologies, computer programs (including all
source codes) and related documentation, technical information, manufacturing,
engineering and technical drawings, know-how and all pending applications for
and registrations of patents, trademarks, service marks and copyrights.
"IRS" means the United States Internal Revenue Service.
"June Balance Sheet" has the meaning set forth in Section 3.6(c).
"Knowledge of the Company" means the actual knowledge of any of the
officers or directors of the Company or any of its Subsidiaries.
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<PAGE> 16
"Laws" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental Authority.
"Liabilities" means all indebtedness, obligations and other
liabilities (whether absolute, accrued, contingent, fixed or otherwise, or
whether known or unknown, or whether due or to become due).
"Licenses" means all licenses, permits, certificates of authority,
variances, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental Authority.
"Liens" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge, rights of others or other encumbrance
of any kind, or any conditional sale contract, title retention contract or
other contract to give any of the foregoing.
"Losses" means any and all damages, fines, costs, fees, penalties,
deficiencies, losses, amounts paid in settlement and expenses (including
without limitation interest, court costs, fees of attorneys, accountants and
other experts or other expenses of litigation or other proceedings or of any
claim, default or assessment).
"Multiemployer Plan" has the meaning set forth in Section 3.15(h).
"NPL" means the National Priorities List under CERCLA.
"New Securities" means any shares of, or securities convertible into
or exchangeable for any shares of, any class of the capital stock of the
Company, provided that such term does not include: (i) the Stock, (ii)
securities issued pursuant to the acquisition of another business entity by the
Company by merger, purchase of substantially all of the assets of such entity,
or other reorganization whereby the Company, following such transaction, owns
not less than a majority of the voting power of such entity, (iii) shares of
Common Stock, or options to purchase shares of Common Stock (and the shares of
Common Stock issuable upon exercise of such options), in each case issued
pursuant to any arrangement approved by the Board of Directors of the Company
to employees, officers, directors or consultants of the Company or any of its
Subsidiaries, (iv) shares of Common Stock issued in connection with any stock
split, stock dividend or recapitalization of the Company, (v) shares of Common
Stock issued upon the exercise of warrants, options or convertible securities
if the issuance of such warrants, options or convertible securities was subject
to the right of first offer granted under Section 5.7 or occurred prior to the
date of this Agreement and shares of Common Stock issued upon the exercise of
the Warrant, or (vi) securities sold by the Company to the public in an
offering pursuant to a registration statement filed with the SEC under the
Securities Act, provided that the exception in this clause (vi) shall apply in
the case of an underwritten public offering only if the managing underwriter of
such offering advises the Company in writing that in its good faith judgment
the purchase right of the Purchaser in connection with such offering would be
incompatible with the success of the offering.
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<PAGE> 17
"Order" means any writ, judgment, decree, injunction, charge or
similar order of any Governmental Authority (in each such case whether
preliminary or final).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"PBGC" means the Pension Benefit Guaranty Corporation established
under ERISA.
"Pension Benefit Plan" means each Benefit Plan which is a pension
benefit plan within the meaning of Section 3(2) of ERISA.
"Permitted Lien" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings, (ii)
any statutory Lien arising in the Ordinary Course of Business by operation of
Law with respect to a Liability that is not yet due or delinquent, (iii) any
minor imperfection of title or recorded easements, covenants or other
restrictions which individually or in the aggregate with other such items would
not have a material adverse effect on the Business, and (iv) mortgages and
security interests securing the repayment of borrowed money entered into by the
Company or any of its Subsidiaries in the Ordinary Course of Business, the
terms of which have not been breached or violated by the Company or any of its
Subsidiaries.
"Person" means any natural person, corporation, general partnership,
limited partnership, proprietorship, limited liability company, joint venture,
other business organization, trust, union, association or Governmental
Authority.
"Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation, unemployment or other employee benefit plan, practice, policy or
arrangement of any kind, whether written or oral, including, but not limited
to, any "employee benefit plan" as defined in Section 3(3) of ERISA.
"Purchase Price" has the meaning set forth in Section 2.1(a).
"Purchaser" has the meaning set forth in the introductory paragraph
hereof.
"Purchaser Percentage" means a fraction (i) the numerator of which is
the total number of shares of Common Stock owned by the Purchaser, and (ii) the
denominator of which is the total number of shares of Common Stock outstanding
at the time the First Offer Notice is given (in each case assuming the
conversion of all shares, if any, convertible into Common Stock).
"Registration Rights Agreement" means the Registration Rights
Agreement to be entered into by the Company and the Purchaser in the form of
Exhibit B hereto.
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<PAGE> 18
"Restricted Investor" means any Person, other than a Financial
Investor or any Selling Stockholder, who proposes to acquire Voting Stock if
either (i) such Person owns ten percent (10%) or more of the Total Voting Power
of the Company prior to such acquisition, or (ii) as a result of such
acquisition, such Person would own ten percent (10%) or more of the Total
Voting Power of the Company immediately following such acquisition.
"Rule 144" has the meaning set forth in Section 4.7.
"Rules of Arbitration" has the meaning set forth in Section 8.4(c).
"SEC" means the Securities and Exchange Commission.
"SEC Reports" has the meaning set forth in Section 3.6(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Stockholder" means any individual stockholder of the Company
that is a party to the Selling Stockholder Agreement.
"Selling Stockholder Agreement" has the meaning set forth in the last
recital hereof.
"Stock" means all shares of Common Stock to be issued and sold by the
Company to the Purchaser hereunder.
"Stockholder Agreement" means the Stockholder Agreement to be entered
into by the Company and certain stockholders of the Company in the form of
Exhibit C hereto.
"Subsidiary" of a Person means a Person that is, directly or
indirectly, through one or more intermediates controlled by the first Person.
"Tax Returns" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Tax" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Third Party Claim" has the meaning set forth in Section 8.4(a).
"Third Party Claim Notice" has the meaning set forth in Section
8.4(a).
"Third Party Claim Notice Period" has the meaning set forth in Section
8.4(a).
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<PAGE> 19
"Third Party Claim Response Period" has the meaning set forth in
Section 8.4(a).
"Total Voting Power of the Company" means the total number of votes
which may be cast in the election of directors of the Company at any meeting of
the stockholders of the Company if all securities entitled to vote in the
election of directors of the Company were present and voted at such meeting
(other than votes that may be cast only upon the occurrence of a contingency).
"Transaction Documents" means, collectively, the Stockholder
Agreement, the Registration Rights Agreement, the Commercial Agreement and the
Voting Agreement.
"Treasury Regulations" means the regulations prescribed under the
Code.
"Voting Agreement" means the Voting Agreement to be entered into by
the Company, the Purchaser and certain other stockholders of the Company in the
form of Exhibit D hereto.
"Voting Stock" means the Common Stock and any other capital stock or
securities issued by the Company having the ordinary power to vote in the
election of directors of the Company (other than such capital stock or
securities having such power only on the occurrence of a contingency).
"Voting Stock Notice" has the meaning set forth in Section 5.8(b).
"Warrant" has the meaning set forth in Section 2.1(b).
"Warrant Price" has the meaning set forth in Section 2.1(b).
ARTICLE II
ISSUANCE AND SALE OF STOCK
AND WARRANT
SECTION 2.1 Description of Transactions.
(a) Stock Transaction. Subject to the terms and
conditions of this Agreement, the Purchaser agrees to purchase at the
Closing, and the Company agrees to sell and issue to the Purchaser at
the Closing, 525,000 shares of the authorized and unissued Common
Stock of the Company for a purchase price of US $12.86 per share, and
for an aggregate purchase price of US $6,751,500.00 (the "Purchase
Price"), payable in cash. At the Closing, the Company shall deliver
to the Purchaser a certificate representing the Stock purchased by the
Purchaser, free and clear of all Liens, duly executed by the
appropriate officers of the Company and bearing or accompanied by all
requisite stock transfer stamps, and the Purchaser shall pay to the
Company the Purchase Price by wire transfer of immediately available
funds to the
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<PAGE> 20
account designated by the Company at least one Business Day prior to
the Closing Date or, if no such account is designated, by bank or
certified check.
(b) Warrant Transaction. Subject to the terms and
conditions of this Agreement, the Purchaser agrees to purchase at the
Closing, and the Company agrees to sell and issue to the Purchaser at
the Closing, a Warrant in the form of Exhibit E hereto (the "Warrant")
for a purchase price of US $10 (the "Warrant Price"). At the Closing,
the Company shall deliver to the Purchaser the Warrant, free and clear
of all Liens, duly executed by the appropriate officers of the
Company, and the Purchaser shall pay to the Company the Warrant Price
by wire transfer of immediately available funds to the account
designated by the Company at least one Business Day prior to the
Closing Date or, if no such account is designated, by bank or
certified check.
(c) Other Transactions. Subject to the terms and
conditions of this Agreement, at the Closing the Company shall execute
and deliver the Transaction Documents.
SECTION 2.2 Closing. The purchase and sale of the Stock and the
Warrant (the "Closing") shall take place at the offices of Moore & Van Allen,
PLLC, NationsBank Corporate Center, 100 North Tryon Street, Floor 47,
Charlotte, North Carolina, 28202-4003, at 9:00 a.m., on the third Business Day
following the fulfillment or waiver of the conditions precedent referred to in
Articles VI and VII hereof or at such other time and place as the Company and
the Purchaser mutually agree upon in writing (the "Closing Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as
follows:
SECTION 3.1 Organization, Good Standing and Qualification. Each of
the Company and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the State of its incorporation
and has all requisite corporate power and authority to carry on its Business as
now conducted and as proposed to be conducted by it, to own the Assets owned by
it and to lease the Assets held by it under lease. Each of the Company and its
Subsidiaries is duly qualified to transact business and is in good standing in
each jurisdiction where the character of the Assets it owns, leases or
operates, or the conduct of its Business, requires such qualification, other
than in any jurisdiction where the failure to so qualify would not have a
material adverse effect on its Business. The Company has the corporate power
and authority to enter into and perform its obligations under this Agreement,
the Warrant and the Transaction Documents.
SECTION 3.2 Due Authorization, Execution and Delivery. The
execution, delivery and performance of this Agreement, the Warrant and the
Transaction Documents by the Company and the consummation of the transactions
contemplated hereby and thereby by the Company have been duly authorized by all
necessary corporate action on the part of the
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<PAGE> 21
Company. This Agreement has been, and at Closing the Warrant and the
Transaction Documents will be, duly executed and delivered by the Company.
This Agreement constitutes, and the Warrant, the Transaction Documents and all
other instruments and documents to be executed and delivered by the Company
hereunder will, when executed and delivered, constitute, the legal, valid and
binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except as such enforcement (i) may be
limited by bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally, and (ii) is subject to the availability of
equitable remedies, as determined in the discretion of the court before which
such a proceeding may be brought.
SECTION 3.3 Capitalization.
(a) Authorized and Issued Capital Stock of the Company.
The authorized capital stock of the Company consists, and will consist
as of the Closing, of 10,000,000 shares of Common Stock, and 5,933,421
shares of Common Stock have been duly and validly issued, are
fully-paid and nonassessable and are the only issued and outstanding
shares of capital stock of the Company. Each Selling Stockholder owns
beneficially and of record the number of shares of Common Stock
described on Schedule 3.3(a). Schedule 3.3(a) also sets forth the
number of shares of Common Stock held in the treasury of the Company
immediately prior to the Closing under this Agreement.
(b) Authorized and Issued Capital Stock of Subsidiaries.
The authorized capital stock of each Subsidiary of the Company
consists, and will consist as of Closing, of the number and class of
shares set forth beside the name of such Subsidiary on Schedule 3.3(b).
The issued and outstanding shares of capital stock of each Subsidiary
of the Company shown beside the name of such Subsidiary on Schedule
3.3(b) have been validly issued, are fully paid and non-assessable and
are the only issued and outstanding shares of capital stock of such
Subsidiary. All issued and outstanding shares of capital stock of each
Subsidiary are owned beneficially and of record by the Company.
(c) Stock Rights. Except as set forth on Schedule
3.3(c), (i) there are no outstanding subscriptions, options, warrants,
rights (including conversion or preemptive rights) or Contracts,
orally or in writing, obligating the Company or any of its
Subsidiaries, contingently or otherwise, to issue or sell, or cause to
be issued or sold, any shares of capital stock or other equity
interest, or any securities convertible into or exchangeable for
capital stock or other equity interest, in the Company or any of its
Subsidiaries, (ii) there are no outstanding rights or Contracts,
orally or in writing, obligating the Company or any of its
Subsidiaries, contingently or otherwise, to purchase or redeem, or
cause to be purchased or redeemed, any shares of capital stock or
other equity interest, or any securities convertible into or
exchangeable for capital stock or other equity interest, in the
Company or any of its Subsidiaries, and (iii) neither the Company nor
any of its Subsidiaries is a party to or bound by any Contract or
understanding, oral or written, and, to the Knowledge of the Company,
there is no Contract or understanding, oral or written, between any
Persons, which affects or relates to the voting or giving of written
consents with respect to any
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<PAGE> 22
security of the Company or any of its Subsidiaries or by a director of
the Company or any of its Subsidiaries other than the Voting Agreement
and the Stockholder Agreement.
(d) Valid Issuance of Stock and Warrant. The Stock has
been duly and validly authorized and, when issued, sold and delivered
by the Company to the Purchaser in accordance with the terms hereof
for the consideration expressed herein, will be duly and validly
issued, fully-paid and nonassessable, free and clear of any preemptive
right or other right to acquire and free and clear of all Liens. The
Common Stock issuable upon exercise of the Warrant has been duly and
validly reserved by the Company. The Common Stock issuable upon
exercise of the Warrant has been duly authorized and, when issued in
compliance with the terms of the Warrant, will be duly and validly
issued, fully paid and nonassessable, free and clear of any preemptive
right or other right to acquire and free and clear of all Liens. The
Stock, Warrant and the Common Stock issuable upon the exercise of the
Warrant will be issued to the Purchaser by the Company hereunder or
thereunder in compliance with all applicable federal and state
securities Laws.
(e) No Preemptive Rights. The execution, delivery and
performance of this Agreement by the Company and the consummation of
the transactions contemplated hereby will not (i) give rise to or
result in any preemptive rights, rights of first refusal or other
rights to acquire any shares of capital stock or other equity
interest, or any securities convertible into or exchangeable for
capital stock or other equity interest, in the Company or any of its
Subsidiaries, in favor of any Person, or (ii) result in any
anti-dilution adjustment pursuant to any outstanding security,
warrant, option or other Contract of the Company or any of its
Subsidiaries.
(f) Registration Rights. Except as set forth on Schedule
3.3(f), neither the Company nor any of its Subsidiaries (i) has
granted any registration rights, including piggyback rights, to any
Person which are currently outstanding, or agreed to grant any such
rights to any Person subsequent to the date hereof, or (ii) is
otherwise under any obligation to register on behalf of any Person any
of its securities pursuant to any Law applicable to the sale, exchange
or issuance of securities including without limitation the Securities
Act.
SECTION 3.4 Subsidiaries. Except as set forth on Schedule 3.4 hereof
and except for the capital stock of the Subsidiaries of the Company owned by
the Company as set forth on Schedule 3.3(b), neither the Company nor any of its
Subsidiaries owns, directly or indirectly, any shares of capital stock or other
equity interest, or any securities convertible into or exchangeable for capital
stock or other equity interest, in any Person or has a commitment to contribute
to the capital of, make loans to, or share in the profits or losses of, any
other Person.
SECTION 3.5 Consents; No Conflict. The Company is not required to
obtain the consent, authorization or approval of any Person, or License from
any Governmental Authority, as a condition to the consummation of this
Agreement, the Warrant or the Transaction Documents by the Company. The
execution and delivery of this Agreement, the
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<PAGE> 23
Warrant and the Transaction Documents by the Company and the consummation by
the Company of the transactions contemplated hereby and thereby will not
conflict with, result in the termination of, contravene or constitute a default
under, or be an event which with the giving of notice or passage of time or
both will become a default under, or give to others any rights of termination
or cancellation of, or accelerate the performance required by or maturity of,
or result in the creation of any material Lien or loss of any rights with
respect to the Company pursuant to any of the terms, conditions or provisions
of or under, any applicable Law, the certificate of incorporation or by-laws of
the Company, or any Contract to which the Company is a party or which is
otherwise binding upon the Company or to which the Assets of the Company are
subject.
SECTION 3.6 SEC Filings; Financial Statements.
(a) SEC Filings. Each of the Company and its
Subsidiaries has filed all forms, reports and documents required to be
filed by it with the SEC (collectively, the " SEC Reports"). As of
their respective dates, the SEC Reports (i) were prepared in accordance
with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC thereunder
applicable to such SEC Reports, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(b) Financial Statements. Each of the consolidated
financial statements (including, in each case, any related notes
thereto) contained in the SEC Reports (collectively, the " Financial
Statements"), including any SEC Reports filed after the date hereof
until the Closing, (i) complies, or when filed will comply, as to form
in all material respects with the rules and regulations of the SEC with
respect thereto, (ii) was, or when filed will be, prepared in
accordance with GAAP (except as may be indicated in the notes thereto
or, in the case of unaudited interim Financial Statements, as may be
permitted by the SEC on Form 10-Q under the Exchange Act), and (iii)
fairly presented, or when filed will fairly present, in all material
respects the consolidated financial position of the Company and its
Subsidiaries as at the respective dates thereof and the consolidated
results of their operations and cash flows for the periods indicated,
except that the unaudited interim Financial Statements were, or when
filed will be, subject to normal year-end audit adjustments.
(c) No Undisclosed Liabilities. Except for Liabilities
reflected on the consolidated balance sheet of the Company and its
Subsidiaries contained in the Financial Statements for the period
ending as of June 29, 1996 (the " June Balance Sheet"), neither the
Company nor any of its Subsidiaries has any Liabilities of a nature
required to be disclosed on a consolidated balance sheet or in the
related notes to consolidated financial statements prepared in
accordance with GAAP other than Liabilities incurred since the date of
the June Balance Sheet in the Ordinary Course of Business.
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<PAGE> 24
(d) No Material Adverse Changes. Since June 29, 1996,
there has not been (i) any change in the Assets, Liabilities,
condition (financial or otherwise), affairs, earnings, Business,
operations or prospects of the Company or any of its Subsidiaries from
that reflected in the Financial Statements dated as of June 29, 1996,
except changes in the Ordinary Course of Business which have not been,
either individually or in the aggregate, materially adverse to the
Business, (ii) any damage, destruction or loss, whether or not covered
by insurance, materially adverse to the Business, (iii) any waiver by
the Company or any of its Subsidiaries of a valuable right or of a
material debt owed to them, (iv) any loans made by the Company or any
of its Subsidiaries to their Employees, officers or directors other
than advances of expenses made in the Ordinary Course of Business, (v)
any declaration or payment of any dividend or other distribution of
the Assets of the Company or any of its Subsidiaries or any direct or
indirect redemption, purchase or acquisition of any of the securities
of the Company or any of its Subsidiaries other than repurchases of
Common Stock from terminated employees, consultants, officers and
directors pursuant to written agreements, or (vi) to the Knowledge of
the Company, any other event or condition of any character which has
had a material adverse affect on the Business. Since June 29, 1996,
the Company and its Subsidiaries have conducted the Business in the
Ordinary Course of Business.
SECTION 3.7 Property and Assets.
(a) Owned Assets. Each of the Company and its
Subsidiaries holds good, marketable and indefeasible title to all of
its owned Assets, free and clear of all Liens except Permitted Liens.
(b) Leased Assets. Each of the Company and its
Subsidiaries is in possession of and has valid leasehold interests in
and valid rights under Contract to use all Assets which it holds under
leases, free and clear of all Liens except Permitted Liens.
(c) Condition of Assets. Each of the Company and its
Subsidiaries has maintained all tangible Assets material to its
Business in good repair, working order and operating condition,
subject only to ordinary wear and tear.
SECTION 3.8 Tax Matters.
(a) Tax Returns. (i) Each of the Company and its
Subsidiaries has duly and timely filed all Tax Returns that it was
required to file prior to the date hereof, (ii) all such Tax Returns
were correct and complete in all material respects, and (iii) neither
the Company nor any of its Subsidiaries is currently the beneficiary
of any extension of time within which to file any Tax Return.
(b) Compliance. (i) All Taxes that are or may become
payable by the Company or any of its Subsidiaries or chargeable as a
Lien upon their Assets (whether or not shown on any Tax Return) as of
the date hereof have been duly and timely paid, and (ii) each of the
Company and its Subsidiaries has complied in all
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<PAGE> 25
material respects with applicable Law relating to the reporting,
payment and withholding of Taxes in connection with amounts paid to
its Employees, creditors, independent contractors or other third
parties and has, within the time and in the manner prescribed by Law,
withheld from such amounts and timely paid over to the proper
Governmental Authorities all such amounts required to be so withheld
and paid over under applicable Law. There is no Lien on any of the
Assets of the Company or any of its Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax.
(c) Claims. (i) No claim (other than a claim that has
been finally settled) has ever been made by a Governmental Authority
in a jurisdiction where either the Company or any of its Subsidiaries
does not file Tax Returns or pay or collect Taxes in respect of a
particular type of Tax imposed by that jurisdiction that either the
Company or any of its Subsidiaries (as the case may be) is or may be
subject to an obligation to file Tax Returns or pay or collect Taxes
in respect of such Tax in that jurisdiction, and (ii) there has been
no claim or issue (other than a claim or issue that has been finally
settled) concerning any liability for Taxes of the Company or any of
its Subsidiaries either (A) asserted, raised or threatened by any
Governmental Authority in writing or (B) to the Knowledge of the
Company, pending.
(d) Waivers. Neither the Company nor any of its
Subsidiaries has (i) waived any statute of limitations, (ii) agreed to
any extension of the period for assessment or collection or (iii)
executed or filed any power of attorney, in each case with respect to
any Taxes, which waiver, agreement or power of attorney is currently
in force.
(e) Consents. Neither the Company nor any of its
Subsidiaries has filed a consent under Section 341(f) of the Code
concerning collapsible corporations and there are no outstanding
adjustments for Income Tax purposes applicable to the Company or any
of its Subsidiaries required as a result of changes in methods of
accounting effected on or before the date hereof.
