<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
--------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of January 28, 1996
earliest event reported)
SSE TELECOM, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-10965 52-1466297
(State of or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
Suite 710, 8230 Leesburg Pike
Vienna, Virginia 22182
(Address of principal executive offices)
Registrant's telephone number: (703) 442-4503
Page 1 of 99
--- ----
Exhibit Index on Page 5
---
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
------------------------------------
A. Purchase of Assets of Fairchild Data Corporation. Effective January
------------------------------------------------
28, 1996 ("Closing Date"), SSE Telecom, Inc. (the "Company") and SSE DataCom,
Inc., (a newly formed, wholly owned subsidiary of the Company) ("DataCom")
entered into an Asset Purchase Agreement ("Agreement") with The Fairchild
Corporation, VSI Corporation (a subsidiary of The Fairchild Corporation) and
Fairchild Data Corporation (a subsidiary of VSI Corporation) ("Fairchild Data").
The Company, through DataCom, acquired substantially all of the assets of
Fairchild Data, subject to certain liabilities. The Company will continue
through DataCom all of the business conducted by Fairchild Data, which currently
consists of the engineering, manufacture and sale of products, principally
modems, which are components in satellite earth stations.
The purchase price ("Purchase Price") for the acquisition of the assets of
Fairchild Data consisted of: (i) a cash payment of $4,220,000, of which $500,000
is deferred for a period of approximately sixty days until delivery of certain
audited financial statements of Fairchild Data, (ii) the issuance of 200,000
shares of the common stock of the Company (the "SSET Common Stock"), (iii) the
issuance of a warrant (the "Warrant") entitling the registered holder thereof to
acquire 50,000 shares of the common stock of the Company, exercisable at any
time during the period between January 29, 1996 and January 28, 1999, at an
exercise price fixed at $11.09 per share, and (iv) the assumption by DataCom of
certain liabilities of Fairchild Data amounting to approximately $2,220,000. To
obtain the cash portion of the Purchase Price, the Company used a portion of its
working capital and a short-term loan of approximately $2,000,000 from the
Company's regular bank secured by short-term investments of the Company.
100,000 shares of the SSET Common Stock issued by the Company (on behalf
of DataCom, as part of the Purchase Price) is subject to adjustment depending on
the level of gross profit margin achieved by DataCom in the period commencing on
January 1, 1996 and ending on December 31, 1996, as set forth in the Agreement.
The Company and Fairchild Data entered into a registration rights agreement with
respect to the SSET Common Stock and Warrant issued by the Company as part of
the Purchase Price.
DataCom and Fairchild Data entered into a sublease agreement on the
Closing Date pursuant to which DataCom subleased from Fairchild Data for a term
of twenty-four months a portion of the premises leased by Fairchild Data in
Scottsdale, Arizona in which Fairchild Data conducted its manufacturing
operations.
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There is no material relationship between Fairchild Data, or any of its
affiliates, any director or officer of Fairchild Data, or any associate of any
director or officer of Fairchild Data, on the one hand, and the Company or any
of its affiliates, any director or officer of the Company, or any associate of
any director or officer of the Company, on the other hand.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
---------------------------------
Financial statements and pro forma financial information in conformance
with Regulation S-X are not currently available, but will be filed within 60
days.
(c) Exhibits
2.2 Asset Purchase Agreement among SSE Telecom, Inc., SSE DataCom,
Inc., The Fairchild Corporation, Fairchild Data Corporation, and
VSI Corporation, dated January 28, 1996. There is included as
part of this exhibit a listing of the schedules and exhibits to
the Asset Purchase Agreement, but such schedules and exhibits
are not filed. Registrant undertakes to furnish supplementally a
copy of the omitted schedules and exhibits to the Commission
upon request.
4.6 Warrant from SSE Telecom, Inc. to Fairchild Data Corporation
dated January 28, 1996.
10.22 Sublease Agreement between SSE DataCom, Inc. and Fairchild Data
Corporation, dated January 28, 1996. There is included as part
of this exhibit a description of the exhibits to the Sublease,
but such exhibits are not filed. Registrant undertakes to
furnish supplementally a copy of the omitted exhibits to the
Commission upon request.
10.23 Registration Agreement between SSE Telecom, Inc. and Fairchild
Data Corporation, dated January 28, 1996.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 7, 1996 SSE TELECOM, INC.
By: /s/ Daniel E. Moore
---------------------------
Daniel E. Moore
Executive Vice President
<PAGE>
INDEX TO EXHIBITS
-----------------
Page No.
--------
2.2 Asset Purchase Agreement among SSE
Telecom, Inc., SSE DataCom, Inc.,
The Fairchild Corporation, Fairchild
Data Corporation, and VSI Corporation,
dated January 28, 1996. There is
included as part of this exhibit a
listing of the schedules and exhibits
to the Asset Purchase Agreement, but
such schedules and exhibits are not
filed. Registrant undertakes to
furnish supplementally a copy of the
omitted schedules and exhibits to the
Commission upon request. 6
4.6 Warrant from SSE Telecom, Inc. to
Fairchild Data Corporation dated
January 28, 1996. 66
10.22 Sublease Agreement between SSE DataCom,
Inc. and Fairchild Data Corporation,
dated January 28, 1996. There is
included as part of this exhibit a
description of the exhibits to the
Sublease, but such exhibits are not
filed. Registrant undertakes to
furnish supplementally a copy of the
omitted exhibits to the Commission upon
request. 72
10.23 Registration Agreement between SSE
Telecom, Inc. and Fairchild Data
Corporation, dated January 28, 1996. 83
<PAGE>
EXHIBIT 2.2
-----------
ASSET PURCHASE AGREEMENT
<PAGE>
ASSET PURCHASE AGREEMENT
AMONG
SSE TELECOM, INC.
A DELAWARE CORPORATION
SSE DATACOM, INC.
A DELAWARE CORPORATION
THE FAIRCHILD CORPORATION
A DELAWARE CORPORATION
FAIRCHILD DATA CORPORATION
A DELAWARE CORPORATION
VSI CORPORATION
A DELAWARE CORPORATION
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
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<C> <S> <C>
1. Definitions and Schedules.............................................. 1
-------------------------
1.01 Definitions..................................................... 1
1.02 Schedules....................................................... 6
2. Sale and Purchase of Assets; Liabilities
----------------------------------------
Assumed........................................................... 6
-------
2.01 Acquired Assets................................................. 6
2.02 Retained Assets................................................. 7
2.03 Contracts in Process............................................ 8
2.04 Assumed Liabilities............................................. 9
2.05 Excluded Liabilities............................................ 9
2.06 Name and Logo License........................................... 10
3. Purchase Price and Payment............................................. 11
--------------------------
3.01 Purchase Price.................................................. 11
3.02 Cash Portion.................................................... 11
3.03 SSET Securities................................................. 11
3.04 Assumption of Assumed Liabilities............................... 12
3.05 Closing Balance Sheet........................................... 12
3.06 Acquisition Date Balance Sheet.................................. 13
3.07 Payment of the Deferred Amount.................................. 13
4. Representations and Warranties of the Seller
--------------------------------------------
and Shareholder................................................... 13
---------------
4.01 Organization; Corporate Power;
Qualification............................................... 13
4.02 Authorization................................................... 13
4.03 Financial Statements............................................ 14
4.04 Events Subsequent to Most Recent
Fiscal Year End............................................. 14
4.05 [Intentionally Omitted]......................................... 16
4.06 Legal Compliance................................................ 16
4.07 Tax Matters..................................................... 17
4.08 Real Property................................................... 17
4.09 Intellectual Property........................................... 17
4.10 Tangible Assets................................................. 18
4.11 Inventory....................................................... 18
4.12 Contracts....................................................... 18
4.13 Notes and Accounts Receivable................................... 19
4.14 Insurance....................................................... 19
4.15 Litigation...................................................... 20
4.16 Product Warranty................................................ 20
4.17 Product Liability............................................... 20
4.18 Employees....................................................... 21
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
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<C> <S> <C>
4.19 Employee Benefits.............................................. 21
4.20 Environmental Health and Safety................................ 22
4.21 Brokers........................................................ 22
4.22 MISAT.......................................................... 22
4.23 Disclosure..................................................... 22
4.24 Investment..................................................... 23
5. Representations and Warranties of the Buyer and SSET.................. 23
----------------------------------------------------
5.01 Organization; Corporate Power;
Qualification............................................. 23
5.02 Authorization.................................................. 24
5.03 Information Provided........................................... 24
5.04 No Material Change............................................. 25
5.05 Brokers........................................................ 25
5.06 Disclosure..................................................... 25
6. Closing............................................................... 26
-------
6.01 The Closing.................................................... 26
6.02 Seller's Obligations at Closing................................ 26
6.03 Obligations of Buyer and SSET at Closing....................... 27
6.04 Deliveries by the Parties...................................... 28
6.05 Supplemental Closing........................................... 28
7. Adjustments to Purchase Price After the Closing....................... 28
-----------------------------------------------
7.01 Inventories.................................................... 28
7.02 Receivables.................................................... 29
7.03 Warranty Reserves.............................................. 30
7.04 Adjustment for Indemnification................................. 30
7.05 Certain Expenses of Seller's Auditors.......................... 31
8. Conditions to Closing................................................. 31
---------------------