(f) Tax Sharing Agreements. Neither the Company nor any
of its Subsidiaries is a party to or bound by or has any obligation
under any Tax allocation, sharing, indemnity or similar agreement or
arrangement, and neither the Company nor any of its Subsidiaries (i)
is or has been a member of any group of companies (other than the
Company and its Subsidiaries) filing a consolidated, combined or
unitary Income Tax Return or (ii) has any liability for the Taxes of
any Person under Section 1.1502-6 of the Treasury Regulations (or any
similar provision of state, local or foreign Law) as a transferee,
successor, indemnitor or guarantor by Contract or otherwise.
SECTION 3.9 Business Contracts.
(a) Description of Business Contracts. Schedule 3.9(a)
contains a true and complete list of each of the following Contracts
to which the Company or any of its Subsidiaries is a party:
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(i) all Contracts (excluding Benefit
Plans) providing for a commitment of employment or
consultation services for a specified or unspecified term to,
or otherwise relating to the employment or the termination of
employment or the severance of, any Employee;
(ii) all Contracts with any Person
containing any provision or covenant prohibiting or materially
limiting the ability of any of the Company or any of its
Subsidiaries to engage in any business activity or compete
with any Person in connection with the Business, or
prohibiting or materially limiting the ability of any Person
to compete with the Company or any of its Subsidiaries in
connection with the Business;
(iii) all material partnership, joint
venture or stockholders' Contracts with any Person;
(iv) all Contracts with customers,
distributors, dealers, manufacturer's representatives or sales
agencies with whom the Company or any of its Subsidiaries
deals in connection with the Business which in any case
involve the payment or potential payment, pursuant to the
terms of any such Contract, by or to the Company or any of its
Subsidiaries of more than $100,000 annually;
(v) all Contracts relating to the future
disposition or acquisition of any Assets individually or in
the aggregate material to the Business, other than
dispositions or acquisitions of raw materials or inventory in
the Ordinary Course of Business;
(vi) all collective bargaining or similar
labor Contracts covering any Employee; and
(vii) all other Contracts (other than
Benefit Plans) to which the Company or any of its Subsidiaries
is a party that (A) involve the prospective payment or
potential payment, pursuant to the terms of any such Contract,
by or to the Company or any of its Subsidiaries of more than
$100,000 annually and (B) cannot be terminated within sixty
(60) days after giving notice of termination without resulting
in any material cost or penalty to the Company or any of its
Subsidiaries.
(b) Status of Business Contracts. Each Contract required
to be disclosed in Schedule 3.9(a), and each other Contract to which
the Company or any of its Subsidiaries is a party and which is material
to the Business as currently conducted or as proposed to be conducted,
are in full force and effect and constitute the legal, valid and
binding obligations of the Company or one of its Subsidiaries, as the
case may be, enforceable against the Company or one of its
Subsidiaries, as the case may be, in accordance with their terms.
Except as disclosed in Schedule 3.9(b), neither the Company nor any of
its Subsidiaries which is a party to any such Contract nor, to the
Knowledge of the Company, any other party to any such Contract, is in
violation or
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breach of or default under any such Contract (or with notice or lapse
of time or both, would be in violation or breach of or default under
any such Contract) the effect of which would have a material adverse
effect on the Business.
SECTION 3.10 Employee and Consultant Agreements. Each Employee and
each consultant of the Company or any of its Subsidiaries has executed an
agreement prohibiting the unauthorized disclosure or use of confidential and
proprietary information of the Company or any of its Subsidiaries where such
confidential or proprietary information is provided by the Company or its
Subsidiaries to such Person. To the Knowledge of the Company, no such Employees
or consultants are in violation thereof. To the Knowledge of the Company, no
Employees are obligated under any Contract, or are subject to any Order, that
would interfere with the use of his/her best efforts to promote the interests of
the Company and its Subsidiaries or that would conflict with the Business as
conducted or as proposed to be conducted or that would be breached or violated
as a result of the transactions contemplated hereby.
SECTION 3.11 Litigation and Claims. Neither the Company nor any of
its Subsidiaries is a party to or, to the Knowledge of the Company, is
threatened to be made a party to, any charge, complaint, action, suit,
arbitration, proceeding, hearing, or investigation (i) which questions or
challenges the right of the Company to enter into this Agreement, the Warrant or
any Transaction Document, or (ii) which, individually or in the aggregate with
all other such items, would have a material adverse effect on the Business.
SECTION 3.12 Labor Matters, etc. Neither the Company nor any of its
Subsidiaries is a party to or bound by any collective bargaining or other labor
agreement, and there are no labor unions or other organizations representing any
Employees. There has not occurred or been threatened any material strike,
slowdown, picketing, work stoppage, concerted refusal to work overtime or other
similar labor activity by or with respect to any Employees. There are no labor
disputes currently subject to any grievance procedure, arbitration or litigation
and there is no representation petition pending or threatened in each case with
respect to any Employee. To the Knowledge of the Company no officer or key
Employee, or any group of key Employees, intends to terminate their employment
with the Company or any of its Subsidiaries, and neither the Company nor any of
its Subsidiaries has the present intention to terminate the employment of any of
the foregoing. The employment of each officer and Employee of the Company is
terminable at the will of the Company.
SECTION 3.13 Intellectual Property Rights. The Company and its
Subsidiaries have all right, title and interest in, or valid rights under
Contract to use, all Intellectual Property material to the Business as currently
being conducted or as proposed to be conducted, without any conflict with or
infringement on the rights of others. All registrations with and applications to
Governmental Authorities in respect of Intellectual Property owned by the
Company or any of its Subsidiaries are valid and in full force and effect.
Neither the Company nor any of its Subsidiaries has received any notice that it
is in default (or with the giving of notice or lapse of time or both, would be
in default) in any material respect under any Contract to use Intellectual
Property. To the Knowledge of the Company, no Intellectual Property owned or
used by the Company or any of its Subsidiaries is being infringed upon by any
other Person. Neither the Company nor any of its Subsidiaries has received
notice
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that it is infringing any Intellectual Property of any other Person. Except
for inventions already assigned to the Company or its Subsidiaries, the Company
does not believe it is or will be necessary to utilize any inventions of any
Employee (or individual whom it or any of its Subsidiaries currently intends to
hire) made prior to his or her employment by the Company or any of its
Subsidiaries.
SECTION 3.14 Compliance. Neither the Company nor any of its
Subsidiaries is in breach or violation of any provision of its certificate of
incorporation or bylaws. Neither the Company nor any of its Subsidiaries is in
breach or violation of, or in default under, any Law or Order applicable to it,
the effect of which, individually or in the aggregate with other such breaches,
violations and defaults, would have a material adverse effect on the Business.
The Company and its Subsidiaries have obtained and are in compliance with all
Licenses required to be obtained by them in connection with the operation of the
Business.
SECTION 3.15 Employee Benefits.
(a) Compliance. Each Benefit Plan (and each related
trust or insurance contract) complies in form and in operation in all
material respects with its respective governing documents and the
applicable requirements of ERISA and the Code. The Company and each
of its Subsidiaries have performed all material obligations required
to be performed by them under, and are not in material default under
or in material violation of any term, provision, or condition of, any
Benefit Plan.
(b) Filings. All required reports and descriptions
(including without limitation Form 5500 Annual Reports, Summary Annual
Reports, PBGC-1's, and Summary Plan Descriptions) have been filed or
distributed in a timely manner with respect to each Benefit Plan.
(c) Contributions. All contributions (including all
employer contributions and employee salary reduction contributions)
which are due have been paid to each Benefit Plan and all
contributions for any period ending on or before the Closing Date
which are not yet due have been paid to each Benefit Plan or accrued
in accordance with the past custom and practice of the Company and its
Subsidiaries. All premiums or other payments for all periods ending
on or before the date hereof have been paid with respect to each
Welfare Benefit Plan (as defined in ERISA Section 3(1)).
(d) Determination Letters. Each Pension Benefit Plan
which is required to comply with Code Section 401(a) satisfies the
requirements of Code Section 401(a) and has received a favorable
determination letter from the IRS regarding such status and has not,
since receipt of the most recent favorable determination letter, been
amended or operated in a way which would adversely affect such
qualified status.
(e) Asset Valuation. The market value of assets under
each Pension Benefit Plan (other than any Multiemployer Plan) equals
or exceeds the present value of accrued benefits thereunder through
the date hereof (determined on a plan termination basis). No Pension
Benefit Plan (other than any Multiemployer Plan) has been completely
or partially terminated or been the subject of a reportable event as
to
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which notices would be required to be filed with the PBGC. No
proceeding by the PBGC to terminate any Pension Benefit Plan (other
than any Multiemployer Plan) has been instituted or, to the Knowledge
of the Company, threatened.
(f) No Prohibited Transactions. To the Knowledge of the
Company, there has been no Prohibited Transaction (as defined in ERISA
Section 406 and Code Section 4975) with respect to any Benefit Plan.
(g) Claims. There are no actions, suits, arbitrations,
or claims pending (other than routine claims for benefits) or, to the
Knowledge of the Company, threatened against any Benefit Plan, its
administrators, trustees, or other fiduciaries, or against the Company
or any of its Subsidiaries, or against the assets of such Plan. To
the Knowledge of the Company, no fiduciary with respect to any Benefit
Plan has any material Liability for breach of fiduciary duty or any
other failure to act or comply in connection with the administration
or investment of the assets of any Benefit Plan.
(h) Miscellaneous. Neither the Company nor any of its
Subsidiaries is, and neither has ever been, a member of a controlled
group of corporations that contributes to, ever has contributed to, or
ever has been required to contribute to any multiemployer plan (as
defined in Section 4001(a)(3) of ERISA) (a " Plan") and neither has
any Liability (including withdrawal Liability) under any Multiemployer
Plan. Neither the Company nor any of its Subsidiaries has incurred,
and neither has any reason to expect that it will incur, any Liability
to the PBGC (other than PBGC premium payments) or otherwise under
Title IV of ERISA (including any withdrawal Liability) or under the
Code with respect to any Pension Benefit Plan that it, or any
controlled group of corporations which includes it, maintain or have
ever maintained or to which any of them contributes, has ever
contributed, or has ever been required to contribute. No Benefit Plan
provides post-retirement welfare benefits other than continuation
coverage provided pursuant to Part 6 of Title I of ERISA and Section
4980A of the Code. No Benefit Plan is under audit or, to the
Knowledge of the Company, investigation by any Governmental Authority.
Each Benefit Plan which is a "group health plan" (as such term is
defined in Section 4980B(g)(2) of the Code or ERISA Section 607(1))
has been operated in material compliance with the provisions of Part 6
of Title I of ERISA and Sections 4980A and 4980B of the Code at all
times.
SECTION 3.16 Insurance. The Company and its Subsidiaries maintain,
with respect to the Business, insurance in such amounts and covering such risks
as is customary in the industry in which the Business operates. Each such
policy of insurance is in full force and effect, and all premiums thereunder or
self-insurance funding amounts required thereby, as the case may be, have been
paid or funded. Neither the Company nor any of its Subsidiaries has received any
notice of termination with respect to any such insurance policy and is not in
default thereunder in any material respect. No insurance carrier has threatened
to terminate any such insurance policy or to increase any premiums in respect
thereof, and neither the Company nor any of its Subsidiaries has failed to
comply with any material conditions contained in any such policy.
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SECTION 3.17 Environmental Matters.
(a) Compliance. Each of the Company and its Subsidiaries
has obtained, and complied with all the terms and conditions of, all
Licenses required by any Environmental Law in connection with the
Business except where the failure to obtain or comply with any such
License would not have, individually or in the aggregate with other
such failures, a material adverse effect on the Business. Each such
License is in full force and effect. Each of the Company and its
Subsidiaries is in compliance with all Environmental Laws except where
a failure to comply, individually or in the aggregate with all such
other failures, would not have a material adverse effect on the
Business.
(b) Listings. Except as disclosed in Schedule 3.17(b),
to the Knowledge of the Company, none of the real property owned or
leased by the Company or any of its Subsidiaries is listed on the NPL,
CERCLIS or any similar state or local list of sites requiring
investigation or clean-up.
(c) No Notice. No written notice or, to the Knowledge of
the Company, any other communication from any Governmental Authority
of any alleged violation of any Environmental Law has been received by
the Company or any of its Subsidiaries, except for notices or
communications that have been complied with in all respects.
(d) No Hazardous Substances. Neither the Company nor any
of its Subsidiaries utilizes any Hazardous Substances in the course of
its Business operations and there has been no release of Hazardous
Substances by the Company or any of its Subsidiaries or, to the
knowledge of the Company, any other Person, on any property, owned or
occupied by the Company or any of its Subsidiaries.
SECTION 3.18 Offer or Sale of Shares and Warrant. Neither the Company
nor anyone acting on its behalf has offered the Stock or Warrant to any entity
other than the Purchaser or has taken any other action that would subject the
issuance and sale of the Stock or Warrant (or the issuance of the Common Stock
upon exercise of the Warrant) to the registration requirements of the Securities
Act or any state securities Laws.
SECTION 3.19 Brokers. No broker or other representative has acted on
behalf of the Company or any of its Subsidiaries in connection with the
transactions contemplated hereby in such manner as to give rise to any valid
claim by any Person against the Purchaser for a finder's fee, brokerage
commission or similar payment.
SECTION 3.20 Transactions With Directors, Officers, Employees and
Affiliates. Except as set forth in Schedule 3.20 there have been no
transactions between the Company or any of its Subsidiaries and any director,
officer, employee or affiliate (as defined in Rule 405 promulgated by the SEC)
of the Company or any of its Subsidiaries, except on an arm's length basis in
accordance with normal business practices, and none of the officers, directors,
employees or affiliates of the Company or any of its Subsidiaries, or any member
of the immediate family of any such Persons, is a director or officer of, or has
a material interest
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in, any Person which is a material supplier, customer or sales agent of the
Company or any of its Subsidiaries or has competed to a material extent with
the Company or any of its Subsidiaries. Except as set forth in Schedule 3.20,
no Affiliate of the Company or any of its Subsidiaries provides or supplies
assets, services or facilities which are individually or in the aggregate
material to the Business, and neither the Company nor any of its Subsidiaries
provides or supplies any assets, services or facilities to any Affiliate of the
Company or any of its Subsidiaries which are individually or in the aggregate
material to the Business. Except as disclosed on Schedule 3.20, each of the
transactions listed in Schedule 3.20 is engaged in on an arm's-length basis.
SECTION 3.21 Echostar Investment. The Company owns the shares of the
issued and outstanding common stock described on Schedule 3.4 (the "Echostar
Stock") of Echostar Communications Corporation ("Echostar"), a corporation whose
common stock is publicly traded on the NASDAQ Exchange. The Company has issued
to Echostar those certain 6 1/2 Percent Convertible Subordinated Debentures in
the aggregate original principal amount of US $8,750,000.00 (collectively, the
"Echostar Debenture") which have a current unpaid aggregate principal balance of
US $8,750,000.00 and which are convertible by Echostar into Common Stock upon
the terms set forth therein. The Company entered into that certain letter
agreement (the "Echostar Letter") regarding the Echostar Debenture which is
attached hereto as Schedule 3.21.
SECTION 3.22 Disclosure. The representations and warranties of the
Company contained in this Agreement and in any schedule, certificate, or
agreement furnished by the Company to the Purchaser pursuant to this Agreement
do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements herein or therein, in
the light of the circumstances under which they were made, not misleading. The
Company acknowledges that the Purchaser is also relying on the representations
and warranties of the Company herein in connection with the purchase by the
Purchaser of shares of Common Stock from the Selling Stockholders pursuant to
the Selling Stockholder Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company that:
SECTION 4.1 Organization and Authority of the Purchaser. The
Purchaser is a societe anonyme duly organized, validity existing and in good
standing under the laws of France. The Purchaser has full corporate power and
authority to enter into this Agreement and the Transaction Documents and to
consummate the transactions contemplated herein and therein.
SECTION 4.2 Due Authorization, Execution and Delivery. The
execution, delivery and performance of this Agreement and the Transaction
Documents by the Purchaser and the consummation by the Purchaser of the
transactions contemplated herein and therein have
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been duly authorized by all necessary corporate action on the part of the
Purchaser, and this Agreement has been, and at Closing the Transaction
Documents will be, duly executed and delivered by the Purchaser. This
Agreement constitutes, and the Transaction Documents and all other instruments
and documents to be executed and delivered by the Purchaser hereunder will,
when executed and delivered, constitute, the legal valid and binding
obligations of the Purchaser enforceable against the Purchaser in accordance
with their respective terms, except that such enforcement (i) may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally, and (ii) is subject to the availability of equitable remedies, as
determined in the discretion of the court before which such a proceeding may be
brought.
SECTION 4.3 Consents; No Conflict. The Purchaser is not required to
obtain the consent, authorization or approval of any Person, or any License
from any Governmental Authority, as a condition to the consummation of this
Agreement or the Transaction Documents by the Purchaser. The execution and
delivery of this Agreement and the Transaction Documents by the Purchaser and
the consummation of the transactions contemplated hereby and thereby will not
conflict with, result in the termination of, contravene or constitute a default
under, or be an event which with the giving of notice or passage of time or
both will become a default under, or give to others any rights of termination
or cancellation of, or accelerate the performance required by or maturity of,
or result in the creation of any material Lien or loss of any rights with
respect to the Purchaser pursuant to any of the terms, conditions or provisions
of or under, any applicable Law, the certificate of incorporation or by-laws
(or other organizational documents) of the Purchaser, or any Contract to which
the Purchaser is a party or which is otherwise binding upon the Purchaser or to
which the Assets of the Purchaser are subject.
SECTION 4.4 Brokers. No broker or other representative has acted on
behalf of the Purchaser in connection with the transactions contemplated hereby
in such manner as to give rise to any valid claim by any Person against the
Company for a finder's fee, brokerage commission or similar payment.
SECTION 4.5 Purchase Entirely for Own Account. The Purchaser will
acquire the Stock and the Warrant for investment for its own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and the Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the Stock or the Warrant. The
Purchaser does not presently have any Contract, undertaking or arrangement with
any Person to sell, transfer or grant participations to such Person or to any
third Person with respect to the Stock or the Warrant.
SECTION 4.6 Investment Experience. The Purchaser understands that
the Stock and the Warrant have not been, and will not be, registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of the Purchaser's
representations as expressed herein. The Purchaser has not been formed for the
specific purpose of acquiring the Stock or the Warrant.
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SECTION 4.7 Restricted Securities. The Purchaser understands that
the Stock and the Warrant are characterized as "restricted securities" under
the federal securities Laws inasmuch as they are being acquired in a
transaction not involving a public offering and that under such Laws, the Stock
and the Warrant may be resold without registration under the Securities Act
only in certain limited circumstances. In this respect, the Purchaser
represents that it is familiar with Rule 144 promulgated under the Securities
Act ("Rule 144"), as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.
SECTION 4.8 Disclosure. The representations and warranties of the
Purchaser contained in this Agreement and in any schedule, certificate or
agreement furnished by the Purchaser to the Company pursuant to this Agreement
do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Limitations on Disposition of Stock. Without in any way
limiting the representations set forth in Article IV hereof, the Purchaser
agrees not to dispose of all or any portion of the Stock unless and until: (i)
there is then in effect a registration statement under the Securities Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or (ii) (A) the Purchaser shall have
notified the Company of the proposed disposition and shall have furnished the
Company with a detailed statement of the circumstances surrounding the proposed
disposition, and (B) if reasonably requested by the Company, the Purchaser
shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not require
registration under the Act, provided that no opinion of counsel will be
required for transactions made pursuant to Rule 144.
SECTION 5.2 Legends. It is understood that any certificate(s)
evidencing the Stock, and any securities issued in respect thereof or exchange
therefor, may bear one or all of the following legends:
(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 A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE
144 OF SUCH ACT."
(b) Any legend required by the laws of the State of Delaware.
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(c) Any legend required by the Blue Sky laws of any other state to
the extent such laws are applicable to the shares represented by the
certificate so legended.
SECTION 5.3 Proceeds of Sale of Stock. The Company shall use all of
the proceeds obtained from the sale of the Stock to the Purchaser, net of the
customary expenses associated therewith, solely to fund the working capital
needs of the Company and its Subsidiaries and/or to make the prepayment on the
Echostar Debenture required by Section 5.4.
SECTION 5.4 Echostar Situation. As a prepayment of the Echostar
Debenture, at Closing, the Company will pay to Echostar the amount of
$3,500,000.00 in principal plus all accrued interest on the Echostar Debenture
via wire transfer of immediately available funds to the account designated by
Echostar. The Company shall not amend or terminate the Echostar Letter without
the prior written consent of the Purchaser which may be withheld in the sole
discretion of the Purchaser. The Company shall take all action within its
power to limit to no more than 500,000 shares the number of shares of Common
Stock which Echostar would have the right to purchase at any time following
Closing pursuant to the Echostar Debenture or any warrants issued pursuant to
the Echostar Letter. In the event Echostar acquires any Common Stock from the
Company, the Company shall use its best efforts to cause Echostar to execute
and deliver to the Company, the Purchaser and all other parties to the
Stockholder Agreement an agreement to be bound by all provisions thereof
binding on the stockholders of the Company which are parties thereto.
SECTION 5.5 Delivery of Budgets and Other Information. As long as
the Purchaser and its Affiliates, collectively, hold in the aggregate not less
than 500,000 shares of Common Stock or shares of Common Stock representing not
less than 8% of the outstanding shares of Common Stock on a fully diluted
basis, the Company shall deliver to the Purchaser (i) as soon as practicable,
but in any event at least thirty (30) days prior to the end of each fiscal year
of the Company, a budget and business plan for the next fiscal year for the
Business, prepared on a monthly basis, including balance sheets and sources and
applications of funds statements for such months and, as soon as prepared, any
other budgets or revised budgets prepared by the Company, (ii) such other
information relating to the financial condition, prospects or affairs of the
Business as the Purchaser may from time to time request, provided, however,
that the Company shall not be obligated to provide information which it deems
in good faith to be proprietary, and (iii) a copy of any Schedule 13D filing
made by any Person pursuant to Section 13(d) of the Exchange Act immediately
following the receipt thereof by the Company.
SECTION 5.6 Access to Business. Following the Closing, the Company
shall permit the Purchaser and its representatives at the Purchaser's expense,
as long as the Purchaser and its Affiliates, collectively, hold in the
aggregate not less than 500,000 shares of Common Stock or shares of Common
Stock representing not less than 8% of the outstanding shares of Common Stock
on a fully diluted basis, to visit and inspect the properties and Assets of the
Company and its Subsidiaries, to examine the books of account and records of
the Company and its Subsidiaries and to discuss the affairs, finances and
accounts of the Company and its Subsidiaries with the officers thereof, all at
such reasonable times as may be requested by the Purchaser, provided that the
Purchaser acknowledges that the access by the Purchaser to
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certain information relating to Contracts which the Company has entered into
with United States Governmental Authorities may be restricted pursuant to
certain Laws due to the status of the Purchaser as a foreign corporation.
SECTION 5.7 Right of First Offer. Subject to the terms and
conditions in this Section 5.7, the Company hereby grants to the Purchaser the
following rights of first offer with respect to future sales by the Company of
its New Securities:
(a) Notice to Purchaser. In the event the Company proposes to
issue New Securities, the Company shall give the Purchaser written notice (the
"First Offer Notice") of its intention stating (i) a description of the New
Securities which the Company proposes to issue and the identity of the Person
or group of Persons to whom the New Securities would be issued, (ii) the number
of shares of New Securities which the Company proposes to issue, (iii) the
price per share at which, and other terms on which, the Company proposes to
issue such New Securities, and (iv) the number of shares of such New Securities
that the Purchaser has the right to purchase under this Section 5.7, based on
the Purchaser Percentage.
(b) Exercise Right. Within thirty (30) days after the First Offer
Notice is given to the Purchaser, the Purchaser may elect to purchase, at the
price specified in the First Offer Notice, the number of shares of the New
Securities proposed to be issued by the Company multiplied by the Purchaser
Percentage. The Purchaser may exercise such purchase right in whole or in
part. An election to purchase shall be made in writing and must be given to
the Company within such thirty (30) day period. The closing of the sale of New
Securities by the Company to the Purchaser upon exercise of its rights under
this Section 5.7 shall take place simultaneously with the closing of the sale
of New Securities to third parties.
(c) Lapse of Right. The Company shall have sixty (60) days after
the last date on which the Purchaser's right of first offer lapses to enter
into a Contract (pursuant to which the sale of New Securities covered thereby
shall be closed, if at all, within sixty (60) days from the execution thereof)
to sell the New Securities which the Purchaser did not elect to purchase under
this Section 5.7, provided that such sale must be at or above the price
specified in the First Offer Notice and upon terms not materially more
favorable to the purchaser of such securities than the terms specified in the
First Offer Notice. In the event the Company does not enter into a Contract to
sell the New Securities within such sixty (60) day period (or does not sell and
issue New Securities in accordance with any such Contract within sixty (60)
days from the date thereof), the Company shall not thereafter issue or sell any
New Securities without first offering such New Securities to the Purchaser in
the manner provided in this Section 5.7.
(d) Termination of Right of First Offer. This Section 5.7 shall
terminate upon the first to occur of the following:
(i) The date on which the Purchaser and its
Affiliates, collectively, hold in the aggregate less than 500,000
shares of Common Stock, provided that on such date such shares so held
represent less than 8% of the outstanding shares of Common Stock on a
fully diluted basis.
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(ii) The failure of the Purchaser to elect to
purchase all shares of New Securities which the Purchaser is entitled
to purchase pursuant to Section 5.7(b) at any such time as the
Purchaser may elect to make such purchase.
SECTION 5.8 Special Purchase Rights.
(a) Grant of Rights. Notwithstanding any other provision
of this Agreement, if the Company proposes to issue or sell any Voting
Stock to a Restricted Investor, or if any underwriter in connection
with a registered public offering proposes to issue or sell any Voting
Stock to a Restricted Investor, the Purchaser shall have a right of
first offer to purchase all shares of such Voting Stock to be issued
to such Restricted Investor on the terms pursuant to which the Company
or such underwriter proposes to issue or sell such Voting Stock to
such Restricted Investor, provided that the underwriters of a
registered public offering of Voting Stock by the Company shall not be
deemed to propose to issue or sell any Voting Stock to a Restricted
Investor unless the Company solicits or arranges for the solicitation
of orders to purchase Voting Stock by a Restricted Investor from such
underwriters in anticipation of or in connection with a registered
public offering and, provided further, that the execution and
performance of an underwriting agreement by the Company in connection
with a registered public offering and the participation by officers of
the Company in the normal and customary selling activities undertaken
by the underwriters shall not, in and of themselves, be considered
soliciting or arranging for the solicitation of orders to purchase
Voting Stock.
(b) Notice to Purchaser. In the event the Company or
such underwriter proposes to issue or sell Voting Stock to a
Restricted Investor, which would be subject to the foregoing right of
first offer, the Company shall give the Purchaser written notice (the
"Voting Stock Notice") of its or such underwriter's intentions stating
(i) a description of the Voting Stock proposed to be issued or sold
and the identity of the Restricted Investor, (ii) the total number of
shares of Voting Stock proposed to be issued or sold, and (iii) the
price per share at which, and the other terms on which, such Voting
Stock is proposed to be issued or sold.
(c) Exercise by Purchaser. Within thirty (30) days after
the Voting Stock Notice is given to the Purchaser, the Purchaser may
elect to purchase, at the price and on the terms specified in the
Voting Stock Notice, all shares of Voting Stock proposed to be issued
and sold to the Restricted Investor. An election to purchase shall be
made by the Purchaser in writing and must be given to the Company
within such thirty (30) day period. The election described herein
shall constitute an irrevocable, legally binding obligation of the
Purchaser to purchase the Voting Stock on the terms set forth in the
Voting Stock Notice. The closing of the sale of the Voting Stock by
the Company to the Purchaser upon the exercise of its rights under
this Section 5.8 shall take place within thirty (30) days following
the date on which such election to purchase is made.
(d) Termination of Special Purchase Rights. This Section
5.8 shall terminate upon the first to occur of the following:
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(i) The date on which the Purchaser and its
Affiliates, collectively, hold less than 500,000 shares of Common
Stock, provided that on such date such shares so held represent less
than 8% of the outstanding shares of Common Stock on a fully diluted
basis.
(ii) The failure of the Purchaser to elect to
purchase all shares of Voting Stock which the Purchaser is entitled to
purchase pursuant to Section 5.8(c) at any such time as the Purchaser
may elect to make such purchase.
SECTION 5.9 Subsidiary Stock. The Company shall not permit any
Subsidiary of the Company to issue or sell any capital stock of such Subsidiary
to any Person other than the Company without granting to the Purchaser rights
to purchase such capital stock which are substantially the same as the rights
of the Purchaser pursuant to Sections 5.7 and 5.8 hereof. For purposes of this
Section 5.9, any transfer of capital stock of any Subsidiary of the Company by
the Company shall be deemed to be an issuance of such stock by such Subsidiary
to such transferee and shall be subject to this Section 5.9.
SECTION 5.10 Confidential Treatment. The Company will use its best
efforts to obtain confidential treatment of the Commercial Agreement (and all
Schedules thereto) in all public filings that include such document including,
without limitation, all filings made by the Company with the SEC.
SECTION 5.11 Advice of Changes. The Company will promptly advise the
Purchaser in writing of (i) any event occurring subsequent to the date of this
Agreement which would render any representation or warranty of the Company
contained in this Agreement, if made on or as of the date of such event, untrue,
inaccurate or incomplete in any material respect, and (ii) any material adverse
change in the working capital, financial condition, assets, liabilities (whether
absolute, accrued contingent or otherwise), operating profits, business or
prospects of the Company and its Subsidiaries as a whole.
SECTION 5.12 Further Assurances. Each party agrees to cooperate fully
with the other parties hereto and their respective authorized representatives
and to execute and deliver or cause to be executed and delivered at all
reasonable times and places such additional instruments and documents as the
other party or parties may reasonably request for the purpose of carrying out
this Agreement.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser to consummate the transactions
provided for herein on the Closing Date are subject to the fulfillment on or
before the Closing Date of each of the following conditions, except to the
extent that Purchaser may, in its absolute discretion, waive one or more
thereof in writing in whole or in part:
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SECTION 6.1 Accuracy of Representations and Warranties. The
representations and warranties of the Company contained herein shall be true in
all material respects on and as of the Closing Date with the same force and
effect as if made on and as of such date.
SECTION 6.2 Performance of Agreements. The Company shall have
performed in all material respects all obligations and agreements, and complied
in all material respects with all covenants, contained in this Agreement to be
performed and complied with by the Company at or prior to the Closing Date.
SECTION 6.3 Bring-Down Certificate. The Company shall have furnished
the Purchaser with a certificate in the form of Exhibit F executed by a duly
authorized officer of the Company, dated the Closing Date, to the effect that
the Company has fulfilled the conditions specified in Sections 6.1 and 6.2
hereof.
SECTION 6.4 Corporate Documents. The Company shall have delivered to
the Purchaser the following documents which, except any such documents the form
of which is attached as an Exhibit hereto, shall be reasonably satisfactory in
form and content to the Purchaser and its counsel:
(a) Good Standing Certificate. A good standing certificate with
respect to the Company and each of its Subsidiaries issued as of the date of
Closing by the appropriate official of the state of incorporation of each such
corporation.
(b) Certificate of Incorporation and Bylaws. The certificate of
incorporation and bylaws or other governing instruments of the Company and each
of its Subsidiaries together with a certificate of a duly authorized officer of
each such corporation in the form of Exhibit G dated the Closing Date and
certifying as to the accuracy and completeness of such corporate documents.
(c) Corporate Resolutions. Copies of resolutions of the Board of
Directors of the Company, duly certified by the Secretary of the Company in the
form of the certificate attached as Exhibit H, authorizing the execution,
delivery and performance of this Agreement, the Warrant, the Transaction
Documents, and all other documents, instruments, and certificates contemplated
hereby to which the Company is a party.
(d) Incumbency Certificates. An incumbency certificate of the
President or any duly authorized Vice President of the Company who will be
executing this Agreement, the Warrant, the Transaction Documents or any other
document, instrument or certificate to be delivered pursuant to the terms
hereof (including the name, title and signature of each such officer) in the
form of Exhibit I.
SECTION 6.5 Opinion of Company Counsel. The Purchaser shall have
received from Surovell, Jackson, Colten & Dugan, P.C., counsel for the Company,
an opinion, dated as of the Closing Date, in the form of Exhibit J.
SECTION 6.6 No Material Adverse Change. There shall have been no
material adverse change in the business, operations, properties or financial
condition of the Company
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<PAGE> 39
and its Subsidiaries taken as a whole whether or not arising in the Ordinary
Course of Business, except for changes relating to general economic events or
trends.
SECTION 6.7 No Adverse Proceedings. No action, suit or proceeding
before any Governmental Authority shall have been commenced, no investigation
by any Governmental Authority shall have been commenced, and no action, suit or
proceeding by any Governmental Authority shall have been threatened, against
any of the parties to this Agreement, or any Subsidiary of the Company, wherein
an unfavorable Order would (i) prevent the consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or (iii)
adversely affect the right of the Purchaser to own the Stock or the Warrant
following Closing (and no such Order shall be in effect.)
SECTION 6.8 Other Assurances. The Company shall have delivered to
the Purchaser such other and further certificates, assurances and documents as
the Purchaser may reasonably request in order to evidence the accuracy of the
representations and warranties of the Company, the performance of the covenants
and agreements to be performed by the Company pursuant hereto at or prior to
the Closing and the fulfillment of the conditions to the obligations of the
Purchaser.
SECTION 6.9 Consents and Approvals. All consents, waivers,
authorizations and approvals of any Governmental Authority, domestic or
foreign, and of any other Person required in connection with the execution,
delivery and performance of this Agreement, shall have been obtained and shall
be in full force and effect on the Closing Date.
SECTION 6.10 Closing Under Selling Stockholder Agreement. The closing
of the transactions contemplated by the Selling Stockholder Agreement shall have
been consummated pursuant to the terms thereof.
SECTION 6.11 Execution of Transaction Documents and Warrant. All
Transaction Documents and the Warrant shall have been executed and delivered by
the parties thereto.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the transactions provided
for herein on the Closing Date are subject to the fulfillment on or before the
Closing Date of each of the following conditions, except to the extent that the
Company may, in its absolute discretion, waive one or more thereof in writing
in whole or in part:
SECTION 7.1 Accuracy of Representations and Warranties. The
representations and warranties of the Purchaser contained herein shall be true
in all material respects on and as of the Closing Date with the same force and
effect as if made on and as of such date.
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<PAGE> 40
SECTION 7.2 Performance of Agreements. The Purchaser shall have
performed in all material respects all obligations and agreements, and complied
in all material respects with all covenants, contained in this Agreement to be
performed and complied with by the Purchaser at or prior to the Closing Date.
SECTION 7.3 Bring-Down Certificate. The Purchaser shall have
furnished the Company with a certificate in the form of Exhibit K executed on
its behalf by its duly authorized executive officer or attorney-in-fact, dated
the Closing Date, to the effect that the Purchaser has fulfilled the conditions
specified in Sections 7.1 and 7.2 hereof.
SECTION 7.4 Purchaser's Documents. The Purchaser shall have
delivered to the Company the following documents which, except any such
documents the form of which is attached as an Exhibit hereto, shall be
reasonably satisfactory in form and content to the Company and its counsel:
(a) Good Standing Certificate. A registration certificate or
other evidence from the Commercial Register or the Commercial and Corporate
Registry or such other document reasonably required to evidence the valid
existence and good standing of the Purchaser issued within sixty (60) days
prior to the Closing Date by the appropriate official of the jurisdiction of
incorporation of the Purchaser.
(b) Certificate of Incorporation and Bylaws. The certificate of
incorporation and bylaws or other governing instruments of the Purchaser,
together with a certificate of a duly authorized officer or attorney-in-fact of
the Purchaser in the form of Exhibit L dated the Closing Date and certifying as
to the accuracy and completeness of such corporate documents.
(c) Incumbency Certificates. An incumbency certificate of the
President of the Purchaser, any duly authorized Vice President of the Purchaser
or any attorney-in-fact of the Purchaser who will be executing this Agreement,
all Transaction Documents or any other document, instrument or certificate to
be delivered pursuant to the terms hereof (including the name, title and
signature of each such individual) in the form of Exhibit M.
SECTION 7.5 No Adverse Proceedings. No action, suit or proceeding
before any Governmental Authority shall have been commenced, no investigation
by any Governmental Authority shall have been commenced, and no action, suit or
proceeding by any Governmental Authority shall have been threatened, against
any of the parties to this Agreement, or any Subsidiary of the Company, wherein
an unfavorable Order would (i) prevent the consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or (iii)
adversely affect the right of the Purchaser to own the Stock or the Warrant
following Closing (and no such Order shall be in effect.)
SECTION 7.6 Other Assurances. The Purchaser shall have delivered to
the Company such other and further certificates, assurances and documents as
the Company may reasonably request in order to evidence the accuracy of the
representations and warranties of the Purchaser, the performance of the
covenants and agreements to be performed by the
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<PAGE> 41
Purchaser pursuant hereto at or prior to the Closing and the fulfillment of the
conditions to the obligations of the Company.
SECTION 7.7 Consents and Approvals. All consents, waivers,
authorizations and approvals of any Governmental Authority, domestic or
foreign, and of any other Person required in connection with the execution,
delivery and performance of this Agreement, shall have been obtained and shall
be in full force and effect on the Closing Date.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Survival. Subject to Section 8.8 hereof, the parties
hereto agree that their respective representations, warranties, covenants and
agreements contained in this Agreement shall survive the Closing.
SECTION 8.2 Indemnification by the Company. Subject to the other
provisions of this Article VIII, the Company shall indemnify and hold harmless
the Purchaser from and against any and all Losses suffered or incurred by the
Purchaser after the date hereof as a result of or arising out of:
(a) the falsity or incorrectness of or breach of any
representation or warranty of the Company in this Agreement or in any schedule
or certificate furnished to the Purchaser by the Company pursuant to this
Agreement; or
(b) the failure by the Company to perform any covenant or
agreement of the Company under this Agreement or under any schedule or
certificate furnished to the Purchaser by the Company pursuant to this
Agreement; or
(c) any claim, action, suit or demand by or on behalf of any past,
current or future stockholder of the Company based upon or relating to the
consummation of the transactions contemplated by this Agreement, any
Transaction Document or the Selling Stockholder Agreement.
SECTION 8.3 Indemnification by the Purchaser. Subject to the other
provisions of this Article VIII, the Purchaser shall indemnify and hold
harmless the Company from and against any and all Losses suffered or incurred
by the Company after the date hereof as a result of or arising out of:
(a) the falsity or incorrectness of or breach of any
representation or warranty of the Purchaser in this Agreement or in any
schedule or certificate furnished to the Company by the Purchaser pursuant to
this Agreement; or
(b) the failure by the Purchaser to perform any covenant or
agreement of Purchaser under this Agreement or under any schedule or
certificate furnished to the Company by the Purchaser pursuant to this
Agreement.
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SECTION 8.4 Method of Asserting Claims. All claims for
indemnification by any Indemnified Party under this Article VIII shall be
asserted and resolved as follows:
(a) Third Party Claims. If any claim or demand in respect of
which an Indemnified Party might seek indemnity under this Article VIII is
asserted against such Indemnified Party by a Person other than the Company or
the Purchaser (a "Third Party Claim"), the Indemnified Party shall give written
notice and the details thereof including copies of all relevant pleadings,
documents and information (collectively a "Third Party Claim Notice") to the
Indemnifying Party within a period of thirty (30) days following the assertion
of the Third Party Claim against the Indemnified Party (the "Third Party Claim
Notice Period"). If the Indemnified Party fails to provide the Third Party
Claim Notice within the Third Party Claim Notice Period, the Indemnifying Party
will not be obligated to indemnify the Indemnified Party with respect to such
Third Party Claim to the extent that the Indemnifying Party's ability to defend
has been prejudiced by such failure of the Indemnified Party. The Indemnifying
Party will notify the Indemnified Party within a period of thirty (30) days
after the receipt of the Third Party Claim Notice by the Indemnifying Party
(the "Third Party Claim Response Period"):
(i) whether the Indemnifying Party disputes its
liability to the Indemnified Party under this Article VIII with
respect to such Third Party Claim; and
(ii) whether the Indemnifying Party desires, at
its sole cost and expense, to defend the Indemnified Party against
such Third Party Claim.
If the Indemnifying Party notifies the Indemnified Party within the
Third Party Claim Response Period that the Indemnifying Party desires to defend
the Indemnified Party against the Third Party Claim, then the Indemnifying
Party at its sole cost and expense shall defend, with counsel reasonably
satisfactory to the Indemnified Party, such Third Party Claim by all
appropriate proceedings, which proceedings will be diligently prosecuted to a
final conclusion or will be settled at the discretion of the Indemnifying Party
(with the consent of the Indemnified Party which shall not be unreasonably
withheld). The Indemnified Party will cooperate in such defense at the sole
cost and expense of the Indemnifying Party. The Indemnified Party may, at its
sole cost and expense, at any time prior to the Indemnifying Party's delivery
of the notice referred to in the last sentence of the preceding paragraph, file
any pleadings or take any other action that the Indemnified Party reasonably
believes to be necessary or appropriate to protect its interests. The
Indemnified Party, at its expense, may participate in, but not control, any
defense or settlement of any Third Party Claim conducted by the Indemnifying
Party pursuant to this Section 8.4(a).
If the Indemnifying Party fails to notify the Indemnified Party within
the Third Party Claim Response Period that the Indemnifying Party desires to
defend the Third Party Claim or if the Indemnifying Party gives such notice but
fails to prosecute diligently or settle the Third Party Claim, then the
Indemnified Party shall defend, at the sole cost and expense of the
Indemnifying Party, the Third Party Claim by all appropriate proceedings, which
proceedings will be prosecuted by the Indemnified Party in a reasonable manner
and in good faith or will be settled at the discretion of the Indemnified Party
(with the consent of the
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<PAGE> 43
Indemnifying Party which shall not be unreasonably withheld). The Indemnifying
Party will, at its sole cost and expense, cooperate in such defense.
Notwithstanding the foregoing provisions of this Section 8.4(a), if
the Indemnifying Party is determined not to be liable for such Third Party
Claim pursuant to the last paragraph of this Section 8.4(a) and Section 8.4(c),
the Indemnifying Party will not be required to bear the costs and expenses of
the Indemnified Party's defense of the Third Party Claim or the Indemnifying
Party's participation therein pursuant to this Section 8.4(a), and the
Indemnified Party will reimburse the Indemnifying Party in full for all
reasonable costs and expenses incurred by the Indemnifying Party in connection
with such defense.
If the Indemnifying Party notifies the Indemnified Party that it does
not dispute its liability to the Indemnified Party with respect to the Third
Party Claim under this Article VIII or fails to notify the Indemnified Party
within the Third Party Claim Response Period whether the Indemnifying Party
disputes its liability to the Indemnified Party with respect to such Third
Party Claim, the Losses resulting from such Third Party Claim as finally
determined will be conclusively deemed to be a liability of the Indemnifying
Party under this Article VIII, and the Indemnifying Party shall pay the amount
of such Losses to the Indemnified Party on demand. If the Indemnifying Party
notifies the Indemnified Party within the Third Party Claim Response Period
that the Indemnifying Party disputes its liability to the Indemnified Party
with respect to such claim, the Indemnifying Party and the Indemnified Party
will proceed in good faith to negotiate a resolution of such dispute, and if
not resolved through negotiations within a period of thirty (30) days from the
date of such notice, such dispute shall be resolved by arbitration in
accordance with Section 8.4(c) hereof.