8.01 Conditions to Obligation of the Buyer
and SSET................................................... 31
8.02 Conditions to Obligation of the Seller
and Shareholder............................................ 32
9. Post-Closing Covenants................................................ 33
----------------------
9.01 Registration Rights in Respect to
SSET Securities............................................ 33
9.02 Delivery by Seller of Certain
Financial Statements and Documents......................... 33
9.03 Further Assurances............................................. 33
9.04 Books, Records and Information................................. 34
9.05 Allocation of Purchase Price; Value of
Consideration............................................. 35
9.06 Guarantees; Powers............................................. 35
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
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<C> <S> <C>
10. Performance Adjustment of Purchase Price and
--------------------------------------------
Distribution...................................................... 36
------------
10.01 Adjustment Shares and Guaranty Fund........................... 36
10.02 Twelve Month Performance...................................... 36
10.03 Distribution of Adjustment Shares
and Guaranty Fund........................................ 37
10.04 Covenants of the Parties...................................... 39
11. Employment and Employee Benefits...................................... 39
--------------------------------
11.01 Offer of Employment........................................... 39
11.02 Allocation of Employee Benefit
Responsibilities......................................... 39
11.03 Severance Payment Obligation.................................. 40
11.04 Workers' Compensation......................................... 40
11.05 Employee Information.......................................... 41
11.06 Seller's Obligations Under Retirement
Plans.................................................... 41
12. Indemnification....................................................... 41
---------------
12.01 Indemnification by Seller and
Shareholder.............................................. 41
12.02 Indemnification by Buyer...................................... 43
12.03 Survival of Representations, Warranties
and Indemnification...................................... 43
12.04 Defense of Claims; Payment.................................... 44
12.05 Direct Claims................................................. 45
12.05 Limitations on Indemnification................................ 46
13. Termination; Remedy for Breach........................................ 46
------------------------------
13.01 Termination of Agreement...................................... 46
13.02 Effect of Termination......................................... 47
14. Miscellaneous......................................................... 48
-------------
14.01 Notices....................................................... 48
14.02 Headings; Construction........................................ 49
14.03 Bulk Sales.................................................... 49
14.04 Incorporation of Exhibits and Schedules....................... 49
14.05 Entire Agreement.............................................. 49
14.06 Governing Law................................................. 49
14.07 Press Releases and Public Announcements....................... 49
14.08 Succession and Assignment..................................... 50
14.09 Amendments and Waivers........................................ 50
14.10 Severability.................................................. 50
14.11 No Third Party Beneficiaries.................................. 50
14.12 Counterparts.................................................. 50
14.13 Apportionments................................................ 50
</TABLE>
(iii)
<PAGE>
EXHIBITS
- --------
Exhibit A Stock Purchase Warrant
Exhibit B Registration Rights Agreement
Exhibit C Sublease
Exhibit D Covenant and Agreement Not to Compete
(iv)
<PAGE>
SCHEDULES
---------
2.01(d) Tangible Personal Property of Seller
2.02(h) All Contractual Relationships With and Liabilities Due From MISAT
2.03 Contracts in Process
4.03.1 Seller's Financial Statements for FY June 30, 1993
4.03.2 Seller's Financial Statements for FY June 30, 1994
4.03.3 Sellers' Financial Statements for FY June 30, 1995
4.03.4 Seller's Unaudited Balance Sheet for the Six Month
Period Ended December 1995
4.04 Events Subsequent to Most Recent FYE
4.08(d) Instruments or Agreements Comprising the Premises Lease
4.09(c) Products of Seller (Including Those Under Development) and Each
Trade Name or Unregistered Trademark Used by Seller in Connection
With Any of Its Businesses
4.12 Contracts of Seller
4.14 Insurance of Seller
4.15 Litigation of Seller
4.16 Copies of the Standard Terms and Conditions of Sale or Lease for
the Seller
4.18 Employees of Seller to Terminate Employment After Closing
4.19 Seller's Employee Benefit Plans
4.22 Instrument or Agreements Reflecting Product Related Agreements
Between MISAT and Seller
9.05 Allocation of Purchase Price
9.06 Seller Guarantees
11.01 Seller's Employees That Will Be Offered Employment by Buyer
(v)
<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
This Asset Purchase Agreement (this "Agreement") is made and entered into
as of the 28th day of January, 1996, by and among SSE TELECOM, INC., a Delaware
corporation ("SSET"), SSE DATACOM, INC., a Delaware corporation which is wholly-
owned by SSET (herein referred to as "Buyer"), THE FAIRCHILD CORPORATION, a
Delaware corporation ("Fairchild"), FAIRCHILD DATA CORPORATION, a Delaware
corporation ("Seller"), and VSI CORPORATION, a Delaware corporation, which is
the sole shareholder of Seller and an indirect wholly-owned subsidiary of
Fairchild ("VSI") (VSI and Fairchild are herein sometimes collectively referred
to as "Shareholder"). SSET, Buyer, Seller, Fairchild and VSI are herein
sometimes collectively referred to as "Parties, or individually as a "Party".
RECITALS
--------
A. Seller is engaged in the engineering, manufacture and sale of
products, principally modems, which are components in satellite earth stations,
with its principal place of business in Phoenix, Arizona. SSET, through its
wholly-owned subsidiary SSE Technologies Inc., is a satellite earth station
component and system manufacturer, with its principal place of business in
Fremont, California.
B. SSET desires to acquire, through Buyer, substantially all of the
assets of Seller, subject to certain liabilities, and to continue through Buyer
all of the business conducted by Seller, and SSET has organized Buyer for the
purpose and with the direction of so doing.
C. Seller desires to sell substantially all of its assets to Buyer and to
have Buyer assume certain of its liabilities pursuant to the terms of this
Agreement.
NOW, THEREFORE, it is agreed by and among the Parties hereto as follows:
1. DEFINITIONS AND SCHEDULES.
-------------------------
1.01 DEFINITIONS. For purposes of this Agreement, except as otherwise
-----------
expressly provided or unless the context otherwise requires, the following terms
shall have the meanings set forth below:
"Accredited Investor" has the meaning set forth in Regulation D
---------------------
promulgated under the Securities Act.
"Acquisition Date Balance Sheet" means the balance sheet of
--------------------------------
Seller as of the Effective Date to be prepared by Seller
<PAGE>
and certified by Seller's Auditors to be delivered in accordance with the
provisions of Section 3.06.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
-----------
regulations promulgated under the Securities Exchange Act.
"Applicable Rate" means the corporate base rate of interest
-----------------
announced from time to time by The Riggs National Bank of Washington, D.C. plus
two percent per annum.
"Basis" means any past or present fact, situation, circumstance,
-------
status, condition, activity, practice, plan occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Buyer" has the meaning set forth in the preface above.
-------
"Cash" means cash and cash equivalents (including marketable
------
securities and short term investments) calculated in accordance with GAAP
applied on a basis consistent with the preparation of the Financial Statements.
"Closing" has the meaning set forth in Section 6.01 below.
---------
"Closing Date" has the meaning set forth in Section 6.01 below.
--------------
"Code" means the Internal Revenue Code of 1986, as amended.
------
"Common Stock" means the authorized capital stock of SSET,
-------------
consisting of 10 million shares of common stock, par value $.01 per share.
"Controlled Group of Corporations" has the meaning set forth in
----------------------------------
Code Section 1563.
"Disclosure Schedules" means the schedules of Seller providing
----------------------
disclosures of Seller under Section 4, or the schedules of Buyer providing
disclosures of Buyer under Section 5.
"Effective Date" has the meaning set forth in Section 6.01 below.
----------------
"Employee Benefit Plan" means any (a) nonqualified deferred
-----------------------
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any
2
<PAGE>
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in
-------------------------------
ERISA Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
-------------------------------
ERISA Section 3(l).
"Environmental, Health, and Safety Laws" means the Comprehensive
----------------------------------------
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) 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, ground water, 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.
"ERISA" means the Employee Retirement Income Security Act of
-------
1974, as amended.
"Excluded Liabilities" has the meaning set forth in Section 2.05
----------------------
below.
"Extremely Hazardous Substance" has the meaning set forth in
------------------------------
Section 302 of the Emergency Planning and Community Right-to-Know Act of 1986,
as amended.
"Financial Statements" has the meaning set forth in Section 4.03
----------------------
below.
"GAAP" means United States generally accepted accounting
------
principles as in effect from time to time.
"Guaranty Fund" has the meaning set forth in Section 10.01(b)
---------------
below.
"Knowledge" means actual knowledge (after reasonable
-----------
investigation).
"Liability" means any liability (whether known or unknown,
-----------
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or
3
<PAGE>
unliquidated, and whether due or to become due), including, without limitation,
(i) any Liability for Taxes; and (ii) any Liability under contractual
obligations.
"Market Price" means the average of the closing price for shares
--------------
of SSET Common Stock as published by NASDAQ for the 10 trading days immediately
preceding the day as to which any such determination of Market Price is to be
made.
"MISAT" means MISAT, Ltd., an Israeli corporation.
-------
"Most Recent Balance Sheet" means the balance sheet contained
---------------------------
within the Most Recent Financial Statements.
"Most Recent Fiscal Month End" has the meaning set forth in
------------------------------
Section 4.03 below.
"Most Recent Fiscal Year End" has the meaning set forth in
-----------------------------
Section 4.03 below.
"Multiemployer Plan" has the meaning set forth in ERISA Section
--------------------
3(37).
"Ordinary Course of Business" means the ordinary course of
-----------------------------
business consistent with past custom and practice (including with respect to
quantity and frequency).