(b) Other Claims. In the event any Indemnified Party should have
a claim under this Article VIII against any Indemnifying Party that does not
involve a Third Party Claim, the Indemnified Party shall promptly give written
notice and the details thereof, including copies of all relevant information
and documents (collectively, an "Indemnity Notice"), to the Indemnifying Party
within a period of thirty (30) days following the discovery of the claim by the
Indemnified Party (the "Claim Notice Period"). The failure by any Indemnified
Party to give the Indemnity Notice within the Claim Notice Period shall not
impair the Indemnified Party's rights hereunder except to the extent that an
Indemnifying Party demonstrates that it has been prejudiced thereby. The
Indemnifying Party will notify the Indemnified Party within a period of thirty
(30) days after the receipt of the Indemnify Notice by the Indemnifying Party
(the "Indemnity Response Period") whether the Indemnifying Party disputes its
liability to the Indemnified Party under this Article VIII with respect to such
claim. If the Indemnifying Party notifies the Indemnified Party that it does
not dispute the claim described in such Indemnity Notice or fails to notify the
Indemnified Party within the Indemnity Response Period whether the Indemnifying
Party disputes the claim described in such Indemnity Notice, the Losses
resulting from such claim as finally determined will be conclusively deemed to
be a liability of the Indemnifying Party under this Article VIII and the
Indemnifying Party shall pay the amount of such Losses to the Indemnified Party
on demand. If the Indemnifying Party notifies the Indemnified Party within the
Indemnity Response Period that the Indemnifying Party disputes its liability
with respect to such claim, the Indemnifying Party and the Indemnified Party
will proceed in good faith to negotiate a resolution of such dispute, and if
not resolved through negotiations within a period of thirty
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<PAGE> 44
(30) days from the date of such notice, such dispute shall be resolved by
arbitration in accordance with Section 8.4(c) hereof.
(c) Resolution of Disputes. Any dispute required to be submitted
to arbitration pursuant to this Section 8.4 shall be finally and conclusively
determined in accordance with the Rules of Arbitration of the International
Chamber of Commerce (the "Rules of Arbitration") then in effect by the decision
of three (3) arbitrators selected in accordance with the Rules of Arbitration
unless the Company and the Purchaser shall agree on a single arbitrator (the
"Board of Arbitration"). The Board of Arbitration shall meet in New York, New
York and shall render a decision in writing (concurred in by a majority of the
members of the Board of Arbitration if more than one) with respect to and
stating the amount, if any, which the Indemnifying Party is required to pay to
the Indemnified Party in respect of the claim made by the Indemnified Party.
To the extent practical, the decision of the Board of Arbitration shall be
rendered no more than thirty (30) days following commencement of proceedings
with respect thereto. The Board of Arbitration shall cause its written
decision to be delivered to the Indemnified Party and the Indemnifying Party.
Any decision made by the Board of Arbitration (either prior to or after the
expiration of such thirty (30) day period) shall be final, binding and
conclusive on the Indemnified Party and the Indemnifying Party and entitled to
be enforced to the fullest extent permitted by Law and entered in any court of
competent jurisdiction.
The Company and the Purchaser hereby consent to the jurisdiction of
the foregoing Board of Arbitration and to the jurisdiction of any state or
federal court located in the States of New York or Delaware and any national
court located in France for the purpose of enforcing the decision or award of
the Board of Arbitration. The Company and the Purchaser agree that service of
process may be made on any such party by personal delivery or by registered or
certified mail addressed to the appropriate party at the address for such party
specified in Section 10.1 hereof. The submission to the jurisdiction of the
courts referred to above for the purpose of enforcing the decision or award of
the Board of Arbitration shall not (and shall not be construed so as to) limit
the right of either the Company or the Purchaser to file or commence
proceedings against the other in any other court of competent jurisdiction for
the purpose of enforcing the decision or award of the Board of Arbitration nor
shall the filing or commencement of proceedings in any one or more
jurisdictions for such purpose preclude the filing or taking of proceedings in
any other jurisdiction for such purpose (whether concurrently or not) if and to
the extent permitted by applicable Law.
Each and every arbitration proceeding commenced pursuant to this
Section 8.4(c) shall be consolidated with any arbitration proceeding then
pending under this Section 8.4(c).
SECTION 8.5 Continued Liability for Indemnity Claims. The liability
of any Indemnifying Party hereunder with respect to claims hereunder shall
continue for so long as any claims for indemnification may be made hereunder
pursuant to Section 8.8 hereof and, with respect to any such indemnification
claims duly and timely made, thereafter until the Indemnifying Party's
liability therefor is finally determined and satisfied.
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SECTION 8.6 Limitations on Indemnification.
(a) Certain Types of Damages. Neither the Company nor
the Purchaser shall be required to provide indemnification hereunder
for Losses which are indirect or speculative.
(b) Threshold Amount - Claim by Purchaser. No amount of
indemnity shall be payable in the case of a claim by the Purchaser
under Section 8.2(a) unless, until and only to the extent that the
Purchaser has suffered or incurred Losses aggregating in excess of US
$100,000 as a result of or arising out of the matters described in
Section 8.2(a).
(c) Threshold Amount - Claim by Company. No amount of
indemnity shall be payable in the case of a claim by the Company under
Section 8.3(a) unless, until and only to the extent that the Company
has suffered or incurred Losses aggregating in excess of US $100,000
as a result of or arising out of the matters described in Section
8.3(a).
SECTION 8.7 Exclusive Remedies. The sole and exclusive remedies for
any party hereto with respect to any claim relating to this Agreement or the
transactions contemplated hereby and the facts and circumstances relating and
pertaining hereto shall be governed by this Agreement (whether any such claim
shall be made in contract, breach of warranty, tort or otherwise).
SECTION 8.8 Time Limits on Claims. A claim by any Indemnified Party
under this Article VIII may be made only:
(a) if with respect to the violation of a representation
or warranty, within two (2) years following the Closing Date, with the
exception of Sections 3.3, 3.8, 3.15 and 3.17 with respect to which
such representations and warranties shall survive, and claims thereon
may be made, until four (4) years following the Closing Date; and
(b) if with respect to the violation of a covenant or
agreement, or pursuant to Section 8.2(c), until the expiration of the
applicable statute of limitations relating thereto.
Notwithstanding anything in this Agreement to the contrary, any claim
not made within the foregoing relevant time period shall expire and be forever
barred thereafter.
ARTICLE IX
TERMINATION
SECTION 9.1 Grounds for Termination. Except as set forth in this
Article IX, this Agreement may not be terminated at any time prior to Closing
by either the Company or the Purchaser, provided that the Company or the
Purchaser may terminate this Agreement by
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<PAGE> 46
written notice to other party to this Agreement if the Closing shall not have
occurred prior to September 30, 1996, or such later date as may be approved by
the Company and the Purchaser in writing. This Agreement may also be
terminated at any time by an agreement in writing signed by the Company and the
Purchaser.
SECTION 9.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 9.1, such termination shall be without liability of any
party, or any stockholder, director, officer, employee, agent, consultant or
representative of such party, to any other party to this Agreement, provided
that if such termination shall result from the breach by a party of the
representations, warranties or covenants of such party contained in this
Agreement, such party shall be liable for any and all Losses sustained or
incurred by the other party to this Agreement.
SECTION 9.3 Termination for Breach. Nothing in this Article IX shall
affect the rights which either party hereto might otherwise have to terminate
this Agreement as a result of a breach thereof by the other party hereto.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Notices. All notices, requests and other communications
hereunder shall be in writing and will be deemed to have been duly given (i)
when personally delivered, (ii) when sent by telefax to a party at the number
listed below for such party, (iii) three (3) Business Days after the day on
which the same has been delivered prepaid to an international courier service or
(iv) ten (10) Business Days after the deposit in the United States mail,
registered or certified, return receipt requested, postage prepaid, in each case
addressed to the party to whom such notice is to be given at the following
address for such party:
If to Purchaser: Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attn: Jacques Couet
Telefax No.: 331-46524596
With copies to: Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attn: Martine Funston, Esq.
Legal Counsel
Telefax No.: 331-46524595
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<PAGE> 47
If to the Company: SSE Telecom, Inc.
8230 Leesburg Pike, Suite 710
Vienna, VA 22182
Attn: Daniel E. Moore
Telefax No.: (703) 442-4507
With copies to: Surovell, Jackson, Colten & Dugan,
P.C.
4010 University Drive, Suite 200
Fairfax, VA 22030
Attn: G. Donald Markle, Esq.
Telefax No.: (703) 591-2149
Either party from time to time may change its address, telefax number or other
information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.
SECTION 10.2 Fees and Expenses. The Company and the Purchaser shall
each bear its own expenses in connection with the negotiation and preparation of
this Agreement, all documents and instruments contemplated hereby, and the
consummation of the transactions contemplated hereby, including without
limitation the fees and expenses of their respective counsel, accountants,
investment bankers and consultants.
SECTION 10.3 Public Announcements. Except as otherwise required by
Law, neither the Company nor the Purchaser shall issue any press release or make
any other public announcement with respect to the transactions contemplated
hereby without the approval of the other party, which approval shall not be
unreasonably withheld or delayed.
SECTION 10.4 Entire Agreement. This Agreement supersedes all prior
discussions and agreements among the parties with respect to the subject matter
hereof and contains the sole and entire agreement among the parties hereto with
respect to the subject matter hereof.
SECTION 10.5 Waiver. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by either party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion.
SECTION 10.6 Amendment. This Agreement may be amended, supplemented
or modified only by a written instrument duly executed by or on behalf of each
party hereto.
SECTION 10.7 Benefits and Binding Effect. Neither this Agreement nor
any right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void, provided that the Purchaser may assign any or all rights or
obligations of the Purchaser hereunder to any Affiliate of the Purchaser.
Subject to the preceding sentence, this Agreement is binding
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<PAGE> 48
upon, inures to the benefit of and is enforceable by the parties hereto and
their respective successors and assigns.
SECTION 10.8 Captions. The captions used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
SECTION 10.9 Exhibits and Schedules. All exhibits and schedules
referred to in this Agreement, all attachments to exhibits or schedules, and any
other attachment to this Agreement are hereby incorporated by reference into
this Agreement and are hereby made a part of this Agreement as if set out in
full herein.
SECTION 10.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware applicable to a
contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
SECTION 10.11 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
SECTION 10.12 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.13 No Third Party Beneficiary. This Agreement shall not
confer any rights or remedies upon any Person other than the parties hereto and
their respective successors and permitted assigns.
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<PAGE> 49
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
COMPANY:
SSE TELECOM, INC., a
Delaware corporation
By: /s/ Frederick C. Toombs
----------------------------------
Name: Frederick C. Toombs
--------------------------------
Title: President
-------------------------------
PURCHASER:
ALCATEL TELSPACE, a French
societe anonyme
By: /s/ Jerome de Vitry
----------------------------------
Name: Jerome de Vitry
--------------------------------
Title: Director R&D and Product Management
Attorney-in-fact
-------------------------------
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<PAGE> 50
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the " Agreement") is entered into
as of the 6th day of September, 1996 by and between SSE TELECOM, INC., a
Delaware corporation (the "Company"), and ALCATEL TELSPACE, a societe anonyme
organized under the laws of France (the "Purchaser").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution of this Agreement, (i) the
Purchaser will purchase 525,000 shares of the common stock of the Company from
the Company pursuant to the terms of that certain Stock Purchase and Investment
Agreement dated as of September 6, 1996 (the "Investment Agreement"), and (ii)
the Purchaser will purchase 100,000 shares of the common stock of the Company
from certain stockholders of the Company pursuant to the terms of that certain
Stock Purchase Agreement dated as of September 6, 1996 (the "Selling
Stockholder Agreement"); and
WHEREAS, the execution of this Agreement by the parties hereto is a
condition precedent to the obligation of the Purchaser to consummate the
transactions contemplated by the Investment Agreement and the Selling
Stockholder Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties contained herein and of the mutual benefits to
be derived herefrom, and intending to be legally bound, the parties hereto
agree as follows:
SECTION 1. Demand Registrations.
(a) Requests for Registration. At any time during the
Registration Period, the holders of at least fifty percent (50%) of
the Registrable Securities may request the Company to effect a
registration under the Securities Act of all or part of their
Registrable Securities. Each request for a Demand Registration shall
specify the number of Registrable Securities requested to be
registered. Within ten (10) days after receipt of any such request,
the Company will give written notice of such requested registration to
all other holders of Registrable Securities and will include in such
registration, subject to Section 1(c) hereof, all Registrable
Securities with respect to which the Company has received written
requests for inclusion therein within thirty (30) days after the
receipt of the Company's notice.
(b) Number of Demand Registrations. The holders of
Registrable Securities, as a group and not individually, will be
entitled to require only one Demand Registration pursuant to this
Section 1, provided, however , that in the event all of the holders of
the Registrable Securities irrevocably decide to sell all of the
Registrable Securities then owned by such holders as soon as is
practical and so notify the Company in writing, then the limitation
otherwise imposed by this Section 1(b) shall not apply (whether or not
a registration has been previously made pursuant to
<PAGE> 51
Section 1(a)) and such holders shall be entitled to, and do hereby
irrevocably agree that they will in fact continue to, exercise their
rights set forth in Section 1(a), promptly and to the maximum extent
permitted by the managing underwriter with respect to any particular
registration, until such time as such holders have disposed of all the
Registrable Securities owned by them. A registration will not be
considered to be a Demand Registration unless and until:
(i) it has remained effective for three
hundred sixty-five (365) consecutive days or such shorter
period as shall be required to sell all of the securities
registered pursuant thereto (but not terminating before the
expiration of the applicable prospectus delivery period); and
(ii) all Registrable Securities requested
to be included therein are effectively included therein and
saleable thereunder.
(c) Priority on Registration. The Company may include
in any Demand Registration any securities which are not Registrable
Securities but which are of the same class as the Registrable
Securities and which are held by holders who have piggyback
registration rights with respect to the demand registration rights
provided under this Agreement. If a Demand Registration is an
underwritten offering and the managing underwriters advise the Company
in writing that in their opinion the number of Registrable Securities
and, if permitted hereunder, other securities requested to be included
in such offering exceeds the number of Registrable Securities and
other securities, if any, which can be sold in an orderly manner in
such offering within a price range acceptable to the holders of a
majority of the Registrable Securities, then the Company will include
in such registration, prior to the inclusion of any securities which
are not Registrable Securities, the number of Registrable Securities
requested to be included pro rata among the respective holders thereof
on the basis of the amount of Registrable Securities requested by such
holders to be included in such registration, so that no securities
other than Registrable Securities will be included in such
registration if the inclusion of such securities would result in a
limitation on the number of Registrable Securities to be included
therein.
(d) Restrictions on Demand Registration. The Company
may postpone for up to three (3) months the filing or the
effectiveness of a registration statement for a Demand Registration if
(i) the Company, in the good faith judgment of its Board of Directors,
determines that such Demand Registration would reasonably be expected
to have an adverse effect on any proposal or plan by the Company or
any of its Subsidiaries to engage in any acquisition (other than in
the ordinary course of business) or any merger, recapitalization,
consolidation, reorganization, tender offer or similar transaction or
negotiations, discussions or pending proposals with respect thereto or
would require the Company to make premature public disclosure of
information, the premature disclosure of which would have a material
adverse effect on the business or prospects of the Company, or would
otherwise be seriously detrimental to the Company or its stockholders,
and (ii) the Company provides the holders of the Registrable
Securities with a written certificate signed by the president of the
Company stating the reasons of the Board of Directors for such delay,
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<PAGE> 52
provided, however, that the Company may not utilize this right more
than once in any twelve (12) month period, and provided further, that,
in such event, the holders of Registrable Securities initially
requesting such Demand Registration will be entitled to withdraw such
request and, if such request is withdrawn, such Demand Registration
will not be considered to be a Demand Registration hereunder, and the
Company will pay all Registration Expenses in connection with such
registration.
(e) Selection of Underwriters. If any Demand
Registration is in the form of an underwritten offering, the Company
will select and retain the investment banker or investment bankers and
manager or managers that administer the offering; provided, however,
that such selection will be subject to the approval of the holders of
a majority of the Registrable Securities participating in such
registration, which shall not be unreasonably withheld. The Company
shall (together with all holders proposing to distribute their
securities through such underwriting) enter into and perform its
(their) obligations under an underwriting agreement in customary form
with the managing underwriter selected for such underwriting. If any
holder of Registrable Securities disapproves of the terms of the
underwriting, such holder may elect to withdraw therefrom by written
notice to the Company and the managing underwriter. The Registrable
Securities so withdrawn shall also be withdrawn from registration.
SECTION 2. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes
to register any of its securities under the Securities Act (including
securities registered for selling stockholders with demand registration
rights, subject to the limitations set forth in Section 2(d) below) and
the registration form to be used may be used for the registration of
Registrable Securities, the Company will give prompt written notice to
all holders of Registrable Securities, and to the holders of any other
securities of the Company having registration rights compatible with
the proposed registration form, of its intention to effect such a
registration and will include in such registration all Registrable
Securities with respect to which the Company has received written
requests for inclusion therein within fifteen (15) days after the
receipt of the Company's notice (a "Piggyback Registration "). If the
Company gives notice of such a proposed registration, the total number
of Registrable Securities which shall be included in such registration
shall be limited to such number, if any, as in the reasonable opinion
of the manager of such offering would not adversely affect the
marketability or offering price of all of the securities proposed to be
offered by the Company in such offering; provided, however, if the
holders of Registrable Securities having registration rights upon a
Piggyback Registration are not permitted to include all of such
Registrable Securities by reason of such determination by the manager
of the offering, the Registrable Securities to be included in the
offering shall be determined in accordance with Sections 2(c) and 2(d)
below. Notwithstanding the foregoing, the Company may, in its sole
discretion and without the consent of any holder of Registrable
Securities, withdraw such registration statement and abandon such
proposed public offering.
- 3 -
<PAGE> 53
(b) Piggyback Expenses. The Registration Expenses of
the holders of the Registrable Securities will be paid by the Company
in all Piggyback Registrations, including proposed Piggyback
Registrations which are abandoned.
(c) Priority on Primary Registrations. If a Piggyback
Registration is a primary registration initiated by or on behalf of
the Company and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be
included in such registration exceeds the number which can be sold in
an orderly manner in such offering within a price range acceptable to
the Company, then the Company will include in such registration (i)
first, the securities the Company proposes to sell, and (ii) second,
securities of the holders requesting such registration, pro rata among
the holders requesting inclusion in the registration on the basis of
the number of such securities requested to be included in such
registration by each such holder.
(d) Priority on Secondary Registrations. If a
Piggyback Registration is an underwritten secondary registration
initiated by or on behalf of holders of the Company's securities
exercising demand registration rights and the managing underwriters
advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the
number which can be sold in an orderly manner in such offering within
a price range acceptable to the holders initially requesting such
registration, then the Company will include in such registration (i)
first, the securities requested to be included therein by the holders
exercising demand registration rights, and (ii) second, the
Registrable Securities and other securities requested to be included
in such registration by Persons holding piggyback registration rights,
pro rata among the holders of such securities on the basis of the
number of such securities requested to be included in such
registration by each such holder.
SECTION 3. Form S-3 Registrations.
(a) Requests for Registration. At any time during the
Registration Period, a holder of Registrable Securities may request
that the Company effect a registration on Form S-3 and any related
qualification or compliance under the Securities Act with respect to
all or part of its Registrable Securities. Each request for a Form
S-3 Registration shall specify the appropriate number of Registrable
Securities requested to be registered. Within ten (10) days after
receipt of any such request, the Company will give written notice of
such requested registration to all other holders of Registrable
Securities and will include in such registration, subject to Section
3(c), all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within thirty (30)
days after the receipt of the Company's notice.
(b) Restrictions on Form S-3 Registrations. Each
holder of Registrable Securities will be entitled to require unlimited
Form S-3 Registrations pursuant to this Section 3, provided, however,
that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 3
if (i) Form S-
- 4 -
<PAGE> 54
3 is not available for such offering by the holders of Registrable
Securities, (ii) such holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if
any) aggregating less than 100,000 shares or at an aggregate price to
the public of less than $1,000,000, provided that this clause (ii)
shall not apply with respect to the exercise by the holders of
Registrable Securities of their rights under Section 1 hereof
following the giving of the notice permitted by Section 1(b) hereof,
(iii) the Company shall furnish to the holders a written certificate
signed by the president of the Company stating that, in the good faith
judgment of the Board of Directors of the Company, it would reasonably
be expected to have an adverse effect on any proposal or plan by the
Company or any of its Subsidiaries to engage in any acquisition (other
than in the ordinary course of business) or any merger,
recapitalization, consolidation, reorganization, tender offer or
similar transaction or negotiations, discussions or pending proposals
with respect thereto or would require the Company to make premature
public disclosure of information, the premature disclosure of which
would have a material adverse effect on the business or prospects of
the Company, or would otherwise be seriously detrimental to the
Company or its stockholders, for such Form S-3 registration to be
effected at such time, in which event the Company shall have the right
to defer the filing of the Form S-3 registration statement for a
period of not more than ninety (90) days after receipt of the request
of the holder under this Section 3, provided, however, that the
Company shall not utilize this right more than once in any twelve
month (12) period, provided further, that, in such event, the holders
of Registrable Securities initially requesting such Form S-3
Registration will be entitled to withdraw such request, (iv) the
Company has, within the twelve (12) month period preceding the date of
such request, already effected two registrations on Form S-3 for the
holders of Registrable Securities pursuant to this Section 3,
provided, however, that this clause (iv) shall not apply with respect
to the exercise by the holders of Registrable Securities of their
rights under Section 1 hereof following the giving of the notice
permitted by Section 1(b) hereof, or (v) in effecting such
registration, qualification or compliance, the Company would be
required to qualify to do business or to execute a general consent to
service of process in any jurisdiction in which the Company was not
already so qualified or had not already executed such consent. Any
Form S-3 Registration effected pursuant to this Section 3 shall not be
considered to be a Demand Registration pursuant to Section 1 of this
Agreement.
(c) Priority on Registration. The Company may include
in any Form S-3 Registration any securities which are not Registrable
Securities but which are of the same class as the Registrable
Securities and which are held by holders who have piggyback
registration rights with respect to the Form S-3 registration rights
provided under this Agreement. If a Form S-3 Registration is an
underwritten offering and the managing underwriters advise the Company
in writing that in their opinion the number of Registrable Securities
and, if permitted hereunder, other securities requested to be included
in such offering exceeds the number of Registrable Securities and
other securities, if any, which can be sold in an orderly manner in
such offering within a price range acceptable to the holders of a
majority of the Registrable Securities, then the Company will include
in such registration, prior to the inclusion
- 5 -
<PAGE> 55
of any securities which are not Registrable Securities, the number of
Registrable Securities requested to be included pro rata among the
respective holders thereof on the basis of the amount of Registrable
Securities requested by such holders to be included in such
registration, so that no securities other than Registrable Securities
will be included in such registration if the inclusion of such
securities would result in a limitation on the number of Registrable
Securities to be included therein.
(d) Undertakings by the Company. In addition to any
other obligations of the Company set forth herein with respect to the
use of a Form S-3 Registration by the holders of Registrable
Securities to sell securities of the Company to the public, the
Company shall:
(i) take such action as is necessary and
may reasonably be accomplished by the Company to enable the
holders of Registrable Securities to utilize Form S-3 for the
sale of their Registrable Securities, including, but not
limited to, the filing with the SEC in a timely manner all
reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(ii) furnish to any holder, so long as
such holder owns any Registrable Securities, forthwith upon
request (i) a written statement by the Company that it
qualifies as a registrant whose securities may be resold
pursuant to Form S-3, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing such
holder of any rule or regulation of the SEC that permits the
selling of any such securities pursuant to Form S-3 or similar
form.
(e) Selection of Underwriters. If any Form S-3
Registration is in the form of an underwritten offering, the Company
will select and retain the investment banker or investment bankers and
manager or managers that administer the offering, provided, however,
that such selection will be subject to the approval of the holders of
a majority of the Registrable Securities participating in such
registration, which shall not be unreasonably withheld. The Company
shall (together with all holders proposing to distribute their
securities through such underwriting) enter into and perform its (and
their) obligations under an underwriting agreement in customary form
with the managing underwriter selected for such underwriting. If any
holder of Registrable Securities disapproves of the terms of the
underwriting, such holder may elect to withdraw therefrom by written
notice to the Company and the managing underwriter. The Registrable
Securities so withdrawn shall also be withdrawn from registration.
SECTION 4. Resales Pursuant to Rule 144. In order to make available
to the holders of Registrable Securities the benefits of Rule 144 and any other
rule or regulation of the SEC that may at any time permit a holder of
Registrable Securities to sell securities of the Company to the public without
registration, the Company shall:
- 6 -
<PAGE> 56
(a) make and keep adequate current public information
available at all times as required by Rule 144; and
(b) take such action as is necessary to enable the
holders of Registrable Securities to utilize Rule 144 for the sale of their
Registrable Securities, including, but not limited to, the filing with the SEC
in a timely manner all reports and other documents required of the Company
under the Exchange Act; and
(c) furnish to any holder, so long as such holder owns
any Registrable Securities, forthwith upon request (i) a written statement by
the Company that it has complied with the reporting requirements of Rule 144,
the Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so
filed by the Company, and (iii) such other information as may be reasonably
requested by such holder to permit the holder to use any rule or regulation of
the SEC that permits the selling of any such securities without registration.
SECTION 5. Holdback Agreements
(a) By Holders. Each holder of Registrable Securities
agrees not to effect any pubic sale or distribution (including sales
pursuant to Rule 144) of any Registrable Securities, within seven (7)
days prior to, and during the 120-day period beginning on, the date
specified in writing by the Company to such holder as the effective
date of any underwritten Demand Registration or any underwritten
Piggyback Registration in which Registrable Securities of such holder
are included (except as part of such underwritten registration),
unless the underwriters managing the registered public offering
otherwise agree, provided that officers and directors of the Company
enter into similar agreements.
(b) By the Company. The Company agrees not to effect
any public sale or distribution of its equity securities, or any
securities convertible into or exchangeable or exercisable for such
securities, within seven (7) days prior to, and during the 120-day
period beginning on, the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration (except as
part of such underwritten registration or pursuant to registrations on
Form S-4 or Form S-8 or any successor form), unless the underwriters
managing the registered public offering otherwise agree.
SECTION 6. Registration Procedures. Whenever the holders of
Registrable Securities have requested that any Registrable Securities be
registered pursuant to Sections 1, 2 or 3 of this Agreement, the Company will
use its best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof, and pursuant thereto the Company will as expeditiously as possible:
(a) Prepare and file with the SEC a registration
statement on the appropriate form with respect to such Registrable Securities
and use its best efforts to cause such registration statement to become
effective within ninety (90) days of the date that the Company received a
request for the registration of such Registrable Securities from the
- 7 -
<PAGE> 57
holders in accordance with the terms of Sections 1(a), 2(a) or 3(a) above, as
the case may be; and
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for a period of not less than one hundred twenty (120) consecutive
days (three hundred sixty-five (365) consecutive days with respect to a Demand
Registration under Section 1 hereof) or such shorter period which will
terminate when Registrable Securities covered by such registration statement
have been sold (but not before the expiration of the applicable prospectus
delivery period) and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
and
(c) Furnish to each seller of Registrable Securities
such number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller; and
(d) Use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions within the United States as the sellers shall request and do any
and all other acts and things which may be reasonably necessary or advisable to
enable such sellers to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such sellers (provided that the Company will
not be required to qualify generally to do business or file any general consent
to service of process in any jurisdiction where it would not otherwise be
required to qualify or file but for this subparagraph); and
(e) Notify each seller of such Registrable Securities
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 contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing, and at the request of any such seller, the
Company will prepare and file promptly with the SEC, and promptly notify each
holder of Registrable Securities of the filing of, a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an 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 in light of
the circumstances under which they were made; and
(f) Make available for inspection by any seller of
Registrable Securities, any underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
agent retained by any such seller or underwriter, all financial and other
records (reasonably requested), pertinent corporate documents and contracts of
the Company as shall be reasonably necessary to enable them to exercise their
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<PAGE> 58
due diligence responsibility, and cause the Company's officers, directors,
employees and independent accountants to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement, provided, however, that each
seller of Registrable Securities agrees that information obtained by it as a
result of such inspections which is deemed confidential shall not be used by it
as the basis for any market transaction in securities of the Company unless and
until such information is made generally available to the public and each such
seller shall cause any attorney, accountant or agent retained by such seller to
keep confidential any such information; and
(g) In the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any common stock included in such registration statement for
sale in any jurisdiction, the Company will use reasonable efforts promptly to
obtain the withdrawal of such order; and
(h) If the offering is to be underwritten, enter into
any necessary agreements in connection therewith (including an underwriting
agreement containing customary representations, warranties and agreements); and
(i) Take all such other reasonable actions in
connection therewith in order to expedite or facilitate the disposition of such
Registrable Securities and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
underwritten registration, make such representations and warranties to the
holders of such Registrable Securities and the underwriters, if any, in such
form, substance and scope as are customarily made by issuers to underwriters in
primary underwritten offerings, obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions, in form, scope and substance,
shall be reasonably satisfactory to the managing underwriters, if any, and the
sellers), and obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the sellers and
the underwriters, if any, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters to
underwriters in connection with primary underwritten offerings.
SECTION 7. Registration Expenses.
(a) Company Expenses. All expenses (herein called
"Registration Expenses") incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all
registration and filing fees, fees and expenses of compliance with
securities and blue sky laws, printing expenses, messenger and
delivery expenses, fees and disbursements of counsel for the Company,
and fees and disbursements of all the Company's certified public
accountants, underwriters (excluding discounts and commissions) and
any Persons retained by the Company, will be paid by the Company.
(b) Holder Expenses. Except as otherwise paid by the
Company pursuant to Section 7(a) above, each holder of Registrable
Securities shall bear all
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expenses incurred by such holder in connection with the negotiation
and preparation of any registration statement, underwriting agreement
and all other documents and instruments contemplated hereby to which
any such holder is a party, including, without limitation, the fees
and expenses, if any, of its legal counsel, provided, however, that if
such holder learns of a material adverse change in the condition,
business, or prospects of the Company after such holder has decided to
participate, and has notified the Company of its decision to
participate, in a registration pursuant to the terms of this
Agreement, then such holder shall be free to withdraw from such
registration and the Company shall pay all expenses, including, but
not limited to, expenses incurred by such holder in connection with
such registration, provided further, however, that if such holder
initiated a Demand Registration but such registration is not
considered to be a Demand Registration in accordance with the terms of
Section 1(b) hereof, then the Company shall pay all expenses,
including, but not limited to, expenses incurred by such holder, in
connection with such registration.
SECTION 8. Undertakings of the Holders of Registrable
Securities.
(a) Suspension of Sales. If any Registrable Securities
are included in a registration statement pursuant to the terms of this
Agreement, the holder thereof will not (until further notice) effect
sales thereof after receipt of written notice from the Company to
suspend sales to permit the Company to correct or update a registration
statement or prospectus, provided that the obligations of the Company
with respect to maintaining any registration statement current and
effective shall be extended by a period of days equal to the period
said suspension is in effect.
(b) Compliance. If any Registrable Securities are
being registered in any registration pursuant to this Agreement, the
holder thereof will comply with all anti-stabilization, manipulation
and similar provisions of Section 10 of the Exchange Act, and any
rules promulgated thereunder by the SEC and, at the request of the
Company, will execute and deliver to the Company and to any
underwriter participating in such offering an appropriate agreement to
such effect.
(c) Termination of Effectiveness. At the end of the
period during which the Company is obligated to keep a registration
statement current and effective as described herein, each holder of
Registrable Securities included in the registration statement shall
discontinue sales thereof pursuant to such registration statement,
unless such holder has received written notice from the Company of its
intention to continue the effectiveness of such registration statement
with respect to any of such securities which remain unsold.
SECTION 9. Underwritten Registrations.
(a) Furnish Information. No holder of Registrable
Securities may participate in any registration hereunder which is
underwritten unless such holder (i) agrees to sell such holder's
securities on the basis provided in any underwriting arrangements
approved by the holder or holders entitled hereunder to approve such
arrangements, and (ii) completes and executes all customary
questionnaires, powers of
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<PAGE> 60
attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements,
provided that no holder of Registrable Securities included in any
underwritten registration shall be required to make any
representations or warranties to the Company or the underwriters on
account of the registration of shares owned by such holder other than
representations and warranties regarding such holder and such holder's
intended method of distribution.
(b) Right of Approval. The Company shall not include
in any registration statement (or attachments or exhibits thereto)
filed by the Company (under this Agreement or otherwise) pursuant to
the Securities Act any information describing or relating to the
Purchaser or any Purchaser Affiliate or the relationship of the
Purchaser or any Purchaser Affiliate with the Company without the
advance written consent of the Purchaser, which consent shall not be
unreasonably withheld or delayed.
(c) Delay of Registration. No holder of Registrable
Securities shall have any right to obtain or seek an injunction
restraining or otherwise delaying the preparation of, or declaration
of the effectiveness of, any registration statement initiated in
accordance with the terms of this Agreement if such injunction is the
result of any controversy that might arise with respect to the
interpretation or implementation of this Agreement.
SECTION 10. Assignment of the Purchaser's Registration Rights.
The rights of a holder of Registrable Securities set forth in this Agreement,
including the right to cause the Company to register Registrable Securities and
pay the Registration Expenses, to the extent set forth herein, incurred in
connection therewith, may be assigned by such holder to a Purchaser Affiliate
which acquires Registrable Securities. All Registrable Securities held or
acquired by a Purchaser Affiliate shall be aggregated with all Registrable
Securities held by the Purchaser for the purpose of determining the
availability to the holders of Registrable Securities of any rights under this
Agreement. For purposes of this Agreement, the term "Purchaser Affiliate"
means any Person that, directly or indirectly, controls or is controlled by or
is under common control with the Purchaser. For purposes of this definition,
control of a Person means the power, directly or indirectly, to direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise and, in any event and without limiting the foregoing, any
Person owing fifty percent (50%) or more of the voting securities of another
Person shall be deemed to control that Person.
SECTION 11. Other Registration Rights. The Purchaser
acknowledges that it has received copies of (a) that certain Registration
Agreement, dated January 28, 1996 (the "Fairchild Agreement"), by and between
the Company and Fairchild Data Corporation; (b) that certain agreement, dated
as of March 14, 1994 (the "EchoStar Agreement"), by and between the Company and
EchoStar Communications Corporation ("EchoStar"), pursuant to which the Company
granted certain registration rights to EchoStar; and (c) that certain letter
agreement, dated August 2, 1996 (the "EchoStar Letter"), from the Company to
EchoStar, pursuant to which the Company agreed to grant certain additional
registration rights to EchoStar at least as favorable to EchoStar as those set
forth in the Fairchild Agreement in
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<PAGE> 61
the event the Company issues shares of Common Stock to EchoStar in connection
with the exercise of certain warrants that may be issued by the Company after
the date hereof. To the extent the registration rights provided for in the
EchoStar Letter are set forth in a written document after the date hereof, such
document shall be referred to herein as the "New Registration Agreement." The
Fairchild Agreement, the EchoStar Agreement, the EchoStar Letter and the New
Registration Agreement shall collectively be referred to herein as the "Company
Registration Documents").
In the event that (i) a Demand Registration or a Form S-3
Registration, as the case may be, is requested and the provisions of Section
1(c) or Section 3(c) hereof, as the case may be, cannot be implemented by the
Company without conflicting with its obligations under Section 2(d) of the
Fairchild Agreement, Section 8(c) of the EchoStar Agreement, or the provision
contained in the New Registration Agreement that is substantially similar to
Section 2(d) of the Fairchild Agreement; (ii) a Piggyback Registration is
requested and the provisions of Section 2(c) hereof cannot be implemented by
the Company without conflicting with its obligations under Section 8(b) of the
EchoStar Agreement; or (iii) a Piggyback Registration is requested and the
provisions of Section 2(d) hereof cannot be implemented by the Company without
conflicting with its obligations under Section 8(c) of the EchoStar Agreement,
then the Company shall use its best efforts to (x) with respect to subparagraph
(i) of this Section 11, convince all holders of securities of the Company,
whose registration rights are in conflict with Section 1(c) or Section 3(c)
hereof, as the case may be, requesting inclusion in such Demand Registration or
Form S-3 Registration, as the case may be, to execute a waiver of such rights
so that such Demand Registration or Form S-3 Registration, as the case may be,
can be completed in a manner which complies with Section 1(c) or Section 3(c)
hereof, as the case may be; (y) with respect to subparagraph (ii) of this
Section 11, convince all holders of securities of the Company, whose
registration rights are in conflict with Section 2(c) hereof, requesting
inclusion in such Piggyback Registration to execute a waiver of such rights so
that such Piggyback Registration can be completed in a manner which complies
with Section 2(c) hereof; and (z) with respect to subparagraph (iii) of this
Section 11, convince all holders of securities of the Company, whose
registration rights are in conflict with Section 2(d) hereof, requesting
inclusion in such Piggyback Registration to execute a waiver of such rights so
that such Piggyback Registration can be completed in a manner which complies
with Section 2(d) hereof. If, despite the use of its best efforts, the Company
is unable to obtain any waiver described above, then the holders of the
Registrable Securities requesting such Demand Registration or Piggyback
Registration, as the case may be, shall cooperate with the Company to resolve
any conflict described above in the Company Registration Documents.
Other than the New Registration Agreement, from and after the date of
this Agreement, the Company shall not, without the prior written consent of the
holders of a majority of the Registrable Securities, enter into any agreement
with any holder or prospective holder of any securities of the Company that
would allow such holder or prospective holder to make a demand registration
that would adversely affect the rights of any holder of Registrable Securities
hereunder.
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<PAGE> 62
SECTION 12. Indemnification.
(a) Indemnification by the Company. The Company shall
indemnify and hold harmless, with respect to any registration
statement filed by it, to the fullest extent permitted by law, each
holder of Registrable Securities covered by such registration
statement, its officers, directors, employees, agents and general or
limited partners (and the directors, officers, employees and agents
thereof) and each other Person, if any, who controls such holder
within the meaning of the Securities Act (collectively, the " Holder
Indemnified Parties") against all losses, claims, damages, liabilities
and expenses joint or several (including reasonable fees of counsel
and any amounts paid in settlement effected with the Company's
consent, which consent shall not be unreasonably delayed or withheld)
to which any such Holder Indemnified Party may become subject under
the Securities Act, the Exchange Act, any other federal law, any state
or common law, any rule or regulation promulgated thereunder or
otherwise, insofar as such losses, claims, damages liabilities or
expenses (or actions or proceedings, whether commenced or threatened,
in respect thereof) are caused by (i) any untrue statement or alleged
untrue statement of a material fact contained in any registration
statement in which such Registrable Securities were included as
contemplated hereby or 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, (ii) any untrue statement
or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus, together with the documents
incorporated by reference therein (as amended or supplemented if the
Company shall have filed with the SEC any amendment thereof or
supplement thereto), or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or (iii) any
violation by the Company of the Securities Act, the Exchange Act, any
other federal law, any state or common law, or any rule or regulation
promulgated thereunder in connection with any such registration; and
in each such case, the Company shall reimburse each such Holder
Indemnified Party for any reasonable legal or any other expenses
incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability, expense, action or
proceeding, provided, however, that the Company shall not be liable to
any such Holder Indemnified Party in any such case to the extent that
any such loss, claim, damage, liability or expense (or action or
proceeding, whether commenced or threatened, in respect thereof)
arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such registration
statement or amendment thereof or supplement thereto or in any such
preliminary, final or summary prospectus in reliance upon and in
strict conformity with written information furnished to the Company by
or on behalf of any such Holder Indemnified Party relating to such
Holder Indemnified Party for use in the preparation thereof, and
provided further, that the Company shall not be liable to any such
Holder Indemnified Party with respect to any preliminary prospectus to
the extent that any such loss, claim, damage, liability or expense of
such Holder Indemnified Party results from the fact that such Holder
Indemnified Party sold Registrable Securities to a Person to whom
there was not sent or given, at or before the written confirmation of
such sale, a copy of the prospectus
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<PAGE> 63
(excluding documents incorporated by reference) or of the prospectus
as then amended or supplemented (excluding documents incorporated by
reference) if the Company has previously furnished copies thereof to
such Holder Indemnified Party in compliance with this Agreement and
the loss, claim, damage, liability or expense of such Holder
Indemnified Party results from an untrue statement or omission of a
material fact contained in such preliminary prospectus which was
corrected in the prospectus (or the prospectus as amended or
supplemented). Such indemnity and reimbursement of expenses and
obligations shall remain in full force and effect regardless of any
investigation made by or on behalf of the Holder Indemnified Parties
and shall survive the transfer of such securities by such Holder
Indemnified Parties.
(b) Indemnification by Holders. Each holder of
Registrable Securities participating in any registration hereunder
shall indemnify and hold harmless, to the fullest extent permitted by
law, the Company, its directors, officers, employees and agents, and
each Person who controls the Company (within the meaning of the
Securities Act) (collectively, " Company Indemnified Parties") against
all losses, claims, damages, liabilities and expenses, joint or several
(including reasonable fees of counsel and any amounts paid in
settlement effected with such holder's consent, which consent shall not
be unreasonably delayed or withheld) to which any Company Indemnified
Parties may become subject under the Securities Act, the Exchange Act,
any other federal law, any state or common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions or
proceedings, whether commenced or threatened, in respect thereof) are
caused by (i) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement in which such
holder's Registrable Securities were included or 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,
(ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary, final or summary prospectus,
together with the documents incorporated by reference therein (as
amended or supplemented if the Company shall have filed with the
Commission any amendment thereof or supplement thereto), or the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, and in the cases described in clauses (i) and (ii) of
this Section 12(b), to the extent, but only to the extent, that such
untrue statement or omission is contained in any information furnished
in writing by such holder relating to such holder for use in the
preparation of the documents described in such clauses (i) and (ii) and
the Company does not know, at the time such information is included in
the registration statement, prospectus, preliminary prospectus,
amendment or supplement, that such information is false or misleading,
(iii) any violation by such holder of the Securities Act, the Exchange
Act, any other federal law, any state or common law, or any rule or
regulation promulgated thereunder applicable to such holder and
relating to action of or inaction by such holder in connection with any
such registration, and (iv) with respect to any preliminary prospectus,
the fact that such holder sold Registrable Securities to a Person to
whom there was not sent or given, at or before the written confirmation
of such sale, a copy of the prospectus (excluding the
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<PAGE> 64
documents incorporated by reference) or of the prospectus as then
amended or supplemented (excluding documents incorporated by
reference) if the Company has previously furnished copies thereof to
such holder in compliance with this Agreement and the loss, claim,
damage, liability or expense of such Company Indemnified Party results
from an untrue statement or omission of a material fact contained in
such preliminary prospectus which was corrected in the prospectus (or
the prospectus as amended or supplemented). Such indemnity obligation
shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company Indemnified Parties (except as
provided above) and shall survive the transfer of such securities by
such holder.
(c) Conduct of Indemnification Proceedings. Promptly
after receipt by an identified party under Sections 12(a) or 12(b)
above of written notice of the commencement of any action, suit,
proceeding, investigation or threat thereof with respect to which a
claim for indemnification may be made pursuant to this Section, such
indemnified party shall, if a claim in respect thereto is to be made
against an indemnifying party, give written notice to the indemnifying
party of the threat or commencement thereof, provided, however, that
the failure to so notify the indemnifying party shall not relieve it
from any liability which it may have to any indemnified party except
to the extent that the indemnifying party is actually prejudiced by
such failure to give notice. If any such claim or action referred to
under Sections 12(a) or 12(b) above is brought against any indemnified
party and it then notifies the indemnifying party of the threat or
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party
(who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party). After notice from the
indemnifying party to such indemnified party of its election so to
assume the defense of any such claim or action, the indemnifying party
shall not be liable to such indemnified party under this Section 12
for any legal expenses of counsel or any other expenses (other than
reasonable costs of investigation) subsequently incurred by such
indemnified party in connection with the defense thereof, unless the
indemnifying party has failed to assume the defense of such claim or
action or to employ counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the 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 differing
interests between such indemnified party and any other party
represented by such counsel in such action. The indemnifying party
shall not be required to indemnify the indemnified party with respect
to any amounts paid in settlement of any action, proceeding or
investigation entered into without the written consent of the
indemnifying party, which consent shall not be unreasonably delayed or
withheld. No indemnifying party shall consent to the entry of any
judgment or enter into any settlement without the consent of the
indemnified party unless (i) such judgment or settlement does not
impose any obligation or liability upon the indemnified party other
than the execution, delivery or approval thereof, and (ii) such
judgment or settlement
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<PAGE> 65
includes as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a full release and discharge
from all liability in respect of such claim and a full release of all
Persons that may be entitled to or obligated to provide
indemnification or contribution under this Section.