"Person" means an individual, a partnership, a corporation, an
--------
association, a limited company, a joint stock company, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Premises Lease" means that certain lease dated August 2, 1985
----------------
between Seller and L.D. Hancock Co., and all amendments thereto through the date
of this Agreement in respect to the property therein described, a portion of
which said property is occupied by Seller as Seller's principal place of
business.
"Purchase Price" has the meaning set forth in Section 3.01 below.
----------------
"Registration Rights" means the registration rights to be
---------------------
provided by SSET in respect to the SSET Securities pursuant to the Registration
Rights Agreement which shall be substantially in the form annexed hereto as
Exhibit B.
"Retained Assets" has the meaning set forth in Section 2.02
-----------------
below.
"Securities Act" means the Securities Act of 1933, as amended.
----------------
4
<PAGE>
"Securities Exchange Act" means the Securities Exchange Act of
-------------------------
1934, as amended.
"Security Interest" means any mortgage, pledge, lien,
-------------------
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens for Taxes not yet due and payable or
for Taxes that the taxpayer is contesting in good faith through appropriate
proceedings (c) purchase money liens and liens securing rental payments under
capital lease arrangements, and (d) other liens arising in the Ordinary Course
of Business and not incurred in connection with the
borrowing of money.
"Sublease" means the sublease agreement to be entered into
----------
between Buyer and Seller in respect to the premises therein described, being the
premises where Buyer now conducts Buyer's business, said Sublease to be in the
form annexed hereto as Exhibit C.
"Subsidiary" means any corporation with respect to which a
------------
specified Person (or a subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors.
"Seller" has the meaning set forth in the preface above.
--------
"Seller's Auditors" means the certified public accounting firm of
-------------------
Arthur Andersen LLP regularly engaged by Fairchild as the auditor for Fairchild
and its Subsidiaries.
"SSET Securities" means the Common Stock of SSET and the Warrant
-----------------
to be delivered by SSET as part of the Purchase Price.
"Tax" and "Taxes" 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
Sec. 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.
"Tax Return" 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.
5
<PAGE>
"Warrant" means the Stock Purchase Warrant to be issued by SSET, a
---------
copy of the form of such Warrant being annexed hereto as Exhibit A.
1.02 SCHEDULES. Schedules to this Agreement are identified by
---------
reference to the section or subsection in which the information to be set forth
or disclosed in such schedule is first particularly described. Each of such
schedules shall be initialed by a representative of Seller and a representative
of Buyer.
2. SALE AND PURCHASE OF ASSETS; LIABILITIES ASSUMED.
------------------------------------------------
2.01 ACQUIRED ASSETS. Relying upon the representations and warranties
---------------
and subject to the terms and conditions contained herein, Seller agrees to sell,
and Buyer agrees to purchase, the business of Seller as a going concern and all
of the assets of Seller, as of the date of this Agreement, with only such
changes as shall occur in the Ordinary Course of Business of Seller from the
date hereof and until the Closing (as defined), such business and assets being
hereinafter referred to as the "Acquired Assets" excluding, however, the
Retained Assets as defined in Section 2.02. Acquired Assets means and includes
all right, title and interest of Seller in and to all of the following:
(a) (i) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto and all patents,
patent applications and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions and re-examinations
thereof or rights thereto; (ii) all trademarks, service marks, trade dress,
logos and trade names, together with all translations, adaptations, derivations
and combinations thereof, and including all goodwill associated therewith,
excluding, however, the names "Fairchild Data" and the Fairchild logo; (iii) all
copyrightable works, all copyrights and all applications, registrations and
renewals in connection therewith or rights thereto; (iv) all mask works and all
applications, registrations and renewals in connection therewith; (v) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications);
and (vi) all goodwill associated with any of the foregoing, licenses and
sublicenses granted and obtained with respect thereto and rights thereunder,
remedies against infringement thereof and all rights to protection of interest
therein under the laws of all jurisdictions (collectively, all of the foregoing
the "Intellectual Property");
(b) All customer and supplier lists, dealer and distributor
lists, pricing and cost information, and business and marketing plans and
proposals, all computer software (including
6
<PAGE>
data and related documentation), manuals, advertising and promotional materials,
and all other proprietary rights;
(c) All inventories of the Seller used or to be used in
connection with Seller's business, including all inventories and materials used
or to be used in the manufacture of finished products, work-in-process, finished
products and materials, components, component parts, and subassemblies, and all
other tangible property customarily used or to be used in the manufacture of
finished products, or performing services;
(d) All tangible personal property, such as machinery, tools,
dies, appliances, benches, cabinets, automobiles, trucks, tractors, trailers,
spare and replacement parts, molds, all expensed inventories and supplies or
materials, engineering, manufacturing and administration furniture and
equipment, removable fixtures, office furniture and equipment, and including the
items of tangible personal property particularly described in the Schedule
annexed hereto and identified by reference to this section;
(e) All rights and interests of Seller under purchase orders,
sales orders and other contracts, quotes, bids for contracts, contracts and
orders in process, agreements, commitments, licenses and personal property
leases, indentures, guarantees and other similar arrangements and rights
thereunder;
(f) Accounts, notes and other receivables, claims, deposits,
prepayments, refunds, causes of action, choses in action, rights of recovery,
rights of setoff and rights of recoupment;
(g) Franchises, approvals, permits, licenses, orders,
registrations, certificates, variances and similar rights obtained from
governments and governmental authorities;
(h) All other property and assets of the Seller of whatever
nature and wherever situated, except, however, the Retained Assets; and
(i) All of the books and records of Seller, or copies thereof,
relating to the foregoing described properties of Seller.
2.02 RETAINED ASSETS. Excluded from the definition of Acquired
---------------
Assets, and therefore excluded from the sale hereunder, are all of the following
assets and property of Seller (collectively, the "Retained Assets"):
(a) The interest of Seller as lessee under the Premises Lease and
any leasehold improvements or fixtures installed
7
<PAGE>
by Seller (but this provision shall not limit the rights and obligations of
Buyer and Seller under the Sublease);
(b) The corporate charter, qualifications to conduct business as
a foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, and other documents relating to the organization,
maintenance and existence of the Seller as a corporation, and any other similar
assets reflected on the Acquisition Date Balance Sheet;
(c) All rights to any refund or credits for any Taxes of Seller
for periods prior to the Closing Date;
(d) All claims, causes of action, rights or refunds relating to
or arising out of any of the Retained Assets or the Excluded Liabilities (as
defined in Section 2.05);
(e) Cash;
(f) The names "Fairchild" and "Fairchild Data" and the Fairchild
logo;
(g) All ownership interest held by Seller in MISAT;
(h) All contractual relationships with MISAT and all Liabilities
due from MISAT to Seller, except as otherwise set forth on Schedule 2.02(h)
annexed hereto;
(i) Seller's right to manufacture, sell, distribute, license or
otherwise deal with KU Band RF products pursuant to the agreements with MISAT
and the Bird Foundation, as identified in Schedule 4.22, and all related
intellectual property associated therewith, except as otherwise set forth on
Schedule 2.02(h);
(j) All insurance policies of Seller;
(k) The Letter of Credit referenced in Schedule 4.12(c); and
(l) The Collection Account Agreement and related lock box
referenced in Schedule 4.12(c).
2.03 CONTRACTS IN PROCESS. On the Closing Date and concurrent with
--------------------
Closing hereunder, Seller will transfer to Buyer the obligation to perform all
contracts in process with respect to customers' orders relating to Seller's
business listed on Schedule 2.03, as updated by Buyer and Seller through the
Closing Date, and all of Seller's rights thereunder, and Buyer will agree to
assume and fulfill, in accordance with their respective terms, all of such
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contracts in process, and shall receive all income therefrom, which transfer
shall be without consideration other than the consideration of Seller's transfer
of such contracts in process and Buyer's agreement to assume the liability for
completion of such contracts in process. Buyer shall also assume the contracts
listed on Schedule 2.03, as updated by Buyer and Seller through the Closing
Date, between the Seller and third parties, where Seller is a purchaser of goods
or services and such contracts relate to the business of Seller, provided that
such contracts are assumable by their terms or with the contracting party's
consent obtained. Any provision of this Agreement to the contrary
notwithstanding, no order, contract or other agreement shall be deemed as
assigned hereunder if such assignment would constitute a violation thereof, but
Buyer and Seller shall use their best efforts to give economic effect to any of
such contracts, orders or other agreements which may not be assigned by Seller
and assumed by Buyer.
2.04 ASSUMED LIABILITIES. On the Closing Date, and relying upon the
-------------------
representations and warranties of Seller and Shareholder and subject to the
adjustment provisions of Section 7 and the indemnification provisions of Section
12.01, Buyer will assume all of the following liabilities (collectively, the
"Assumed Liabilities") of the Seller:
(a) All Liabilities of the Seller set forth on the Closing
Balance Sheet (as hereafter defined), subject, however, to delivery of the
Acquisition Date Balance Sheet (as hereafter defined), and then such Liability
shall be adjusted to reflect only the Liabilities of the Seller set forth on the
face of the Acquisition Date Balance Sheet (rather than in any notes thereto),
but excluding the Excluded Liabilities as defined in Section 2.05 below;
(b) All Liabilities and obligations of the Seller under the
contracts assigned by Seller and assumed by Buyer under the provisions of
Section 2.03 above; and
(c) All Liabilities and obligations of the Seller arising from
the business of Seller prior to the Closing in respect to the following:
(i) The warranty obligations of Seller to its customers for
products manufactured, sold and delivered by Seller prior to Closing; and
(ii) Any other Liability arising from the Ordinary Course of
Business.
2.05 EXCLUDED LIABILITIES. Buyer shall not assume or otherwise be
--------------------
liable for any of the following Liabilities or obligations of Seller
(collectively, the "Excluded Liabilities"),
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and whether or not the same shall have been reflected on the Closing Balance
Sheet or the Acquisition Date Balance Sheet:
(a) Any Liability for Taxes attributable to any period prior to
the Closing (but, Buyer's employees will prepare for Seller, without charge to
Seller, state and local sales and use tax returns for current periods prior to
Closing);
(b) Any Liability under any Employee Benefit Plan which is in
excess of the amount which is agreed to be assumed by Buyer and included in the
Acquisition Date Balance Sheet;
(c) Any Liability or obligation for the payment of any amount to
Seller's Auditors for their services rendered or to be rendered and expenses
advanced or incurred in connection with the preparation and delivery of the
financial statements required to be delivered under the provisions of Section
9.02; and
(d) All obligations under any Security Agreement or Guaranty
posted by Seller to secure lines of credit to Fairchild and VSI;
(e) All obligations under Seller's Employee Benefit Plans listed
under Schedule 4.12(e) except as otherwise provided in Section 11.02;
(f) Any Liability related to (i) the Super Technologies matter
disclosed in Schedule 4.15 at Item 4, (ii) the Inteltrade/HTC purchase order
identified in Schedule 4.12(c), including any obligation to Prodelin, and (iii)
the agreement between Seller and Scientific-Atlanta disclosed in Schedule 4.09
at Item F.3; and
(g) All other Liabilities of Seller not included within the
definition of Assumed Liabilities.
2.06 NAME AND LOGO LICENSE. Effective as of the Closing Date and
---------------------
without any further instrument or consideration, Fairchild and Fairchild Data
grant to the Buyer, for a period of three years from the Closing Date, a
nontransferable license to use the name "Fairchild Data", together with all
translations, adaptations, derivations and combinations thereof, but only in
connection with the manufacturing, sales and marketing operations by Buyer of
the business previously conducted by Seller. For a period of two years from the
Closing Date, Fairchild and Seller grant and license to Buyer the right to use,
in connection with the operations by Buyer of the business previously conducted
by Seller, all trademarks, service marks, trade dress and logos used by Seller,
but only in connection with the manufacturing, sales and marketing operations by
Buyer of the business previously conducted by Seller.
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3. PURCHASE PRICE AND PAYMENT.
--------------------------
3.01 PURCHASE PRICE. The term "Purchase Price" as used in this
--------------
Agreement shall mean the aggregate price to be paid by Buyer for the Acquired
Assets, which shall consist of the Cash Portion (as defined in Section 3.02),
the SSET Securities (as defined in Section 3.03), and the assumption of the
Assumed Liabilities (in accordance with Section 3.04).
3.02 CASH PORTION. The Cash Portion shall be:
------------
(a) $4,220,000.00 (the "Base Sum") adjusted as follows:
(i) the Base Sum shall be increased or decreased, as the
case may be, by the amount, if any, by which the Adjusted Net Assets (as defined
below) as of the Effective Date, as reflected on the Acquisition Date Balance
Sheet (as defined below) varies from the sum of $3,750,000.00; and
(ii) decreased by the amount of the Adjusted Liabilities (as
defined below) as of the Effective Date, as reflected on the Acquisition Date
Balance Sheet, and less the amount, if any, of the Cash Adjustment (as defined
below).
(b) The phrase "Adjusted Net Assets" means the assets of Seller
as reflected on the Acquisition Date Balance Sheet, less the amounts actually
reflected on such balance sheet, if any, representing sums attributable to
Retained Assets;
(c) The phrase "Adjusted Liabilities" means the liabilities of
the Seller as of the Effective Date and as reflected on the Acquisition Date
Balance Sheet but only to the extent that such liabilities are included within
the definition of Assumed Liabilities; and
(d) If by application of the foregoing provisions of this Section
3.02 the Cash Portion of the Purchase Price required to be paid by Seller to
Buyer would exceed $4,220,000.00, then Buyer may elect to pay such increase in
the Cash Portion, in cash, or cause a further adjustment (the "Cash Adjustment")
to be made in the Cash Portion by reassigning to Seller such of the accounts
receivable of Seller, as specified by Seller (the "Reassigned Accounts
Receivable"), as shall be necessary to reduce the Cash Portion of the Purchase
Price to $4,220,000.00.
3.03 SSET SECURITIES. The SSET Securities to be delivered by Buyer to
---------------
Seller at Closing shall consist of:
(a) 200,000 shares of SSET Common Stock, of which (i) 100,000
shall be represented by a single certificate, and (ii) 100,000 (the "Adjustment
Shares") shall be represented by five
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certificates for 20,000 shares each, which certificates shall bear on their face
a legend to the following effect:
The shares represented by this certificate have been issued pursuant to the
Asset Purchase Agreement ("Agreement") entered into by and among SSE
TELECOM, INC. ("Company"), SSE DATACOM, INC., THE FAIRCHILD CORPORATION,
FAIRCHILD DATA CORPORATION, and VSI CORPORATION, made and entered into
effective January 28, 1996, and reference is hereby made to Section
10 of such Agreement for certain provisions under which the shares will be
required to be surrendered to the Company; and until the provisions of
Section 10 have been complied with by the parties to such Agreement, the
Company reserves the right to delay the transfer of the shares represented
by this certificate.
When under the provisions of Section 10 there is no longer any requirement that
any such Adjustment Shares shall be surrendered to Buyer, SSET will, on
surrender of the certificates bearing the foregoing legend, replace any such
certificates with new certificates not bearing the foregoing legend.
(b) A Stock Purchase Warrant issued by SSET to Seller
entitling the registered holder thereof to acquire 50,000 shares of Common Stock
of SSET, exercisable at any time, in whole or in part, during the period
commencing as of the Closing and ending three years hereafter, at an exercise
price fixed at $2.00 per share above the Market Price (as defined) as of the
Closing (the "Warrant"), said Warrant to be in the form annexed hereto as
Exhibit A.
3.04 ASSUMPTION OF ASSUMED LIABILITIES. As part of the Purchase
---------------------------------
Price, Buyer shall, at and as of the Closing Date, assume the Assumed
Liabilities, subject to the further terms and conditions of this Agreement.
3.05 CLOSING BALANCE SHEET. The determination of the Cash Portion of
---------------------
the Purchase Price is to be based on the Acquisition Date Balance Sheet which
the parties intend that Seller shall cause to be delivered to Buyer within 60
days of the Effective Date as more particularly provided in Section 3.06 below.
In order to allow Closing to occur prior to delivery of the Acquisition Date
Balance Sheet, the parties have agreed that Closing shall occur based on the
Balance Sheet for Seller as of December 31, 1995 (the "Closing Balance Sheet")
to be prepared by Seller setting forth the assets and liabilities of Seller as
of that date. The Closing Balance Sheet shall be prepared in accordance with
GAAP and in the manner consistent with the internal accounting principals,
practices and procedures used by Seller in connection with the preparation of
the June 30, 1995 Balance Sheet of Seller identified in Schedule 4.03, provided,
however, Seller
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shall also deliver at Closing, together with the Closing Balance
Sheet, a statement from Seller's chief financial officer setting forth any
differences in the accounting principles, practices and procedures that will be
applicable to the Acquisition Date Balance Sheet from the Closing Balance Sheet.
At Closing, the Cash Portion of the Purchase Price shall be computed based on
the Closing Balance Sheet, adjusted as provided in Section 3.02 as though the
Closing Balance Sheet was the Acquisition Date Balance Sheet, and the amount so
computed, less $500,000.00 (the "Deferred Sum") paid at Closing. The Deferred
Sum adjusted as appropriate shall be payable upon delivery of the Acquisition
Date Balance Sheet.
3.06 ACQUISITION DATE BALANCE SHEET. As soon as practical after the
------------------------------
Closing, but in any event within 60 days after the Effective Date, Seller shall
deliver to Buyer the Acquisition Date Balance Sheet, which shall be as of the
Effective Date, certified by Seller's Auditors, together with a supplemental
schedule, certified by Seller's chief financial officer and reviewed by Seller's
Auditors, setting forth in reasonable detail the adjustments necessary to be
made to such Acquisition Date Balance Sheet to arrive at the Adjusted Net Assets
and the Adjusted Liabilities as provided in Sections 3.02(b) and 3.02(c) above.
3.07 PAYMENT OF THE DEFERRED AMOUNT. Upon delivery of the Acquisition
------------------------------
Date Balance Sheet and the application of the provisions of Sections 3.02 and
3.04 above, the Deferred Sum, increased or decreased as the case may be to
provide for the proper payment of the Cash Portion, shall be paid by Buyer to
Seller, by wire transfer of immediately available funds.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND SHAREHOLDER. Except
------------------------------------------------------------
as otherwise set forth in the Disclosure Schedules annexed hereto and identified
by reference to this Section and subsections hereof, Seller and Shareholder,
jointly and severally, represent and warrant to Buyer and SSET, and agree as
follows:
4.01 ORGANIZATION; CORPORATE POWER; QUALIFICATION. Seller is a
--------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Seller is duly qualified to do business as a foreign
corporation, and is in good standing in the State of Arizona, which is the only
state where the nature of the business, or the character and location of the
properties owned or leased by the Seller makes qualification of it as a foreign
corporation necessary. Seller has all requisite corporate power and authority
to own, lease or hold its rights, properties and assets and to conduct its
business as it is now being conducted, to enter into this Agreement and to
consummate the transactions contemplated hereby.