(d) Contribution. If the indemnification provided for
in this Section 12 is unavailable to or insufficient to hold harmless
an indemnified party under Sections 12(a) or 12(b), then each
indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of the losses, claims, damages,
liabilities or expenses (or actions or proceedings in respect thereof)
referred to in Sections 12(a) or 12(b) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
the one hand and the indemnified party on the other in connection with
the statements, omissions, actions or inactions which resulted in such
losses, claims, damages, liabilities or expenses. The relative fault
of the indemnifying party and the indemnified party shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the indemnifying party or the indemnified party, any action or
inaction by any such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement, omission, action or inaction. The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages, liabilities or expenses (or actions or proceedings in respect
thereof) pursuant to this Section 12(d) shall be deemed to include any
reasonable legal or other expenses incurred by such indemnified party
in connection with investigating or defending any such action or claim
(which shall be limited as provided in Section 12(c) if the
indemnifying party has assumed the defense of any such action in
accordance with the provisions thereof) which is the subject of this
Section 12(d). No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. Promptly after receipt by an
indemnified party under this Section 12(d) of written notice of the
commencement of any action, suit, proceeding, investigation or threat
thereof with respect to which a claim for contribution may be made
against an indemnifying party under this Section 12(d), such
indemnified party shall, if a claim for contribution in respect
thereto is to be made against an indemnifying party, give written
notice to the indemnifying party of the commencement thereof (if the
notice specified in Section 12(c) has not been given with respect to
such action), provided, however, that the failure to so notify the
indemnifying party shall not relieve it from any obligation to provide
contribution which it may have to any indemnified party under this
Section 12(d), except to the extent that the indemnifying party is
actually prejudiced by the failure to give notice. The parties hereto
agree that it would not be just and equitable if contribution pursuant
to this Section 12(d) were determined by pro rata allocation or by any
other method of allocation which does not take account of the
equitable considerations referred to in this Section 12(d).
If indemnification is available under this Section 12, the
indemnifying parties shall indemnify each indemnified party to the
fullest extent provided in Sections 12(a)
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<PAGE> 66
and 12(b) hereof, without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 12(d). The provisions of
this Section 12(d) shall be in addition to any other rights to
indemnification or contribution which any indemnified party may have
pursuant to law or contract, shall remain in full force and effect
regardless of any investigation made by or on behalf of any
indemnified party, and shall survive the transfer of securities by any
such party.
(e) Indemnification and Contribution of Underwriters.
In connection with any underwritten offering contemplated by this
Agreement which includes Registrable Securities, the Company and all
sellers of Registrable Securities included in any registration
statement shall agree to customary provisions for indemnification and
contribution (consistent with the other provisions of this Section 12)
in respect of losses, claims, damages, liabilities and expenses of the
underwriters of such offering.
(f) Aggregate Liability of the Holders of Registrable
Securities. The aggregate amount which any holder of Registrable
Securities shall be required to pay pursuant to this Section 12,
pursuant to any representation or warranty provided in connection
with, or indemnity, contribution or reimbursement agreements executed
in connection with, any underwritten offering, or pursuant to any
other transactions contemplated hereby or thereby shall be limited to
the amount of proceeds received by such holder upon the sale of the
Registrable Securities and other securities of the Company (after
deducting any underwriting commissions, discounts, transfer taxes and
expenses applicable thereto) pursuant to the registration statement
giving rise to such claim.
SECTION 13. Termination.
This Agreement shall terminate on the date on which the Purchaser and
the Purchaser Affiliates hold, in the aggregate, Registrable Securities
representing less than two percent (2%) of the total number of outstanding
shares of capital stock of the Company on a fully diluted basis.
SECTION 14. Definitions. Capitalized terms used herein shall have
the meanings set forth below:
"Common Stock" means the authorized common stock of the Company, par
value $.01 per share, whether or not issued and outstanding.
"Company" has the meaning set forth in the introductory paragraph
hereof.
"Company Indemnified Parties" has the meaning set forth in Section
12(b) hereof.
"Company Registration Documents" has the meaning set forth in Section
11 hereof.
"Competitor of Alcatel" shall mean any Person having an interest in
satellite earth station product lines or businesses which are the same as or
similar to those of the Purchaser.
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<PAGE> 67
"Demand Registration" means any registration requested pursuant to
Section 1(a) hereof.
"EchoStar" has the meaning set forth in Section 11 hereof.
"EchoStar Agreement" has the meaning set forth in Section 11 hereof.
"EchoStar Letter" has the meaning set forth in Section 11 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fairchild Agreement" has the meaning set forth in Section 11 hereof.
"Form S-3" means such form under the Securities Act, as in effect on
the date hereof, or any registration form under the Securities Act subsequently
adopted by the SEC that permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
"Form S-3 Registration" means any registration requested pursuant to
Section 3(a) hereof.
"Holder Indemnified Parties" has the meaning set forth in Section
12(a) hereof.
"Investment Agreement" has the meaning set forth in the first recital
hereof.
"New Registration Agreement" has the meaning set forth in Section 11
hereof.
"Person" means any natural person, corporation, general partnership,
limited partnership, proprietorship, limited liability company, joint venture,
other business organization, trust, union, association or governmental
authority.
"Piggyback Registration" has the meaning set forth in Section 2(a)
hereof.
"Purchaser" has the meaning set forth in the introductory paragraph
hereof.
"Purchaser Affiliate" has the meaning set forth in Section 10 hereof.
"Registrable Securities" means (i) the Common Stock sold by the
Company to the Purchaser pursuant to the Investment Agreement, (ii) the Common
Stock sold by certain stockholders of the Company to the Purchaser pursuant to
the Selling Stockholder Agreement, (iii) the Common Stock issued or issuable by
the Company to the Purchaser pursuant to the Warrant, (iv) all securities of
the Company, including Common Stock, issued (or issuable upon the conversion or
exercise of any warrant, right or other security that is issued) with respect
to the Common Stock described in clauses (i), (ii), or (iii), whether by way of
dividend, stock split, recapitalization or otherwise, and (v) all securities of
the Company issued in exchange for or in replacement of any securities meeting
the criteria set forth in clauses (i), (ii), (iii) or (iv) of this definition.
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<PAGE> 68
"Registration Expenses" has the meaning set forth in Section 7(a)
hereof.
"Registration Period" means the period (i) commencing on the earlier
of (A) the date on which a Competitor of Alcatel acquires capital stock of the
Company in excess of ten percent (10%) of all outstanding shares of capital
stock of the Company on a fully diluted basis (or acquires rights to purchase
or acquire such capital stock), and (B) one (1) year after the date of this
Agreement, and (ii) continuing until the termination of this Agreement in
accordance with Section 13 hereof.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Stockholder Agreement" has the meaning set forth in the first
recital hereof.
"Subsidiary" of a Person means a Person that is, directly or
indirectly, through one or more intermediates controlled by the first Person.
For purposes of this definition, "controlled by" means the possession, directly
or indirectly, of the power to direct or cause a direction of the management
policies of a Person whether through the ownership of voting securities, by
contract or otherwise and, in any event and without limitation of the
foregoing, any Person fifty percent (50%) or more of whose voting securities
are owned by another Person shall be deemed to be controlled that Person.
"Warrant" means that certain Warrant dated September 6, 1996 issued by
the Company in favor of the Purchaser.
SECTION 15. Miscellaneous.
(a) Notices. All notices, requests and other
communications hereunder shall be in writing and will be deemed to
have been duly given and received (i) when personally delivered, (ii)
when sent by telefax to a party at the number listed below for such
party, (iii) three (3) business days after the day on which the same
has been delivered prepaid to an international courier service, or
(iv) ten (10) business days after the deposit in the United States
mail, registered or certified, return receipt requested, postage
prepaid, in each case addressed to the party to whom such notice is to
be given at the following address for such party:
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<PAGE> 69
If to the Company:
SSE Telecom, Inc.
8230 Leesburg Pike, Suite 710
Vienna, Virginia 22182
U.S.A.
Attn: Daniel E. Moore
Telefax No.: (703) 442-4507
With copies to:
Surovell, Jackson, Colten & Dugan, P.C.
4010 University Drive, Suite 200
Fairfax, Virginia 22020
U.S.A.
Attn: G. Donald Markle, Esq.
Telefax No: (703) 591-2149
If to the Purchaser:
Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attn: Jacques Couet
Telefax No.: 331-46524596
With copies to:
Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attn: Martine Funston, Esq.
Telefax No.: 331-46524595
Any party hereto from time to time may change its address, telefax
number or other information for the purpose of notices to that party
by giving notice specifying such change to the other parties hereto.
(b) Fees and Expenses. The Company and the Purchaser
shall each bear its own expenses in connection with the negotiation
and preparation of this Agreement.
(c) Rights of Holders. Each holder of Registrable
Securities shall have the absolute right to exercise or refrain from
exercising any right or rights that such holder may have by reason of
this Agreement, including, without limitation, the right
- 20 -
<PAGE> 70
to consent to the waiver or modification of any obligation under this
Agreement, and such holder shall not incur any liability to any other
holder of any securities of the Company as a result of exercising or
refraining from exercising any such right or rights.
(d) Assignment. Subject to the provisions of Section
10 hereof, neither this Agreement nor any right, interest or
obligation hereunder may be assigned by any party hereto without the
prior written consent of the other party hereto and any attempt to do
so will be void. Subject to the preceding sentence, this Agreement is
binding upon, inures to the benefit of and is enforceable by the
parties hereto and their respective successors and permitted assigns.
(e) Waiver. Any term or condition of this Agreement
may be waived at any time by the party that is entitled to the benefit
thereof, but no such waiver shall be effective unless set forth in a
written instrument duly executed by or on behalf of the party waiving
such term or condition. No waiver by either party of any term or
condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion.
(f) Amendment. This Agreement may be amended,
supplemented or modified only by a written instrument duly executed by
or on behalf of each party hereto.
(g) Remedies. Each party hereto will be entitled to
enforce any right granted to such party by any provision of this
Agreement specifically to recover damages caused by reason of any
breach of any provision of this Agreement and to exercise all other
rights granted by law. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent
jurisdiction (without posting any bond or other security) for specific
performance and for other injunctive relief in order to enforce or
prevent violation of the provisions of this Agreement.
(h) Public Announcements. Except as otherwise
required by law, no party hereto shall issue any press release or make
any other public announcement with respect to the transactions
contemplated hereby without the approval of the other party hereto,
which approval shall not be unreasonably withheld or delayed.
(i) Entire Agreement. This Agreement supersedes all
prior discussions and agreements among the parties hereto with respect
to the subject matter hereof and contains the sole and entire
agreement among the parties hereto with respect to the subject matter
hereof.
(j) Captions. The captions used in this Agreement
have been inserted for convenience of reference only and do not define
or limit the provisions hereof.
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<PAGE> 71
(k) Exhibits and Schedules. All exhibits and
schedules, if any, referred to in this Agreement, all attachments to
such exhibits or schedules, and any other attachment to this Agreement
are hereby incorporated by reference into this Agreement and hereby
are made a part of this Agreement as if set out in full herein.
(l) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware
applicable to a contract executed and performed in such State, without
giving effect to the conflicts of laws principles thereof.
(m) Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original,
but all of which together will constitute one and the same instrument.
(n) Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
(o) No Third Party Beneficiary. This Agreement shall
not confer any rights or remedies upon any Person other than the
parties hereto and their respective successors and permitted assigns.
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<PAGE> 72
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
SSE TELECOM, INC., a Delaware corporation
By: /s/ Frederick C. Toombs
---------------------------------
Name: Frederick C. Toombs
-------------------------------
Title: President
------------------------------
PURCHASER:
---------
ALCATEL TELSPACE, a French societe anonyme
By: /s/ Jerome de Vitry
-------------------------------------
Name: Jerome de Vitry
-----------------------------------
Title: Director R & D Product Management
----------------------------------
Attorney-In-Fact
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<PAGE> 73
===============================================================================
STOCKHOLDER AGREEMENT
BY AND AMONG
SSE TELECOM, INC.,
ALCATEL TELSPACE, S.A.
AND
CERTAIN OTHER STOCKHOLDERS
OF
SSE TELECOM, INC.
Dated as of September 6, 1996
===============================================================================
<PAGE> 74
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
<TABLE>
<S> <C> <C>
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------
ARTICLE II
APPROVAL OF TRANSACTIONS WITH PURCHASER
---------------------------------------
ARTICLE III
RIGHT OF FIRST REFUSAL
----------------------
SECTION 3.1 Grant of Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------------
SECTION 3.2 Permitted Transfers of Voting Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-----------------------------------
SECTION 3.3 Liquidation of Venture America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
------------------------------
SECTION 3.4 No Adverse Effect for Failure to Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-----------------------------------------
ARTICLE IV
RIGHT OF CO-SALE
----------------
SECTION 4.1 Grant of Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
--------------
SECTION 4.2 Transfer of Sale Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-------------------------
SECTION 4.3 Liquidation of Venture America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------------------------
SECTION 4.4 No Adverse Effect for Failure to Participate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
--------------------------------------------
ARTICLE V
BOARD REPRESENTATION
--------------------
AND OBSERVATION RIGHTS
----------------------
SECTION 5.1 Designation of Nominee by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-----------------------------------
SECTION 5.2 Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-----------------------------
SECTION 5.3 Observation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
------------------
</TABLE>
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<PAGE> 75
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF THE CURRENT STOCKHOLDERS
<TABLE>
<S> <C> <C>
SECTION 6.1 Organization, Good Standing, Due Authorization, Execution and
-------------------------------------------------------------
Delivery by Entity Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
------------------------------
SECTION 6.2 Due Authorization, Execution and Delivery by Individual Stockholder . . . . . . . . . . . . . . . . 10
-------------------------------------------------------------------
SECTION 6.3 Title to Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
---------------
SECTION 6.4 Consents; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
---------------------
SECTION 6.5 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
----------
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
SECTION 7.1 Organization and Authority of the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-------------------------------------------
SECTION 7.2 Due Authorization, Execution and Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-----------------------------------------
SECTION 7.3 Consents; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------------------
SECTION 7.4 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------
ARTICLE VIII
TERMINATION
-----------
ARTICLE IX
VIOLATIONS AND LEGENDS
----------------------
SECTION 9.1 Violations of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------------------------
SECTION 9.2 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------
ARTICLE X
RESOLUTION OF DISPUTES
----------------------
ARTICLE XI
MISCELLANEOUS
-------------
SECTION 11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-------
SECTION 11.2 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-----------------
</TABLE>
- ii -
<PAGE> 76
<TABLE>
<S> <C> <C>
SECTION 11.3 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
--------------------
SECTION 11.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
----------------
SECTION 11.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------
SECTION 11.6 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
---------
SECTION 11.7 Benefits and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------------------------
SECTION 11.8 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--------
SECTION 11.9 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------------------
SECTION 11.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-------------
SECTION 11.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
------------
SECTION 11.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
------------
SECTION 11.13 No Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--------------------------
SECTION 11.14 Authority of Venture America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------------------------
</TABLE>
- iii -
<PAGE> 77
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT (this "Agreement") is made and entered into
as of the 6th day of September, 1996 by and among VENTURE AMERICA MANAGEMENT
LIMITED PARTNERSHIP, a Virginia limited partnership, FRANK S. TRUMBOWER, a
resident of Incline Village, Nevada, SARAH P. TRUMBOWER, a resident of
Berryville, Virginia, FREDERICK C. TOOMBS, a resident of Los Gatos, California,
DANIEL E. MOORE, a resident of McLean, Virginia, and FRANK J. PETERNELL, a
resident of Cupertino, California (such entities and individuals are referred
to herein, collectively, as the "Current Stockholders" and, individually, as a
"Current Stockholder"), SSE TELECOM, INC., a Delaware corporation (the
"Company"), and ALCATEL TELSPACE, a societe anonyme organized under the laws of
France (the "Purchaser").
W I T N E S S E T H:
WHEREAS, each Current Stockholder owns the number of shares of the
issued and outstanding common stock of the Company listed opposite his name on
Exhibit A attached hereto; and
WHEREAS, simultaneously with the execution of this Agreement, (i) the
Purchaser will purchase 525,000 shares of the common stock of the Company from
the Company pursuant to the terms of that certain Stock Purchase and Investment
Agreement dated as of September 6, 1996 (the "Investment Agreement"), (ii) the
Purchaser will purchase 100,000 shares of the common stock of the Company from
certain Current Stockholders pursuant to the terms of that certain Stock
Purchase Agreement dated as of September 6, 1996 (the "Selling Stockholder
Agreement"), and (iii) the Company will issue to the Purchaser a Warrant dated
September 6, 1996 to purchase 300,000 shares of common stock of the Company
upon the terms set forth therein (the "Warrant"); and
WHEREAS, the execution of this Agreement by the parties hereto is a
condition precedent to the obligation of the Purchaser to consummate the
transactions contemplated by the Investment Agreement and the Selling
Stockholder Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties contained herein and of the mutual benefits to
be derived herefrom, and intending to be legally bound, the parties hereto
agree as follows:
<PAGE> 78
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. As used in this Agreement, the following
defined terms have the meanings indicated below:
"Affiliate" of a Person means a Person that directly or indirectly
through one or more intermediates, controls, is controlled by, or is under
common control with, the first Person.
"Board" has the meaning set forth in Section 5.1.
"Board of Arbitration" has the meaning set forth in Article X.
"Business Day" means any day which is not a Saturday, Sunday or legal
holiday in New York, New York or Paris, France.
"Commercial Agreement" means that certain Joint Product Identification
and Supply Agreement between the Company and the Purchaser dated September 6,
1996.
"Common Stock" means the authorized common stock of the Company, par
value $.01 per share, whether or not issued and outstanding.
"Company" has the meaning set forth in the introductory paragraph
hereof.
"Contract" means all contracts, agreements, license agreements,
leases, assignments, purchase agreements, indentures, mortgages, instruments of
indebtedness, security agreements, guaranties, purchase orders, sales orders,
and distribution agreements.
"Control" (whether or not capitalized) shall mean, with respect to a
Person, the possession, directly or indirectly, of the power to direct or cause
the direction of the management policies of such Person whether through the
ownership of voting securities, by Contract or otherwise and, in any event, and
without limitation of the foregoing, any Person fifty percent (50%) or more of
whose voting securities are owned by another Person shall be deemed to be
controlled that Person.
"Current Stockholders" and "Current Stockholder" have the meanings set
forth in the introductory paragraph hereof.
"DGCL" has the meaning set forth in Section 5.1.
"Election Meeting" has the meaning set forth in Section 5.1.
"Financial Investor" means a Person meeting the requirements of Rule
13d-1(b)(1)(i) under the Securities Exchange Act of 1934, as amended.
- 2 -
<PAGE> 79
"Governmental Authority" means any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision.
"Investment Agreement" has the meaning set forth in the recitals
hereof.
"Laws" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental Authority.
"Liens" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge, rights of others, or other
encumbrance of any kind, or any conditional sale contract, title retention
contract or other contract to give any of the foregoing.
"Losses" means any and all damages, fines, costs, fees, penalties,
deficiencies, losses, amounts paid in settlement and expenses (including
without limitation interest, court costs, fees of attorneys, accountants and
other experts or other expenses of litigation or other proceedings or of any
claim, default or assessment).
"Permitted Transfer" has the meaning set forth in Section 3.2.
"Person" means any natural person, corporation, general partnership,
limited partnership, proprietorship, limited liability company, joint venture,
other business organization, trust, union, association or Governmental
Authority.
"Prorata Percentage" means, with respect to a Purchasing Stockholder,
a fraction, the numerator of which is the number of shares of Voting Stock
owned by such Purchasing Stockholder as of the date of the Voting Stock Notice
and the denominator of which is the total number of shares of Voting Stock
owned by all Purchasing Stockholders as of the date of the Voting Stock Notice.
"Purchaser" has the meaning set forth in the introductory paragraph
hereof.
"Purchaser Director" has the meaning set forth in Section 5.1.
"Purchaser Nominee" has the meaning set forth in Section 5.1.
"Purchasing Stockholder" has the meaning set forth in Section 3.1.
"Registration Rights Agreement" means that certain Registration Rights
Agreement dated September 6, 1996, between the Company and the Purchaser.
"Representing Stockholder" has the meaning set forth in Article VI.
- 3 -
<PAGE> 80
"Restricted Investor" means any Person, other than a Financial
Investor or any Stockholder, who proposes to acquire Voting Stock if either (i)
such Person owns ten percent (10%) or more of the Total Voting Power of the
Company prior to such acquisition, or (ii) as a result of such acquisition,
such Person would own ten percent (10%) or more of the Total Voting Power of
the Company immediately following such acquisition.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rules of Arbitration" has the meaning set forth in Article X.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Stockholder" has the meaning set forth in Section 3.1.
"Selling Stockholder Agreement" has the meaning set forth in the
recitals hereof.
"Stockholders" mean the Current Stockholders and the Purchaser,
collectively, and "Stockholder" means any one of them.
"Subsidiary" of a Person means a Person that is, directly or
indirectly, through one or more intermediates controlled by the first Person.
"Successor Purchaser Director" has the meaning set forth in Section
5.1.
"Total Voting Power of the Company" means the total number of votes
which may be cast in the election of directors of the Company at any meeting of
stockholders of the Company if all securities entitled to vote in the election
of directors of the Company were present and voted at such meeting (other than
votes that may be cast only upon the occurrence of a contingency).
"Venture America" has the meaning set forth in Section 3.3.
"Voting Agreement" means that certain Voting Agreement effective as of
the date of this Agreement, among the Company, the Purchaser and certain other
stockholders of the Company.
"Voting Stock" means the Common Stock and any other capital stock or
securities issued by the Company having the ordinary power to vote in the
election of directors of the Company (other than such capital stock or
securities having such power only upon the occurrence of a contingency) now
owned or hereafter acquired by any Stockholder.
"Voting Stock Notice" has the meaning set forth in Section 3.1(a).
"Warrant" has the meaning set forth in the recitals hereof.