4.02 AUTHORIZATION. The execution and delivery of this Agreement and
-------------
the consummation of the transactions contemplated
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hereby have been duly and validly authorized by the Board of Directors of the
Seller, and by the Board of Directors of Shareholder and no other corporate
proceedings on the part of the Seller or Shareholder are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement constitutes the valid and binding obligation of Seller and Shareholder
enforceable in accordance with its terms. The execution and delivery of this
Agreement by Seller and Shareholder, and the consummation of the transactions
contemplated hereby do not and will not (i) violate any statute, regulation,
rule, judgment, order, decree, law, or other restriction of any governmental
agency or court to which Seller or Shareholder is subject, (ii) conflict with
any other provisions of Seller's Articles of Incorporation or By-Laws, or (iii)
(subject to obtaining consent of Shareholder's lender and bond holders) conflict
with, result in the breach of or constitute a default under any indenture,
mortgage, agreement, lease or other instrument to which Seller is a party, or to
which Seller or the business or assets of Seller is subject. No consent,
approval or authorization by or notice to any governmental authority or any
other person is required in connection with the execution, delivery or
performance by Seller or Shareholder of this Agreement or the transactions
contemplated hereby, except, however, that any consents of third persons
required to assign the contracts in process identified in Section 2.03 may not
have been obtained.
4.03 FINANCIAL STATEMENTS. Attached hereto as Schedules 4.03.1,
--------------------
4.03.2, 4.03.3 and 4.03.4 are the following financial statements (collectively
the "Financial Statements"): (i) unaudited balance sheets and statements of
income (loss) and cash flow as of and for the fiscal years ended June 30, 1993,
1994 and 1995 (the "Most Recent Fiscal Year End") for the Seller; and (ii)
unaudited balance sheet and statement of income and cash flow of Seller as and
for the six month period ended December 1995 (the "Most Recent Fiscal Month
End"). The Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby, present
fairly the financial condition of Seller as of such dates and the results of
operations of the Seller for such periods in all material respects, and are
consistent with the books and records of the Seller (which books and records are
correct and complete) provided, however, the most recent Financial Statements
are subject to normal year-end adjustments.
4.04 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since the Most
------------------------------------------------
Recent Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations, or results of operations, or to the
Knowledge of Seller, future prospects of Seller, except as may be otherwise
disclosed on a Schedule annexed hereto. Without limiting the generality of the
foregoing, since that date, unless otherwise disclosed in a Schedule annexed
hereto:
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(a) Seller has not sold, leased, transferred, or assigned any of
its assets, tangible or intangible, other than for a fair consideration in the
Ordinary Course of Business;
(b) Seller has not entered into any agreement, contract, lease,
or license (or series of related agreements, contracts, leases, and licenses)
either involving more than $50,000 outside the Ordinary Course of Business;
(c) No party (including the Seller) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) involving more than
$100,000 to which Seller is a party or by which it is bound;
(d) Seller has not imposed any Security Interest upon any of its
assets, tangible or intangible (other than those already in existence);
(e) Seller has not made any capital expenditure in excess of
$100,000 per capital expenditure or outside the Ordinary Course of Business;
(f) Seller has not made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other Person (or series
of related capital investments, loans, and acquisitions) either involving more
than $100,000 or outside the Ordinary Course of Business;
(g) Seller has not issued any note, bond, or other debt security
or created, incurred, assumed, or guaranteed any indebtedness for borrowed money
or capitalized lease obligation either involving more than $50,000 singly or in
the aggregate;
(h) Seller has not delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of Business where such
delay or postponement would have a material adverse effect on the operations of
the business of Buyer (material adverse effect meaning a Liability in excess of
$100,000);
(i) Seller has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) either involving more
than $100,000 or outside the Ordinary Course of Business;
(j) Seller has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(k) There has been no change made or authorized in the charter or
By-Laws of Seller;
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(l) Seller has not declared, set aside, or paid any dividend or
made any distribution with respect to its capital stock (whether in cash or in
kind) or redeemed, purchased, or otherwise acquired any of its capital stock;
(m) Seller has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to any of its property where such damage,
destruction or loss would have a material adverse effect on the operations of
the business of Buyer (material adverse effect meaning a Liability in excess of
$100,000);
(n) Seller has not made any loan to, or entered into any other
transaction with, any of its directors, officers, or employees outside the
Ordinary Course of Business;
(o) Seller has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement, outside the Ordinary Course of Business;
(p) Seller has not granted any increase in the base compensation
or bonus, or fringe benefit payments of any of its top five executive officers;
(q) Seller has not adopted, amended, modified or terminated any
bonus, profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its top five executive officers (or taken
any such action with respect to any other Employee Benefit Plan);
(r) Seller has not made any other change in employment terms for
any of its top five executive officers;
(s) There has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary Course of
Business involving Seller; and
(t) Seller has not committed to any of the foregoing.
4.05 [Intentionally omitted.]
4.06 LEGAL COMPLIANCE. To Seller's Knowledge, Seller and any
----------------
predecessors and Affiliates have complied with all material applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to
16
<PAGE>
comply, where failure to so comply would have a material adverse effect on
Seller' business taken as a whole.
4.07 TAX MATTERS. Seller and Shareholder have made adequate provision
-----------
for the payment of all Taxes of Seller for any matter and for all periods
arising prior to the Closing Date.
4.08 REAL PROPERTY. Seller has, or will have as of the Closing Date,
-------------
obtained all consents necessary for the entering into of the Sublease for the
portion of the real property therein described. With respect to such Sublease
and the real property therein described, except as disclosed in a schedule
annexed hereto:
(a) To Seller's Knowledge, there are no pending or threatened
condemnation proceedings, lawsuits, or administrative actions relating to the
property or other matters affecting materially and adversely the current use,
occupancy, or value thereof;
(b) To Seller's Knowledge, there are no leases, subleases,
licenses, concessions, or other agreements, written or oral, granting to any
party or parties the right of use or occupancy of the property that is to be
made part of the Sublease (it being understood that Seller may sublease, lease
or otherwise dispose of the leasehold interest in the property that is not
subject to the Sublease);
(c) There are no parties (other than the Seller) in possession of
the parcel of real property that is to be Subleased to Buyer (it being
understood that Seller may sublease, lease or otherwise dispose of the leasehold
interest in the property that is not subject to the Sublease); and
(d) The schedule annexed hereto describes the instruments or
agreements comprising the Premises Lease and true and complete copies of all
such instruments and agreements have heretofore been delivered by Seller to
Buyer.
4.09 INTELLECTUAL PROPERTY.
---------------------
(a) Seller owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property used by Seller in
the operation of the businesses of the Seller as presently conducted. Each item
of Intellectual Property owned or used by Seller immediately prior to the
Closing hereunder will be owned or available for use by the Buyer on identical
terms and conditions immediately subsequent to the Closing hereunder;
(b) To Seller's knowledge, Seller has not interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
intellectual property rights of Persons, and
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to Seller's knowledge none of the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Seller have, within the
past three years, received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or violation
(including any claim that Seller must license or refrain from using any
intellectual property rights of any Person). To the Knowledge of Seller, no
Person has interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of Seller; and
(c) The Schedule annexed hereto identifies: (i) all present
products of Seller and any under development by Seller (and any other Person
engaged by Seller), including, but not limited to, all modem products, all
protective switch products, and all network management control products, (ii)
each patent or registration which has been issued to Seller with respect to any
of its Intellectual Property, (iii) each pending patent application or
application for registration which Seller has made with respect to any of its
Intellectual Property, and (iv) each license, agreement, or other permission
which Seller has granted to any Person with respect to any of its Intellectual
Property. The annexed Schedule also identifies each trade name or unregistered
trademark used by Seller in connection with any of its businesses.
4.10 TANGIBLE ASSETS. Seller owns or leases all buildings, machinery,
---------------
equipment, and other tangible assets for the conduct of its businesses as
presently conducted. Each such tangible asset is accepted by Buyer "As Is".
4.11 INVENTORY. The inventory of the Seller consists of raw materials
---------
and supplies, manufactured and purchased parts, goods in process, and finished
goods, all of which will be transferred by Seller to Buyer "As Is", except,
however, the transfer of such inventories in "As Is" condition will not modify
the obligations of the parties under Section 7.01.
4.12 CONTRACTS. The Schedule annexed hereto lists the following
---------
contracts and other agreements to which the Seller is a party:
(a) Any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease payments in
excess of $10,000 per annum;
(b) Any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the performance
of which will extend over a period of more than 90 days, result in a loss to the
Seller or involve consideration in excess of $100,000;
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<PAGE>
(c) Any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in excess of $50,000 or under which
it has imposed a Security Interest on any of its assets, tangible or intangible;
(d) Any material agreement (meaning a Liability in excess of
$100,000) concerning confidentiality or noncompetition;
(e) Any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
(f) Any collective bargaining agreement;
(g) Any agreement for the employment of any individual on a full-
time, part-time, consulting, or other basis providing annual compensation in
excess of $50,000 or providing severance benefits;
(h) Any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside the Ordinary
Course of Business; and
(i) Any other agreement or group of related agreements which both
(i) involves consideration in excess of $100,000, and (ii) a default or
termination which could have a material adverse effect on the business,
financial condition, operations, or results of operations of Seller.