- 4 -
<PAGE> 81
ARTICLE II
APPROVAL OF TRANSACTIONS WITH PURCHASER
Each Current Stockholder hereby acknowledges, consents to and approves
all terms and conditions of the Investment Agreement, the Selling Stockholder
Agreement, the Registration Rights Agreement, the Voting Agreement, the
Commercial Agreement and all transactions contemplated therein. Each Current
Stockholder hereby waives and forever relinquishes any and all preemptive
rights, rights of first refusal or other rights to acquire any shares of
capital stock of the Company which such Current Stockholder has pursuant to any
Contract or otherwise and which would apply to the Common Stock (i) issued or
to be issued by the Company to the Purchaser pursuant to the Investment
Agreement, (ii) sold or to be sold by any Current Stockholder to the Purchaser
pursuant to the Selling Stockholder Agreement, or (iii) issued or to be issued
by the Company to the Purchaser pursuant to the Warrant.
ARTICLE III
RIGHT OF FIRST REFUSAL
SECTION 3.1 Grant of Right. If at any time a Stockholder (a "Selling
Stockholder") proposes to sell or transfer Voting Stock in any manner, directly
or indirectly, to any Person, other than pursuant to a Permitted Transfer in
accordance with the terms of Section 3.2 hereof, then each of the other
Stockholders (a "Purchasing Stockholder") shall have a right of first refusal
to purchase its Prorata Percentage of the shares of such Voting Stock, on the
terms pursuant to which such Selling Stockholder proposes to sell or transfer
such Voting Stock, in accordance with the following procedure:
(a) Notice to Purchasing Stockholders. In the event a
Selling Stockholder proposes to sell or transfer Voting Stock in a
transaction that would be subject to the foregoing right of first
refusal, such Selling Stockholder shall give each Purchasing
Stockholder written notice (the " Voting Stock Notice") of its
intentions stating (i) a description of the Voting Stock proposed to be
sold or transferred and the identity of the transferee, (ii) the total
number of shares of Voting Stock proposed to be sold or transferred,
(iii) the price per share at which, and the other terms on which, such
Voting Stock is proposed to be sold or transferred, and (iv) the date
of such notice.
(b) Exercise by Purchasing Stockholders. Within thirty
(30) days after the Voting Stock Notice is given to each Purchasing
Stockholder, such Purchasing Stockholder may elect to purchase, at the
price and on the terms specified in the Voting Stock Notice, the
number of shares of Voting Stock proposed to be sold or transferred by
the Selling Stockholder determined by multiplying all shares of Voting
Stock proposed to be sold or transferred by the Prorata Percentage of
such Purchasing Stockholder. An election to purchase shall be made by
the Purchasing Stockholder in writing and must be given to the Selling
Stockholder within such thirty (30) day period. Any such election
made by a Purchasing Stockholder shall constitute an
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<PAGE> 82
irrevocable, legally binding obligation of such Purchasing Stockholder
to purchase its Prorata Percentage of the Voting Stock on the terms
set forth in the Voting Stock Notice, and the Purchasing Stockholder
and the Selling Stockholder shall use their best efforts to secure any
approvals required in connection therewith. The closing of the sale
of the Voting Stock by the Selling Stockholder to a Purchasing
Stockholder upon the exercise of its rights under this Section 3.1
shall take place within thirty (30) days following the date on which
such election to purchase is made, provided that such period shall be
extended, as required, in order to comply with applicable Laws.
(c) Back-Up Right. If any Purchasing Stockholder does
not exercise its right of first refusal to purchase shares of Voting
Stock hereunder within the time specified for such exercise (including
its failure to exercise the right granted in this subsection (c)),
such Purchasing Stockholder shall immediately so notify all other
Purchasing Stockholders, and each of the other Purchasing Stockholders
shall have the right to purchase its Prorata Percentage of such shares
of Voting Stock (determined without counting the shares of Voting
Stock owned by the Purchasing Stockholder not exercising its right of
first refusal) within a period of five (5) days following the date on
which such notice is given.
(d) Failure to Exercise. The Selling Stockholder shall
be free, subject to the co-sale rights set forth in Article IV hereof,
during the period of ninety (90) days following the expiration of all
rights of first refusal set forth in this Section 3.1, to sell or
transfer the Voting Stock specified in the Voting Stock Notice
previously delivered to each Purchasing Stockholder which is not
purchased by Purchasing Stockholders to the proposed transferee(s)
described in the Voting Stock Notice and on terms no less favorable to
the Selling Stockholder than the terms specified in the Voting Stock
Notice. The proposed sale or transfer of any such Voting Stock not
sold or transferred by the Selling Stockholder to such transferee(s)
within such ninety (90) day period shall again be subject to the
restrictions set forth in this Section 3.1.
SECTION 3.2 Permitted Transfers of Voting Stock. The right of first
refusal contained in Section 3.1 hereof shall not apply to any sale or transfer
of Voting Stock made by a Selling Stockholder (a "Permitted Transfer"): (i) to
another Stockholder or an Affiliate of another Stockholder, (ii) pursuant to a
bona fide public offering registered under the Securities Act of either Voting
Stock or securities exchangeable or exercisable for Voting Stock or, if such
securities being sold or transferred are registered under the Securities Act,
in any other public market transaction, (iii) pursuant to Rule 144 (but
excluding Rule 144A promulgated under the Securities Act), (iv) pursuant to any
repurchase by the Company, (v) pursuant to any bona fide gift to a charitable
organization, (vi) pursuant to any transfer to a Selling Stockholder's
ancestors, descendants, spouse or to a trustee for their benefit, (vii)
pursuant to community property or similar domestic relations laws, or (viii) if
the Purchaser is the Selling Stockholder, to an Affiliate of the Purchaser.
Notwithstanding the foregoing, any proposed sale or transfer pursuant to
subparagraph (vii) of this Section 3.2 shall not qualify as a Permitted
Transfer (and shall therefore be subject to the rights of first refusal in
Section 3.1) unless such Selling Stockholder notifies the Company and the
Stockholders (other than the Selling Stockholder) of such sale or transfer and
the proposed transferee furnishes the Company and the Stockholders (other than
the Selling Stockholder) with a
- 6 -
<PAGE> 83
written agreement to be bound by and comply with all provisions of this
Agreement applicable to the Selling Stockholder prior to receiving the Voting
Stock being transferred. In addition, notwithstanding the foregoing, any
proposed sale or transfer pursuant to subparagraphs (ii) or (iii) of this
Section 3.2 shall not qualify as a Permitted Transfer (and shall therefore be
subject to the rights of first refusal in Section 3.1) if the Selling
Stockholder solicits or arranges for the solicitation of orders to purchase
such Voting Stock by a Restricted Investor from an underwriter in anticipation
of or in connection with a registered public offering or from or through a
broker in anticipation of or in connection with a Rule 144 transaction or other
public market transaction, provided that the execution and performance of an
underwriting agreement by the Selling Stockholder in connection with a
registered public offering shall not, in and of itself, be considered
soliciting or arranging for the solicitation of orders to purchase Voting
Stock. Simultaneous with any transfer described in subparagraph (v) or (vi),
the Selling Stockholder shall certify to each Stockholder (other than the
Selling Stockholder) that such transfer is not intended to indirectly complete
any transfer that would otherwise be restricted pursuant to this Article III.
SECTION 3.3 Liquidation of Venture America. The Stockholders and the
Company acknowledge that Venture America Management Limited Partnership, a
Virginia limited partnership and a Current Stockholder ("Venture America"),
will undergo a complete liquidation on or before December 31, 1996, and that,
in connection therewith, the 250,366 shares of Common Stock currently owned by
Venture America will be distributed to the following partners thereof in
approximately equal amounts: Daniel E. Moore, James R. Ball, Otis F. Coston.
The provisions in this Article III shall not apply to the transfer of
such shares of Common Stock by Venture America to the foregoing individuals in
connection with the liquidation of Venture America described above, provided
that, in the case of any transfer to Mr. Ball or Mr. Coston, such individual
and, if legally necessary or appropriate, his spouse (if any) agrees in writing
to be bound by all provisions of this Agreement binding on a Current
Stockholder and that a copy of such agreement is delivered to each party hereto
before such transfer.
SECTION 3.4 No Adverse Effect for Failure to Purchase. The exercise
or non-exercise of its right of first refusal by any Purchasing Stockholder
hereunder in one or more cases shall not adversely affect such Purchasing
Stockholder's right to exercise such right of first refusal with respect to any
subsequent proposed sale or transfer of Voting Stock by a Selling Stockholder
pursuant to this Article III.
ARTICLE IV
RIGHT OF CO-SALE
SECTION 4.1 Grant of Right. If at any time a Selling Stockholder
proposes to sell or transfer any Voting Stock in any manner, directly or
indirectly, to any Person, other than pursuant to a Permitted Transfer, and if
all shares of such Voting Stock are not purchased pursuant to the exercise of
the rights of first refusal with respect to such proposed sale or
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transfer set forth in Section 3.1 hereof, then each Purchasing Stockholder
shall have the right, exercisable by giving written notice to the Selling
Stockholder, within ten (10) days after the expiration of all unexercised
rights of first refusal pursuant to Sections 3.1(b) and (c), to participate in
such sale or transfer of Voting Stock by the Selling Stockholder on the terms
set forth in the Voting Stock Notice previously provided to such Purchasing
Stockholder pursuant to Section 3.1. If any Purchasing Stockholder exercises
such right of participation, the number of shares of Voting Stock which such
Selling Stockholder may sell or transfer shall be correspondingly reduced. The
right of participation of each Purchasing Stockholder shall be subject to the
following additional terms and conditions:
(a) Calculation of Shares. The number of shares of
Voting Stock which the Purchasing Stockholder may sell or transfer (in
whole or in part) shall be determined by multiplying (i) the aggregate
number of shares of Voting Stock which the Selling Stockholder
proposes to sell or transfer (following the exercise or the
expiration, as the case may be, of the rights of first refusal set
forth in Section 3.1) by (ii) a fraction, the numerator of which is
the number of shares of Voting Stock owned by the Purchasing
Stockholder as of the date of the Voting Stock Notice and the
denominator of which is the total number of shares of Voting Stock
owned by all Stockholders as of the date of the Voting Stock Notice.
(b) Delivery of Certificates. At the closing of the sale
or transfer of the Voting Stock to the transferee, each Purchasing
Stockholder electing to participate therein pursuant to this Section
4.1 shall deliver to the Selling Stockholder for transfer to the
transferee one or more stock certificates, properly endorsed for
transfer, which represent the number of shares of Voting Stock which
such Purchasing Stockholder elects to sell pursuant to this Section
4.1.
SECTION 4.2 Transfer of Sale Proceeds. The stock certificate or
certificates which each Purchasing Stockholder delivers to the Selling
Stockholder pursuant to Section 4.1(b) shall be delivered by the Selling
Stockholder to the transferee in consummation of the sale or transfer pursuant
to the terms and conditions specified in the Voting Stock Notice, and the
Selling Stockholder shall promptly thereafter remit to such Purchasing
Stockholder that portion of the sale proceeds to which the Purchasing
Stockholder is entitled by reason of its participation in such sale.
SECTION 4.3 Liquidation of Venture America. The provisions in this
Article IV shall not apply to any transfer of shares of Common Stock in
connection with the liquidation of Venture America which satisfies the
requirements of Section 3.3.
SECTION 4.4 No Adverse Effect for Failure to Participate. The
exercise or non-exercise of its co-sale rights by any Purchasing Stockholder
hereunder in one or more cases shall not adversely affect such Purchasing
Stockholder's right to exercise such right of co-sale with respect to any
subsequent proposed sale or transfer of Voting Stock by a Selling Stockholder
pursuant to this Article IV.
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<PAGE> 85
ARTICLE V
BOARD REPRESENTATION
AND OBSERVATION RIGHTS
SECTION 5.1 Designation of Nominee by Purchaser. At least thirty
(30) days prior to establishing the date for any annual or special meeting of
stockholders of the Company at which the Board of directors of the Company (the
"Board") will be elected (an "Election Meeting") the Company shall notify the
Purchaser of its intent to establish such date. Upon its receipt of such
notice, the Purchaser shall have the right, but not the obligation, to
designate an individual who may, but need not be, an employee of the Purchaser
or an Affiliate of the Purchaser (the "Purchaser Nominee") for nomination to
the Board. The Company and the Current Stockholders shall use their best
efforts to cause the Purchaser Nominee to be nominated (including, but not
limited to, making the Purchaser Nominee a member of the recommended management
slate of directors) for election to the Board at such Election Meeting and
elected thereat. In addition, each Current Stockholder agrees to vote (whether
in person or by proxy) all shares of Voting Stock of the Company owned or held
of record by such Current Stockholder at any Election Meeting in favor of the
election of the Purchaser Nominee to the Board.
In the event that any Purchaser Nominee is elected to the Board (the
"Purchaser Director") and thereafter such Purchaser Director dies, resigns, or
is removed (with or without cause) from the Board, then the Purchaser shall
have the right, but not the obligation, to designate a successor Purchaser
Director (the "Successor Purchaser Director") to fill the vacancy on the Board.
In the event the Purchaser designates such Successor Purchaser Director, the
Company and the Current Stockholders shall use their best efforts to cause the
remaining directors on the Board to elect the Successor Purchaser Director in
accordance with the certificate of incorporation and by-laws of the Company and
the Delaware General Corporation Law ("DGCL") as the successor director to hold
office for the unexpired portion of the term of the Purchaser Director. In
addition, if the stockholders of the Company have the right to appoint a
successor director pursuant to the terms of the certificate of incorporation
and by-laws of the Company and the DGCL, then the Company and the Current
Stockholders shall use their best efforts to cause the stockholders of the
Company to appoint the Successor Purchaser Director as the successor to the
Purchaser Director and, in connection therewith, each Current Stockholder
agrees to vote (whether in person or by proxy) all shares of Voting Stock of
the Company owned or held of record by such Stockholder in favor of the
appointment of the Successor Purchaser Director as the successor to the
Purchaser Director.
SECTION 5.2 Indemnification and Insurance. The Company shall
indemnify and hold harmless each of the Purchaser Nominee, the Purchaser
Director and the Successor Purchaser Director from and against any and all
Losses arising out of or related to his service as a director of the Company or
any Affiliate of the Company to the maximum extent permitted by Law (including,
without limitation, the DGCL), the certificate of incorporation of the Company
and the bylaws of the Company. In addition, throughout the term of this
Agreement, the Company shall maintain in effect directors and officers
liability insurance covering each of the Purchaser Nominee, the Purchaser
Director and the Successor Purchaser
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<PAGE> 86
Director in his capacity as a director of the Company and providing the
following minimum benefits: $3,000,000 combined limits. The obligations of the
Company in this Section 5.2 shall survive the termination of this Agreement.
The Company shall not, without the prior written consent of the Purchaser, (i)
amend any provision of its certificate of incorporation or bylaws pertaining to
the indemnification of directors, or (ii) reduce the minimum benefits under the
foregoing directors insurance.
SECTION 5.3 Observation Rights. If at any time neither a Purchaser
Nominee (or a Purchaser Director) nor a Successor Purchaser Director is serving
on the Board, the Purchaser shall have the right to have a representative
designated by it attend all meetings of the Board and observe all proceedings
transacted at such meetings. The Company shall provide to such representative
copies of all notices, minutes, consents, and other materials that it provides
to its directors at the same time it provides such information to directors.
Notwithstanding the foregoing, the Company reserves the right to exclude such
representative from any meeting or any part thereof if the Company believes,
upon advice of counsel, that such exclusion is reasonably necessary to preserve
the attorney-client privilege, to protect highly confidential proprietary
information or for other similar reasons.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF THE CURRENT STOCKHOLDERS
Each Current Stockholder (the " Representing Stockholder") hereby
severally represents and warrants to the Purchaser as follows:
SECTION 6.1 Organization, Good Standing, Due Authorization, Execution
and Delivery by Entity Stockholder. If the Representing Stockholder is Venture
America: (i) the Representing Stockholder is duly organized, validly existing
and in good standing as a limited partnership under the laws of the State of
its formation and has the partnership power and authority to enter into and
perform its obligations under this Agreement, (ii) the execution, delivery and
performance of this Agreement by the Representing Stockholder and the
consummation of the transactions contemplated hereby by the Representing
Stockholder have been duly authorized by all necessary partnership action on
the part of the Representing Stockholder, (iii) this Agreement has been duly
executed and delivered by the Representing Stockholder, and (iv) this Agreement
constitutes the legal, valid and binding obligations of the Representing
Stockholder enforceable against the Representing Stockholder in accordance with
its terms, except that such enforcement (A) may be limited by bankruptcy,
insolvency, moratorium or similar laws affecting creditors' rights generally,
and (B) is subject to the availability of equitable remedies, as determined in
the discretion of the court before which such a proceeding may be brought.
SECTION 6.2 Due Authorization, Execution and Delivery by Individual
Stockholder. If the Representing Stockholder is an individual: (i) the
Representing Stockholder has full authority to execute and deliver this
Agreement, to perform his or her obligations hereunder and to consummate the
transactions contemplated hereby, (ii) this Agreement has been duly
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<PAGE> 87
executed and delivered by the Representing Stockholder, and (iii) this
Agreement constitutes the legal, valid and binding obligations of the
Representing Stockholder enforceable against the Representing Stockholder in
accordance with its terms, except that such enforcement (A) may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally, and (B) is subject to the availability of equitable remedies, as
determined in the discretion of the court before which such a proceeding may be
brought.
SECTION 6.3 Title to Shares.
(a) Title. The Representing Stockholder owns beneficially
and of record all of the shares of Common Stock set forth opposite such
Representing Stockholder's name on Exhibit A, and the Representing
Stockholder owns no other shares of capital stock of the Company. Upon
the delivery of and payment for any shares of Common Stock to be sold
by the Representing Stockholder to the Purchaser pursuant to Article
III, the Purchaser will acquire good and valid title to all such shares
of Common Stock from the Representing Stockholder, free and clear of
all Liens.
(b) Stock Rights. Except as disclosed on Exhibit B, the
Representing Stockholder is not a party to or bound by, or the
beneficiary of, (i) any outstanding subscriptions, options, warrants,
rights (including conversion rights, preemptive rights or rights of
first refusal) or Contracts, orally or in writing, obligating the
Company or any of its Subsidiaries, contingently or otherwise, to
issue or sell, or cause to be issued or sold, any shares of capital
stock or other equity interest, or any securities convertible into or
exchangeable for capital stock or other equity interest, in the
Company or any of its Subsidiaries, (ii) any outstanding rights or
Contracts, orally or in writing, obligating the Company or any of its
Subsidiaries, contingently or otherwise, to purchase or redeem, or
cause to be purchased or redeemed, any shares of capital stock or
other equity interest, or any securities convertible into or
exchangeable for capital stock or other equity interest, in the
Company or any of its Subsidiaries, or (iii) any Contract or
understanding, oral or written, which obligates the Representing
Stockholder to purchase or sell any capital stock or other security of
the Company or any of its Subsidiaries, which affects or relates to
the voting or giving of written consents with respect to any capital
stock or other security of the Company or any of its Subsidiaries or
which otherwise relates to any such capital stock or other security.
(c) Registration Rights. The Representing Stockholder
does not have any registration rights (including, without limitation,
demand or piggyback rights) with respect to any capital stock or other
securities of the Company or any of its Subsidiaries.
SECTION 6.4 Consents; No Conflict. The Representing Stockholder is
not required to obtain the consent, authorization or approval of any Person, or
any authorization, approval or permit from any Governmental Authority, as a
condition to the consummation of this Agreement. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
will not conflict with, result in the termination of, contravene or constitute
a default under, or be an event which with the giving of notice or
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<PAGE> 88
passage of time or both will become a default under, or give to others any
rights of termination or cancellation of, or accelerate the performance
required by or maturity of, or result in the creation of any material Lien or
loss of any rights with respect to the Representing Stockholder pursuant to any
of the terms, conditions or provisions of or under, any applicable Law, the
articles of formation (if any) of the Representing Stockholder, or any Contract
to which the Representing Stockholder is a party or which is otherwise binding
upon the Representing Stockholder.
SECTION 6.5 Disclosure. The representations and warranties of the
Representing Stockholder contained in this Agreement and in any schedule,
certificate, or agreement furnished by the Representing Stockholder to the
Purchaser pursuant to this Agreement do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements herein or therein, in the light of the circumstances under which
they were made, not misleading.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Current
Stockholders as follows:
SECTION 7.1 Organization and Authority of the Purchaser. The
Purchaser is a societe anonyme duly organized, validity existing and in good
standing under the laws of France. The Purchaser has full corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated herein.
SECTION 7.2 Due Authorization, Execution and Delivery. The
execution, delivery and performance of this Agreement by the Purchaser and the
consummation by the Purchaser of the transactions contemplated herein have been
duly authorized by all necessary corporate action on the part of the Purchaser,
and this Agreement has been duly executed and delivered by the Purchaser. This
Agreement constitutes the legal valid and binding obligations of the Purchaser
enforceable against the Purchaser in accordance with their respective terms,
except that such enforcement (i) may be limited by bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally, and (ii) is
subject to the availability of equitable remedies, as determined in the
discretion of the court before which such a proceeding may be brought.
SECTION 7.3 Consents; No Conflict. The Purchaser is not required to
obtain the consent, authorization or approval of any Person, or any
authorization, approval or permit from any Governmental Authority, as a
condition to the consummation of this Agreement by the Purchaser. The
execution and delivery of this Agreement by the Purchaser and the consummation
of the transactions contemplated hereby will not conflict with, result in the
termination of, contravene or constitute a default under, or be an event which
with the giving of notice or passage of time or both will become a default
under, or give to others any rights of termination or cancellation of, or
accelerate the performance required by or maturity of, or result in the
creation of any material Lien or loss of any rights with respect to the
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<PAGE> 89
Purchaser pursuant to any of the terms, conditions or provisions of or under,
any applicable Law, the certificate of incorporation or by-laws of the
Purchaser, or any Contract to which the Purchaser is a party or which is
otherwise binding upon the Purchaser.
SECTION 7.4 Disclosure. The representations and warranties of the
Purchaser contained in this Agreement and in any schedule, certificate or
agreement furnished by the Purchaser to the Current Stockholders pursuant to
this Agreement do not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE VIII
TERMINATION
This Agreement shall (a) terminate in its entirety on the date on
which the Purchaser and all of the Affiliates of the Purchaser hold, in the
aggregate, less than 500,000 shares of Voting Stock provided that on such date
such shares so held represent less than 8% of the outstanding shares of Voting
Stock on a fully diluted basis, and (b) shall terminate as to each Current
Stockholder or any Person that becomes a party hereto after the date hereof on
the date on which such Current Stockholder or such other Person, as the case
may be, holds, of record and beneficially, less than 10,000 shares of Voting
Stock.