4.13 NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable
-----------------------------
of the Seller are reflected properly on the books and records of Seller, are
valid receivables, collectible at their recorded amounts, and subject only to
the reserve for bad debts set forth on the Most Recent Balance Sheet as adjusted
for the passage of time through the Closing Date in accordance with the past
custom and practice of the Seller.
4.14 INSURANCE. The Schedule annexed hereto sets forth the following
---------
information with respect to each insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and bond and
surety arrangements) to which the Seller is a party, a named insured, or
otherwise the beneficiary of coverage:
(a) The name, address, and telephone number of the agent;
(b) The name of the insurer, the name of the policyholder, and
the name of each covered insured;
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(c) The policy number and the period of coverage;
(d) The scope (including an indication of whether the coverage
was on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(e) A description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) to Seller's Knowledge, the
policy is legal, valid, binding, enforceable, and in full force and effect; (B)
the policy will continue to be legal, valid, binding and enforceable by Seller
(but is not assignable by Seller to Buyer) following the consummation of the
transactions contemplated hereby; (C) neither Seller nor (to Seller's Knowledge)
any other party to the policy is in breach or default (including with respect to
the payment of premiums or the giving of notices), and no event has occurred
which, with notice or the lapse of time, would constitute such a breach or
default, or permit termination, modification, or acceleration, under the policy;
and (D) to Seller's Knowledge no party to the policy has repudiated any
provision thereof. Seller has been covered during the past three years by
insurance in scope and amount customary and reasonable for the businesses in
which it has engaged during the aforementioned period.
4.15 LITIGATION. The Schedule annexed hereto sets forth each
----------
instance in which the Seller (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge, or (ii) is a party or to Seller's
Knowledge is threatened to be made a party to any action, suit proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator. None of the actions, suits, proceedings, hearings, and
investigations set forth in such Schedule could result in any material adverse
change in the business, financial condition, operations, results of operations,
or future prospects of Seller.
4.16 PRODUCT WARRANTY. No product manufactured, sold, leased, or
----------------
delivered by Seller is subject to any guaranty, warranty, or other indemnity
beyond the applicable standard terms and conditions of sale or lease. The
Schedule annexed hereto includes copies of the standard terms and conditions of
sale or lease for the Seller (containing applicable guaranty, warranty, and
indemnity provisions).
4.17 PRODUCT LIABILITY. Seller, to Seller's Knowledge, has no
-----------------
Liability (and, to Seller's Knowledge, there is no Basis for any present or
future action, suit, proceeding, hearing, investigation, charge, compiling
claim, or demand against Seller giving rise to any Liability) arising out of any
injury to
20
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individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold, leased, or delivered by Seller.
4.18 EMPLOYEES. Except as disclosed in the Schedule annexed hereto,
---------
to the Knowledge of Seller and the directors and officers of the Seller
(excluding for this purpose the top five executive employees of Seller), no
executive, key employee, or group of employees has any plans to terminate
employment with Seller or with Buyer after the Closing. Seller is not a party
to or bound by any collective bargaining agreement, nor has Seller experienced
any strikes, grievances, claims of unfair labor practices, or other collective
bargaining disputes. Seller and the directors and officers (and employees with
responsibility for employment matters) of the Seller have no Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of Seller.
4.19 EMPLOYEE BENEFITS. The Schedule annexed hereto lists each
-----------------
Employee Benefit Plan that Seller maintains or to which Seller contributes.
(a) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all material
respects with the applicable requirements of ERISA, the Code, and other
applicable laws;
(b) All required reports and descriptions have been filed or
distributed appropriately with respect to each such Employee Benefit Plan. The
requirements of Part 6 of Subtitle B of Title I of ERISA and of Code Sec. 4980B
have been met, in all material respects, with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan;
(c) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to each
such Employee Benefit Plan which is an Employee Pension 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 such Employee Pension Benefit Plan or accrued in
accordance with the past custom and practice of the Seller. All premiums or
other payments for all periods ending on or before the Closing Date have been
paid with respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan;
(d) To Seller's Knowledge, neither the Seller, Shareholder nor
the other members of the Controlled Group of Corporations that includes the
Seller and Shareholder has withdrawn from, or failed to make any required
contributions to, any Multiemployer Plan; and
21
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(e) To Seller's Knowledge, except as listed on Schedule 4.12,
paragraph (e), neither the Seller nor Shareholder maintains or has maintained or
contributes, has contributed, or has been required to contribute to any Employee
Welfare Benefit Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated employees,
their spouses, or their dependents.
4.20 ENVIRONMENT HEALTH AND SAFETY.
-----------------------------
(a) Each of the Seller and its Affiliates has complied in all
material respect with all Environmental, Health, and Safety Laws, and no action,
suit, proceeding, hearing, investigation, charge, complaint claim, demand, or
notice has been filed or commenced against any of them alleging any failure so
to comply. Without limiting the generality of the preceding sentence, Seller and
its Affiliates has obtained and been in material compliance with all of the
terms and conditions of all permits, licenses, and other authorizations which
are required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental, Health, and Safety Laws;
and
(b) To the Knowledge of Seller, Seller has no Liability (and none
of the Seller and its Affiliates has handled or disposed of any substance,
arranged for the disposal of any substance, exposed any employee or other
individual to any substance or condition, or owned or operated any property or
facility in any manner that could form the Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against the Seller giving rise to any Liability) for damage to any site,
location, or body of water (surface or subsurface), for any illness of or
personal injury to any employee or other individual, or for any reason under any
Environmental, Health, and Safety Laws.
4.21 BROKERS. Neither Seller nor Shareholder has retained any broker
-------
or finder with respect to the transactions contemplated by this Agreement.
4.22 MISAT. Schedule 4.22 annexed hereto sets forth each instrument
-----
or agreement reflecting any marketing, sales or other product related agreements
between MISAT and Seller.
4.23 DISCLOSURE. The representations and warranties contained in this
----------
Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
22
<PAGE>
4.24 INVESTMENT. The Seller (i) understands that SSET Securities have
----------
not been, and will not prior to issuance be, registered under the Securities
Act, or under any state securities laws, and are being offered and sold in
reliance upon federal and state exemptions for transactions not involving any
public offering, (ii) is acquiring the SSET Securities solely for its own
account for investment purposes, and not with a view to the distribution thereof
(except to the Shareholder), (iii) is a sophisticated investor with knowledge
and experience in business and financial matters, (iv) has received certain
information concerning SSET and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks inherent in
holding the SSET Securities, (v) is able to bear the economic risk and lack of
liquidity inherent in holding the SSET Securities, (vi) understands that the
Warrant and certificates representing Common Stock will contain on their face
restrictive legends, and (vii) is an Accredited Investor.
5. REPRESENTATIONS AND WARRANTIES OF THE BUYER AND SSET. Except as
----------------------------------------------------
otherwise set forth in the Disclosure Schedules annexed hereto and identified by
reference to this section and subsections hereof, SSET and Buyer, jointly and
severally, represent and warrant to Seller and Shareholder, and agree as
follows:
5.01 ORGANIZATION; CORPORATE POWER; QUALIFICATION.
--------------------------------------------
(a) SSET is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. SSET is duly qualified
to do business and is in good standing as a foreign corporation in the states of
California and Virginia, which are the only states where the nature of the
business, or the character and location of the properties owned or leased by
SSET makes qualification of it as a foreign corporation necessary. SSET has all
requisite corporate power and authority to own, lease or hold its rights,
properties and assets, and to conduct its business as it is now being conducted,
to enter into this Agreement and to consummate the transactions contemplated
hereby; and
(b) Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Buyer is, or as of the
Closing Date will be, qualified to do business as a foreign corporation, and in
good standing in the State of Arizona. Buyer has all requisite corporate power
and authority to own, lease or hold its rights, properties and assets, and to
conduct its business as it is now being conducted, to enter into this Agreement
and to consummate the transactions contemplated hereby.
23
<PAGE>
5.02 AUTHORIZATION.
-------------
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Boards of Directors of SSET and Buyer, including the execution
and delivery of the Registration Rights Agreement and the issuance of the SSET
Securities by the Board of Directors of SSET, and the execution and delivery of
the Sublease by the Board of Directors of Buyer, and no other corporate
proceedings on the part of SSET or Buyer are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
constitutes the valid and binding obligation of SSET and Buyer enforceable in
accordance with its terms. The execution and delivery of this Agreement by SSET
and Buyer, and the consummation of the transactions contemplated hereby do not
and will not (i) violate any statute, regulation, rule, judgment, order, decree,
law, or other restriction of any governmental agency or court to which SSET or
Buyer is subject, (ii) conflict with any other provisions of the Articles of
Incorporation or By-Laws of SSET or Buyer, or (iii) conflict with, result in the
breach of or constitute a default under any indenture, mortgage, agreement,
lease or other instrument to which SSET or Buyer is a party, or to which SSET or
Buyer or the business or assets of SSET or Buyer is subject. No consent,
approval or authorization by or notice to any governmental authority or any
other person is required in connection with the execution, delivery or
performance by Seller or Buyer of this Agreement or the transactions
contemplated hereby; and
(b) The shares of SSET Common Stock to be delivered by Buyer to
Seller at Closing, when delivered, will be duly and validly issued, fully paid
and nonassessable, and the Warrant will be duly and validly issued, and upon
payment of the exercise price, shares of SSET Common Stock issued thereunder
will be duly and validly issued, fully paid and nonassessable. Buyer represents
and warrants that it has full power, title and authority to deliver the SSET
Securities free and clear of any liens or encumbrances of any kind. SSET, by its
execution of this Agreement, further acknowledges, represents and warrants that
the issuance of SSET Securities by SSET to Seller is done on behalf of Buyer's
obligation to deliver the same as part of the Purchase Price.
SSET and Buyer represent that the SSET Securities delivered to
Seller represent a capital contribution to, or an investment in Buyer made by
SSET in the formation of Buyer as SSET's wholly-owned subsidiary with the right
and authority of Buyer to deliver the SSET Securities as part payment of the
Purchase Price.
5.03 INFORMATION PROVIDED. SSET has heretofore delivered to Seller
--------------------
and Shareholder true and complete copies of forms 10-K filed by SSET with the
Securities and Exchange Commission pursuant to provisions of the Securities
Exchange Act for the fiscal year
24
<PAGE>
periods ended September 25, 1993, October 1, 1994 and September 30, 1995 (the
"SSET 10K's"). The information contained in SSET's 10-K's is true and correct in
all material respects as of the dates for which such information is provided.
SSET's 10-K's contain, or there is incorporated therein by reference, audited
consolidated balance sheets and statements of income, changes in stockholder's
equity and cash flow as of and for the fiscal years ended September 25, 1993,
October 1, 1994 and September 30, 1995 ("SSET's Financial Statements"). SSET's
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except as described in the notes thereto), present fairly the
financial condition of SSET and its subsidiaries as of such dates and the
results of operations of SSET and its subsidiaries for such periods.
5.04 NO MATERIAL CHANGE.
------------------
(a) The authorized capital stock of SSET consists of 10 million
shares of Common Stock, par value $.01 per share. The issued and outstanding
shares of Common Stock, and the issued and outstanding options, warrants and
commitments for issuance of shares, as of September 30, 1995, is accurately set
forth in SSET's financial statements for the period ended September 30, 1995
(including notes thereto). Since September 30, 1995, SSET has not issued any
additional shares of Common Stock and has not issued any options or warrants
other than options granted under SSET's 1992 Stock Option Plan, issued in the
Ordinary Course of Business;
(b) Since September 30, 1995, there has not been any material
adverse change in the business, financial condition, operations, results of
operations, or future prospects of SSET and subsidiaries, on a consolidated
basis; and
(c) Neither SSET nor any subsidiary is a party to any
litigation or to the Knowledge of any director of officer of SSET, is threatened
to be made a party to any action, suit, proceeding, hearing, or investigation
of, in, or before any court of quasi judicial or administrative agency of any
federal, state, local or foreign jurisdiction, or before any arbitrator which
would result in any material adverse change in the business, financial
condition, operations, results of operations, or future prospects of SSET or any
subsidiary, on a consolidated basis.
5.05 BROKERS. Neither SSET nor Buyer has retained any brokers or
-------
finders with respect to any transaction contemplated by this Agreement.
5.06 DISCLOSURE. The representations and warranties contained in this
----------
Section 5 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in
25
<PAGE>
order to make the statements and information contained in this Section 5 not
misleading.
6. CLOSING.
-------
6.01 THE CLOSING.
-----------
(a) The closing of the transactions contemplated by this
Agreement (the "Closing") shall be held at the offices of SSET, 8230 Leesburg
Pike, Suite 710, Vienna, Virginia 22182, commencing at 10:00 a.m. (local time)
on January 28, 1996, or at such other place and time after January 28, 1996 as
Seller and Buyer may agree upon in writing (the "Closing Date"). The Closing
shall be effective when all transactions required to be completed and all
documents and funds required to be delivered or executed have been so completed,
executed and delivered. If Closing is effected prior to January 30, 1996, then
the purchase and sale as herein provided shall for all purposes be deemed to
have occurred as of 11:59 p.m., January 28, 1996 (the "Effective Date");
(b) By the written consent of the Parties, any of the dates set
forth in the preceding subsection (a) may be postponed to later dates.
6.02 SELLER'S OBLIGATIONS AT CLOSING. At the Closing, Seller shall
-------------------------------
deliver or cause to be delivered to Buyer:
(a) All conveyances, certificates, affidavits, bills of sale,
assurances, transfers, assignments, assumptions and consents, and any other
documents necessary or reasonably required to effectively sell, assign and
transfer the Acquired Assets and the Assumed Liabilities to Buyer, and to comply
with the conditions of this Agreement;
(b) The Sublease in duplicate originals executed by Seller;
(c) The Closing Balance Sheet referenced in Section 3.05.;
(d) The chief financial officer's certificate referenced in
Section 3.05;
(e) The "Reassigned Accounts Receivable" schedule referenced in
Section 6.04(c);
(f) The officer's certificate referenced in Section 8.01(e);
(g) The opinion of counsel referenced in Section 8.01(f);
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<PAGE>
(h) The Seller's Auditor's letter referenced in Section 8.01(h);
(i) The covenant and agreement not-to-compete referenced in
Section 8.01(i);
(j) An initialed copy of the Allocation of Purchase Price
Schedule referenced in Section 9.05; and
(k) An initialed copy of the Guaranty Fund Amount as provided in
Section 10.01(b).
6.03 OBLIGATIONS OF BUYER AND SSET AT CLOSING. At the Closing, Buyer
----------------------------------------
shall deliver or cause to be delivered to Seller:
(a) All assumptions and consents necessary or reasonably required
to cause Buyer to effectively assume the Assumed Liabilities;
(b) An executed duplicate original of the Sublease;
(c) The Cash Portion of the Purchase Price computed in accordance
with Section 3.02, less the Deferred Sum, pursuant to Section 3.05;
(d) 200,000 shares of SSET Common Stock of which (i) 100,000
shares of Common Stock of SSET shall be represented by a single certificate, and
(ii) 100,000 shares of Common Stock of SSET (the "Adjustments Shares") shall be
represented by five certificates for 20,000 shares each, which certificates
shall bear on their face the legend set forth in Section 3.03;
(e) A fully executed Warrant as required by Section 3.03(b),
registered in the name of Seller;
(f) a fully executed Registration Rights Agreement in the form of
Exhibit B hereto;
(g) The "Reassigned Accounts Receivable" schedule referenced in
Section 6.04(c);
(h) The officer's certificate referenced in Section 8.02(d);
(i) The opinion of counsel referenced in Section 8.02(e);
(j) An initialed copy of the Allocation of Purchase Price
Schedule referenced in Section 9.05; and
(k) An initialed copy of the Guaranty Fund Amount as provided in
Section 10.01(b).
27
<PAGE>
6.04 DELIVERIES BY THE PARTIES. At the Closing, the Parties shall
-------------------------
deliver or cause to be delivered:
(a) The certificate signed by the Parties in duplicate original,
one original to SSET and one original to Seller setting forth the amount, if
any, of the Guaranty Fund as defined in Section 10.01;
(b) SSET and Seller and Shareholder shall enter into the
Registration Rights Agreement; and
(c) If Buyer has elected the Cash Adjustment to the Cash Portion
of the Purchase Price through the Reassigned Accounts Receivable as provided in
Section 3.02(d), the accounts receivable of Seller comprising the Reassigned
Accounts Receivable will be scheduled and acknowledged in writing by Buyer and
Seller, and such receivables shall be collected by Buyer for the account of
Seller, as more particularly provided in Section 7.02(c).
6.05 SUPPLEMENTAL CLOSING. Upon delivery of the Acquisition Date
--------------------
Balance Sheet and subject to the provisions of Sections 3.06 and 3.07, the
Deferred Sum, increased or decreased as the case may be, to provide for the
proper payment of the Cash Portion shall be paid Buyer to Seller, by wire
transfer of immediately available funds. Buyer and Seller shall execute such
instruments as may be necessary or reasonably required to reflect performance by
the parties of their obligations under this Section 6.05.
7. ADJUSTMENTS TO PURCHASE PRICE AFTER THE CLOSING.
-----------------------------------------------
7.01 INVENTORIES.
-----------
(a) Not more than 40 days prior to the Effective Date, Seller
shall take a physical inventory of the raw material, work-in-process and
finished product inventories, such inventories to be observed by Seller's
Auditors, and Seller shall deliver a valuation statement to Purchaser within 20
days of the taking of such inventories. The valuation statement shall contain a
detailed listing and valuation of all such inventories, such valuation to be in
accordance with the policies, practices and procedures employed by Seller in the
preparation by Seller of Seller's Most Recent Fiscal Year End Financial
Statements, subject to such adjustments, if any, as Seller's Auditors shall
require in order for the Seller's Auditors to certify the Acquisition Date
Balance Sheet;
(b) Buyer shall be entitled to provide representatives to
participate in and observe the taking of the physical inventory; and
(c) The inventories so taken shall be valued at the lower of cost
or realizable current market value. Seller agrees
28
<PAGE>
that realizable current market value will include all necessary reserves to
fully write down all inventories which are not returnable to manufacturers for
full credit, or are slow moving, obsolete, damaged or defective. Costs shall be
based on the average cost method, approximating actual costs on the first-in,
first-out basis. The inventories so taken and valued shall then be adjusted from
the date of inventory taking to the Effective Date by the practices and
procedures approved by Seller's Auditors so that the inventories to be included
on the Acquisition Date Balance Sheet will be included thereon in accordance
with GAAP, consistently applied.