ARTICLE IX
VIOLATIONS AND LEGENDS
SECTION 9.1 Violations of this Agreement. Any attempt to transfer
shares of Voting Stock in violation of Articles III or IV hereof shall be void
and the Company agrees that it will not effect such a transfer nor will it
treat any alleged transferee as the holder of such shares. In addition to all
other rights and remedies available to the Purchaser under this Agreement at
Law or in equity for a violation of Article III of this Agreement by a Selling
Stockholder, if any Selling Stockholder transfers Voting Stock in a transaction
which violates Article III hereof, the Company shall, at the option of the
Purchaser, sell to the Purchaser the number of shares of Voting Stock which the
Purchaser was entitled to purchase from such Selling Stockholder had such
Selling Stockholder complied with the provisions of Article III in connection
with such transfer at the price required by Article III. The Purchaser may
exercise such right to purchase by notifying the Company in writing within
thirty (30) days following the discovery by the Purchaser of the violation of
Article III by such Selling Stockholder.
SECTION 9.2 Legends. Each certificate representing shares of the
capital stock of the Company now or hereafter owned by any Stockholder, which
does not represent shares registered under the Securities Act, shall be
endorsed with the following legend:
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<PAGE> 90
"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 A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO
THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
ARTICLE X
RESOLUTION OF DISPUTES
The parties hereto shall attempt to settle all disputes arising in
connection with this Agreement through good faith negotiations. In the event
any such dispute cannot be resolved within sixty (60) days after any party
involved in such dispute notifies the other parties involved in such dispute
that the dispute is to be resolved pursuant to this Article X, then any such
party may submit such dispute to arbitration. Any dispute submitted to
arbitration pursuant to this Article X shall be finally and conclusively
determined in accordance with the Rules of Arbitration of the International
Chamber of Commerce (the "Rules of Arbitration") then in effect by the decision
of three (3) arbitrators selected in accordance with the Rules of Arbitration,
unless the parties shall agree on a single arbitrator (the "Board of
Arbitration"). The Board of Arbitration shall meet in New York, New York and
shall render a decision in writing (concurred in by a majority of the members
of the Board of Arbitration if more than one) with respect to and stating the
amount, if any, which any party hereto is required to pay to any other party
hereto in respect of such dispute. To the extent practical, the decision of
the Board of Arbitration shall be rendered no more than thirty (30) days
following commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered to each of the
parties involved in such dispute. Any decision made by the Board of
Arbitration (either prior to or after the expiration of such thirty (30) day
period) shall be final, binding and conclusive on the parties hereto and
entitled to be enforced to the fullest extent permitted by Law and entered in
any court of competent jurisdiction.
All parties hereto hereby consent to the jurisdiction of the foregoing
Board of Arbitration and to the jurisdiction of any state or federal court
located in the States of New York or Delaware and any national court located in
France for the purpose of enforcing the decision or award of the Board of
Arbitration. All parties hereto agree that service of process may be made on
any such party by personal delivery or by registered or certified mail
addressed to the appropriate party at the address for such party specified in
Section 11.1 hereof. The submission to the jurisdiction of the courts referred
to above for the purpose of enforcing the decision or award of the Board of
Arbitration shall not (and shall not be construed so as to) limit the right of
any party to file or commence proceedings against any other party in any other
court of competent jurisdiction for the purpose of enforcing the decision or
award of the Board of Arbitration nor shall the filing or commencement of
proceedings in any one or more jurisdictions for such purpose preclude the
filing or taking of proceedings in any other jurisdiction for such purpose
(whether concurrently or not) if and to
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<PAGE> 91
the extent permitted by applicable Law. Each and every arbitration proceeding
commenced pursuant to this Article X shall be consolidated with any arbitration
proceeding then pending under this Article X. All fees, costs and expenses in
relation to the arbitration, including, but not limited to, attorneys' fees
shall be paid by such parties as determined by the Board of Arbitration.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Notices. All notices, requests and other communications
hereunder shall be in writing and will be deemed to have been duly given (i)
when personally delivered, (ii) when sent by telefax to a party at the number
listed below for such party (if any), (iii) three (3) Business Days after the
day on which the same has been delivered prepaid to an international courier
service, or (iv) ten (10) Business Days after the deposit in the United States
mail, registered or certified, return receipt requested, postage prepaid, in
each case addressed to the party to whom such notice is to be given at the
following address for such party:
If to the Company:
SSE Telecom, Inc.
8230 Leesburg Pike, Suite 710
Vienna, Virginia 22182
U.S.A.
Attn: Daniel E. Moore
Telefax No.: (703) 442-4507
With copies to:
Surovell, Jackson, Colton & Dugan, P.C.
4010 University Drive, Suite 200
Fairfax, Virginia 22030
Attn: G. Donald Markle, Esq.
Telefax No.: (703) 591-2149
If to the Purchaser:
Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attn: Jacques Couet
Telefax No.: 331-46524596
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<PAGE> 92
With copies to:
Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attn: Martine Funston, Esq.
Telefax No.: 331-46524595
If to the Current Stockholders:
To the address and/or telefax
number for each Current Stockholder
set forth below its signature
Any party hereto from time to time may change its address, telefax number or
other information for the purpose of notices to that party by giving notice
specifying such change to the other parties hereto.
SECTION 11.2 Fees and Expenses. The Company, the Current Stockholders
and the Purchaser shall each bear their or its own expenses in connection with
the negotiation and preparation of this Agreement, all documents and instruments
contemplated hereby, and the consummation of the transactions contemplated
hereby, including, without limitation, the fees and expenses of their respective
counsel, accountants, investment bankers and consultants.
SECTION 11.3 Public Announcements. Except as otherwise required by
Law, no party hereto shall issue any press release or make any other public
announcement with respect to the transactions contemplated hereby without the
approval of the other parties hereto, which approval shall not be unreasonably
withheld or delayed.
SECTION 11.4 Entire Agreement. This Agreement supersedes all prior
discussions and agreements among the parties hereto with respect to the subject
matter hereof and contains the sole and entire agreement among the parties
hereto with respect to the subject matter hereof.
SECTION 11.5 Waiver. Any term or condition of this Agreement may be
waived at any time by the party hereto that is entitled to the benefit thereof,
but no such waiver shall be effective unless set forth in a written instrument
duly executed by or on behalf of the party waiving such term or condition. No
waiver by any party hereto of any term or condition of this Agreement, in any
one or more instances, shall be deemed to be or construed as a waiver of the
same or any other term or condition of this Agreement on any future occasion.
SECTION 11.6 Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
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<PAGE> 93
SECTION 11.7 Benefits and Binding Effect. Neither this Agreement nor
any right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto and any attempt to
do so will be void, provided that the Purchaser may assign any or all rights or
obligations of the Purchaser hereunder to any Affiliate of the Purchaser.
Subject to the preceding sentence, this Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
SECTION 11.8 Captions. The captions used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
SECTION 11.9 Exhibits and Schedules. All exhibits and schedules
referred to in this Agreement, all attachments to such exhibits or schedules,
and any other attachment to this Agreement are hereby incorporated by reference
into this Agreement and hereby are made a part of this Agreement as if set out
in full herein.
SECTION 11.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware applicable to a
contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
SECTION 11.11 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
SECTION 11.12 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.13 No Third Party Beneficiary. This Agreement shall not
confer any rights or remedies upon any Person other than the parties hereto and
their respective successors and permitted assigns.
SECTION 11.14 Authority of Venture America. Simultaneously with the
execution of this Agreement, Venture America shall deliver to the Purchaser
copies of resolutions duly adopted by the general partner or the partners of
Venture America (or such other individuals or entities) as are necessary to
legally authorize Venture America to execute and perform its
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<PAGE> 94
obligations under this Agreement, together with an incumbency certificate of
each individual who will be executing this Agreement on behalf of Venture
America (including the name, title and signature of each such individual).
IN WITNESS WHEREOF, the parties have executed this Stockholder
Agreement as of the date first written above.
COMPANY:
SSE TELECOM, INC.,
a Delaware corporation
By: /s/ Frederick C. Toombs
----------------------------------
Name: Frederick C. Toombs
---------------------------------
Title: President
--------------------------------
PURCHASER:
ALCATEL TELSPACE, a
French societe anonyme
By: /s/ Jerome de Vitry
--------------------------------------
Name: Jerome de Vitry
------------------------------------
Title: Director R & D Product Management
-----------------------------------
Attorney-In-Fact
STOCKHOLDERS:
VENTURE AMERICA MANAGEMENT LIMITED
PARTNERSHIP, a Virginia Limited
Partnership
By: /s/ Daniel E. Moore
------------------------------------
Name: Daniel E. Moore
Title: General Partner
Address: 8230 Leesburg Pike
Suite 710
Vienna, VA 22182
Telefax No.: 703-790-0486
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<PAGE> 95
/s/ FRANK S. TRUMBOWER
------------------------------------------
FRANK S. TRUMBOWER
Address: 774 Mays Boulevard
Unit 10-356
Incline Village, NV 89451
Telefax No.: 703-893-0608
--------------------------
/s/ FREDERICK C. TOOMBS
-------------------------------------------
FREDERICK C. TOOMBS
Address: 16251 Shannon Road
Los Gatos, CA 95032
Telefax No.: 408-358-2024
/s/ SARAH P. TRUMBOWER
-------------------------------------------
SARAH P. TRUMBOWER
Address: Route 3, Box 5470
Berryville, VA 22611
Telefax No.: 540-935-2543
--------------------------
/s/ DANIEL E. MOORE
-------------------------------------------
DANIEL E. MOORE
Address: 1629 Wrightson Drive
McLean, VA 22101
Telefax No.: 703-893-0743
/s/ Frank J. Peternell
-------------------------------------------
FRANK J. PETERNELL
Address: 2023 El Ranchero Drive
(Blue Lake Springs)
Arnold, CA 95223
Telefax No.:
------------------------------
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SARAH P. TRUMBOWER
<PAGE> 96
The undersigned company hereby waives its right to purchase any shares
of Voting Stock owned by Frank J. Peternell which is contained in that certain
Amendment to Employment Agreement dated as of July 1, 1996, by and between the
undersigned and Mr. Peternell to the extent such right is inconsistent with any
rights granted to the Stockholders herein and further agrees that any such
rights granted to the Stockholders shall have priority over such right of the
undersigned.
SSE TECHNOLOGIES, INC.
By: /s/ Frederick C. Tombs
-------------------------
Name: Frederick C. Tombs
-----------------------
Title: President
----------------------
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VOTING AGREEMENT
This Voting Agreement (this "Agreement") is made and entered into as of the
Effective Date (as defined below) by and among SSE TELECOM, INC., a Delaware
corporation (the "Company"), ALCATEL TELSPACE, a societe anonyme organized
under the laws of France (the "Purchaser"), and each stockholder of the Company
who becomes a party to this Agreement by the execution of this Agreement, or a
like counterpart hereof (such entities and individuals are referred to herein,
collectively, as the "Stockholders" and, individually, as a "Stockholder").
WITNESS:
WHEREAS, the Company and Purchaser intend that Purchaser will acquire
shares of the common stock of the Company pursuant to the terms of a certain
Stock Purchase and Investment Agreement to be entered into by the Company and
Purchaser (the "Investment Agreement"); and
WHEREAS, to induce the Purchaser to enter into the Investment Agreement and
to purchase shares of the Company's common stock, the Company has agreed to
request the Stockholders to enter into this Agreement; and
WHEREAS, the Stockholders deem the purchase of common stock of the Company
by the Purchaser pursuant to the Investment Agreement to be in the best
interests of the Company, and the Stockholders are willing to enter into this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties contained herein and of the mutual benefits to be
derived herefrom, and intending to be legally bound, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement, the following
defined terms have the meanings indicated below:
"AFFILIATE" of a person means a Person that directly or indirectly through
one or more intermediates, controls, is controlled by, or is under common
control with, the first Person. For purposes of this definition, "control"
(including the terms "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a Person, whether through the ownership
of voting securities, by contract, or otherwise.
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"BOARD" has the meaning set forth in Article II.
"COMMON STOCK" means the authorized Common Stock of the Company, par value
$.01 per share, whether or not issued and outstanding.
"COMPANY" has the meaning set forth in the introductory paragraph hereof.
"DGCL" has the meaning set forth in Article II.
"EFFECTIVE DATE" has the meaning set forth in Section 4.2
"ELECTION MEETING" has the meaning set forth in Article II.
"INVESTMENT AGREEMENT" has the meaning set forth in the recitals hereto.
"PERSON" means any natural person, corporation, general partnership,
limited partnership, proprietorship, limited liability company, joint venture,
other business organization, trust, union, association or governmental
authority.
"PURCHASER" has the meaning set forth in the introductory paragraph hereof.
"PURCHASER DIRECTOR" has the meaning set forth in Article II.
"PURCHASER NOMINEE" has the meaning set forth in Article II.
"STOCKHOLDERS" and "STOCKHOLDER" have the meaning set forth in the
introductory paragraph hereof.
"SUCCESSOR PURCHASER DIRECTOR" has the meaning set forth in Article II.
"VOTING STOCK" means the Common Stock and any other capital stock or
securities issued by the Company having the ordinary power to vote in the
election of directors of the Company (other than such capital stock or
securities having such power only upon the occurrence of a contingency) now
owned or hereafter acquired by any Stockholder.
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ARTICLE II
BOARD REPRESENTATION
At least thirty (30) days prior to establishing the date for any annual or
special meeting of stockholders of the Company at which the Board of Directors
of the Company (the "Board") will be elected (an "Election Meeting") the Company
shall notify the Purchaser of its intent to establish such date. Upon its
receipt of such notice, the Purchaser shall have the right, but not the
obligation, to designate an individual who may, but need not be, an employee of
the Purchaser or an Affiliate of the Purchaser (the "Purchaser Nominee") for
nomination to the Board. The Company and the Stockholders shall use their best
efforts to cause the Purchaser Nominee to be nominated (including, but not
limited to, making the Purchaser Nominee a member of the recommended management
slate of directors) for election to the Board at such Election Meeting and
elected thereat. In addition, each Stockholder agrees to vote (whether in
person or by proxy) all shares of Voting Stock of the Company owned or held of
record by such Stockholder at any Election Meeting in favor of the election of
the Purchaser Nominee to the Board.
In the event that any Purchaser Nominee is elected to the Board (the
"Purchaser Director") and thereafter such Purchaser Director dies, resigns, or
is removed (with or without cause) from the Board, then the Purchaser shall have
the right, but not the obligation, to designate a successor Purchaser Director
(the "Successor Purchaser Director") to fill the vacancy on the Board. In the
event the Purchaser designates such Successor Purchaser Director, the Company
and the Stockholders shall use their best efforts to cause the remaining
directors on the Board to elect the Successor Purchaser Director in accordance
with the certificate of incorporation and by-laws of the Company and the
Delaware General Corporation Law ("DGCL") as the successor director to hold
office for the unexpired portion of the term of the Purchaser Director. In
addition, if the stockholders of the Company have the right to appoint a
successor director pursuant to the terms of the certificate of incorporation and
by-laws of the Company and the DGCL, then the Company and the Stockholders shall
use their best efforts to cause the stockholders of the Company to appoint the
Successor Purchaser Director as the successor to the Purchaser Director and, in
connection therewith, each Stockholder agrees to vote (whether in person or by
proxy) all shares of Voting Stock of the Company owned or held of record by such
Stockholder in favor of the appointment of the Successor Purchaser Director as
the successor to the Purchaser Director.
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ARTICLE III
TERMINATION
This Agreement shall terminate (a) on the date on which the Purchaser and
all of the Affiliates of the Purchaser hold, in the aggregate, less than 500,000
shares of Common Stock, or (b) as to each Stockholder, the date on which such
Stockholder holds, of record and beneficially, less than 5,000 shares of Voting
Stock. In addition to the foregoing, this Agreement shall terminate in respect
to O'Henry Partnership and in respect to Theodore J. Georgelas and April
Georgelas, if not earlier terminated, on September 30, 1998.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 NOTICES. All notices and other communications hereunder
shall be in writing and will be deemed to have been duly given (i) when
personally delivered, (ii) when sent by telefax to a party at the number listed
below for such party, (iii) three (3) business days after the day on which the
same has been delivered prepaid to an international courier service, or (iv) ten
(10) business days after the deposit in the United States mail, registered or
certified, return receipt requested, postage prepaid, in each case addressed to
the party to whom such notice is to be given at the following address for such
party:
If to the Company SSE Telecom, inc.
8230 Leesburg Pike
Suite 710
Vienna, Virginia 22182
U.S.A.
Attention: Daniel E. Moore
Telefax No.: 703-790-0486
With Copies to: Surovell, Jackson, Colten & Dugan, P.C.
4010 University Drive, Suite 200
Fairfax, Virginia 22030
U.S.A.
Attention: G. Donald Markle, Esquire
Telefax No.: 703-591-2149
If to the Purchaser: Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attention: Jacques Couet
Telefax No.: 331-46524596
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With Copies to: Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attention: Martine Funston, Esquire
Legal Counsel
Telefax No.: 331-46524595
If to the Stockholders: To the address and/or telefax number for each
Stockholder set forth below its signature
Any party hereto from time to time may change its address, telefax number or
other information for the purpose of notices to that party by giving notice
specifying such change to the other parties hereto.
SECTION 4.2 EFFECTIVE DATE. This Agreement shall be effective (the
"Effective Date") concurrent with closing under the Investment Agreement as to
each Person who has executed this Agreement at or prior to closing under the
Investment Agreement, and as of the date of execution of this Agreement by any
Person who becomes a party to this Agreement after closing under the Investment
Agreement.
SECTION 4.3 OWNERSHIP OF VOTING STOCK. Each Stockholder severally
represents to Purchaser that such Stockholder holds of record and beneficially,
as of the Effective Date, the number of shares of Common Stock of the Company
set forth after such Stockholder's signature.
SECTION 4.4 BENEFITS AND BINDING EFFECT. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto, provided that the
Purchaser may assign any or all rights or obligations of the Purchaser hereunder
to any Affiliate of the Purchaser. Nothing contained in this Agreement shall
restrict or inhibit the right of any Stockholder to transfer or sell any shares
of Common Stock owned by such Stockholder free and clear from the terms and
provisions of this Agreement, and any transferee of such shares shall not be
bound by this Agreement. Subject to the first sentence of this Section 4.4,
this Agreement is binding upon, and inures to the benefit of and is
enforceable by the parties hereto, and their respective successors in interest.
SECTION 4.5 CAPTIONS. The captions used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
SECTION 4.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware applicable to a
contract executed and performed in such
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State, without giving effect to the conflicts of laws principles thereof.
SECTION 4.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
SECTION 4.8 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 4.9 NO THIRD PARTY BENEFICIARY. This Agreement shall not confer
any rights or remedies upon any Person other than the parties hereto and their
respective successors and permitted assigns.
IN WITNESS WHEREOF, the parties have executed this Voting Agreement as of
the Effective Date.
COMPANY:
SSE TELECOM, INC., a Delaware
corporation
By: /s/ Frederick C. Toombs
-----------------------------------------
Name: Frederick C. Toombs
---------------------------------------
Title: President
--------------------------------------
PURCHASER:
ALCATEL TELSPACE, a French societe
anonyme
By: /s/ Jerome de Vitry
-----------------------------------------
Name: Jerome de Vitry
---------------------------------------
Title: Director R&D and Product Management
--------------------------------------
ATTORNEY-IN-FACT
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SIGNATURE PAGE FOR STOCKHOLDERS
WHO BECOME PARTIES TO THE VOTING AGREEMENT
AMONG SSE TELECOM, INC., ALCATEL TELSPACE, S.A.,
AND CERTAIN STOCKHOLDERS OF SSE TELECOM, INC.
STOCKHOLDER:
O'HENRY PARTNERSHIP
By: /s/ Kimerly G. Henry
------------------------------------------
Kimerly Henry, General Partner
522 Cedar Creek Grade
Winchester, VA 22601
Telefax No.: (540) 662-0063
------------------------------
Shares of Common Stock: 141,339
----------------------
Date of Execution: September 3, 1996
---------------------------
THEODORE J. AND APRIL GEORGELAS,
TENANTS BY THE ENTIRETY
Shares of Common Stock: 113,071
----------------------
/s/ Theodore J. Georgelas
---------------------------------------------
Theodore J. Georgelas
Address: 7601 Lewinsville Road, #250
-------------------------------------
McLean, VA 22102
---------------------------------------------
Telefax No.: 703-893-3744
---------------------------------
Date of Execution: 8/27/96
---------------------------
/s/ April Georgelas
---------------------------------------------
April Georgelas
Address: 720 Live Oak Dr.
-------------------------------------
McLean, VA 22101
---------------------------------------------
Telefax No.: 703-821-3273
---------------------------------
Date of Execution: 8-30-96
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PRESCAP LIMITED PARTNERSHIP, a West
Virginia Limited Partnership
By: /s/ Frank S. Trumbower
------------------------------------------
Frank S. Trumbower, General Partner
1430 Spring Hill Road, Suite 200
McLean, Virginia 22102
Telefax No.: 703-893-0608
Shares of Common Stock: 16,667
----------------------
Date of Execution: 8-30-96
---------------------------
PRINZ (U.S.A.) DISTRIBUTORS, INC.,
a Virginia Corporation
By: /s/ Frank S. Trumbower
------------------------------------------
Frank S. Trumbower, President
1430 Spring Hill Road, Suite 200
McLean, Virginia 22102
Telefax No.: 703-893-0608
Shares of Common Stock: 105,000
----------------------
Date of Execution: 8-30-96
---------------------------
AVENEL CAPITAL MANAGEMENT, INC. a
Virginia Corporation
By: /s/ Frank S. Trumbower
------------------------------------------
Frank S. Trumbower, President
1430 Spring Hill Road, Suite 200
McLean, Virginia 22102
Telefax No.: 703-893-0608
Shares of Common Stock: 10,000
----------------------
Date of Execution: 8-30-96
---------------------------
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