7.02 RECEIVABLES.
-----------
(a) Not later than 10 business days after the Effective Date,
Seller shall deliver to Buyer a complete list of receivables from customers of
Seller as of the Effective Date, setting forth the names, amounts, and invoice
and other reference numbers for all such receivables, which Seller has elected
to include on the Closing Balance Sheet. The customer receivables, as the same
may be adjusted in the Acquisition Date Balance Sheet, subject to any reserves,
including general and specific, that may be reflected on the Acquisition Date
Balance Sheet, shall be subject to the further provisions of section (b) below;
(b) For 180 days after the Closing, Buyer shall make reasonable
effort consistent with its customary practices to collect the receivables which
have been assigned to Buyer as part of the Acquired Assets. Subject to (c)
below, at the end of such 180 period, Buyer may reassign any uncollected
receivables to Seller, except any that have been specifically reserved, together
with the related invoices and collection files. Seller shall reimburse Buyer in
cash for the full amount of such reassigned receivables, together with interest
at the Applicable Rate from the Date of Closing until the date of payment by
Seller to Buyer, which such payment shall be within 5 days after such
reassignment. Buyer and Seller agree that in the collection of accounts
receivable Buyer shall, for the purposes of this subsection (b), apply the
amounts collected from a customer to the oldest receivables due from that
customer, notwithstanding any contrary designation that may have been made by
such customer, provided, however, Buyer need not make such application of
payment in respect to any receivable due from a customer where payment of an
invoice due from the customer is being specifically withheld by such customer,
pending the resolution of a warranty claim made by the customer or where payment
is being refused because the customer has returned goods which were included in
such invoice;
(c) The 180 day period provided in (b) above shall be extended (i)
for any receivable the nonpayment of which has been postponed by the customer
pending the providing of warranty
29
<PAGE>
service, for the period during which Buyer is providing warranty service to such
customer for the product or products subject to such receivable, and (ii) for
any receivable backed by an enforceable letter of credit, for so long as the
letter of credit is enforceable by Buyer; provided, however, no extension under
(i) or (ii) shall be for more than 90 days; and
(d) Buyer shall collect for the benefit of Seller any Reassigned
Accounts Receivable and shall, not less frequently than twice monthly, pay over
to Seller all amounts collected by Buyer in respect to any Reassigned Accounts
Receivable. The provisions for application of payments made by customers in
respect to receivables set forth in the last sentence of the preceding paragraph
(b) shall apply to such Reassigned Accounts Receivable.
7.03 WARRANTY RESERVES. There shall be included on the Closing
-----------------
Balance Sheet a reserve for warranty obligations due customers of Seller for
products delivered prior to the Effective Date, and the amount thereof, as the
same may be increased or decreased in the Adjustment Date Balance Sheet is
referred to as the "Warranty Reserve" for application of the provisions of this
Section 7.03. If the expense incurred by Buyer during the 24 month period from
the Effective Date (the "Warranty Expense"), determined as herein provided,
exceeds the Warranty Reserve, Seller shall reimburse Buyer in cash for such
excess warranty expense. The Warranty Expense incurred by Buyer in respect to
RF and RF-related products shall be determined in accordance with the policies,
practices and procedures employed by SSET in the providing of warranty for the
products manufactured and delivered to customers of SSE Technologies Inc. and,
in respect to modems, the warranty expense shall be determined in accordance
with the policies, practices and procedures employed by Seller prior to Closing.
Buyer shall not provide warranty service for a customer which Buyer expects will
result in a charge to Warranty Expense in excess of $50,000 (for the same
products to the same customer), without first giving 10 days prior written
notice to Seller. If within such 10-day period Seller gives written notice to
Buyer that the warranty claim is not within the Assumed Liabilities assumed by
Buyer under Section 2.04(c), Buyer need not provide such warranty service and
Seller shall fully indemnify Buyer for any loss or expense occasioned by Buyer's
declining to provide such warranty service.
7.04 ADJUSTMENT FOR INDEMNIFICATION. Any amount for which a party
------------------------------
shall become entitled to recover from another party, determined within the 12
month period following the Closing Date, arising from the Indemnification
provisions of Section 12, shall be considered an adjustment of the Purchase
Price and so reported for tax and accounting purposes in accordance with the
allocations provided in Section 9.05. The provisions of this Section 7.04 shall
not be construed to modify or amend the rights of the parties in respect to
Indemnification as provided in Section 12.
30
<PAGE>
7.05 CERTAIN EXPENSES OF SELLER'S AUDITORS. Upon Seller's delivery of
-------------------------------------
the financial statements required to be delivered under Section 9.02, Buyer
shall promptly reimburse Seller one-half of the expenses incurred by Seller for
payment to Seller's auditors for their services in connection with the financial
statements required to be provided under 9.02, other than for expenses
attributable to the Acquisition Date Balance Sheet, such reimbursement by Buyer
to Seller not, however, to exceed $20,000.
8. CONDITIONS TO CLOSING.
---------------------
8.01 CONDITIONS TO OBLIGATION OF THE BUYER AND SSET. The obligation
----------------------------------------------
of the Buyer and SSET to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) The representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of the
Closing Date;
(b) Seller and Shareholder shall have performed and complied
with all of their covenants hereunder in all material respects through the
Closing;
(c) Seller shall have procured third party consents for
assignment of the agreements scheduled in Section 4.12(b) in respect to each
agreement with the (*) notation "preclosing consent to assignment required";
(d) No action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent 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, and (iii) affect adversely the right of the
Buyer to own the Acquired Assets or to operate the former businesses of the
Seller;
(e) Seller shall have delivered to the Buyer a certificate to the
effect that each of the conditions specified above is satisfied in all respects;
(f) Buyer shall have received from counsel to the Seller an
opinion in form and substance reasonably acceptable to SSET addressed to the
Buyer and SSET, and dated as of the Closing Date;
(g) All actions to be taken by the Seller or Shareholder in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments,
31
<PAGE>
and other documents required to effect the transactions contemplated hereby will
be reasonably satisfactory in form and substance to the Buyer;
(h) (i) Seller's Auditors shall have delivered to Buyer a letter
addressed to Buyer and SSET setting forth that such Auditors will provide the
professional services necessary to permit compliance by Seller with the
provisions of Section 9.02 below; and (ii) none of the information contained in
the letter from Seller's Auditors in (i) shall disclose any matter unacceptable
to Buyer;
(i) Seller and Shareholder shall have executed and delivered to
Buyer a covenant and agreement not-to-compete in the form of Exhibit D attached
hereto; and
(j) Buyer and SSET may waive any conditions specified in the
foregoing provisions of this Section 8.01 if they execute a writing so stating
at or prior to the Closing.
8.02 CONDITIONS TO OBLIGATION OF THE SELLER AND SHAREHOLDER. The
------------------------------------------------------
obligation of the Seller and Shareholder to consummate the transactions to be
performed by them in connection with the Closing is subject to satisfaction of
the following conditions:
(a) The representations and warranties set forth in Section 5
above shall be true and correct in all material respects at and as of the
Closing Date;
(b) Buyer and SSET shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing;
(c) No action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement,
or (ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(d) Buyer shall have delivered to the Seller a certificate to
the effect that each of the conditions specified above is satisfied in all
respects;
(e) The Seller shall have received from counsel to the Buyer an
opinion in form and substance reasonably acceptable to Seller addressed to the
Seller and Shareholder, and dated as of the Closing Date;
32
<PAGE>
(f) All actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Seller;
(g) No material adverse change to the business or assets of
SSET; and
(h) Seller and Shareholder may waive any condition specified in
the preceding sections of this Section 8.02 if they execute a writing so stating
at or prior to the Closing.
9. POST-CLOSING COVENANTS.
----------------------
9.01 REGISTRATION RIGHTS IN RESPECT TO SSET SECURITIES. At Closing,
-------------------------------------------------
SSET and Seller and Shareholder shall enter into the Registration Rights
Agreement in respect to the SSET Securities in the form annexed hereto as
Exhibit B.
9.02 DELIVERY BY SELLER OF CERTAIN FINANCIAL STATEMENTS AND DOCUMENTS.
----------------------------------------------------------------
Not later than 45 days after the Effective Date Seller, at Seller's expense
(subject to partial reimbursement as provided in Section 7.05), shall cause to
be delivered to SSET such Financial Statements, documents, exhibits and consents
of or from Seller and Seller's Auditors as shall be necessary to permit SSET to
provide the information required by Item 7 of form 8-K under the Exchange Act
and Regulation S-X including (i) the financial statements of Seller for the
periods and prepared as required under Regulation S-X, (ii) such additional
information as shall be required to be provided by Seller or Seller's Auditors
to allow for the inclusion of Seller's financial information in the pro forma
financial information required pursuant to Article 11 of Regulation S-X, and
(iii) all required consents of Seller's Auditors.
9.03 FURTHER ASSURANCES.
------------------
(a) After the Closing, and for a period not to exceed 7 years,
Seller shall from time to time at Buyer's request and expense for any out-of-
pocket costs, including reasonable attorneys' fees, execute and deliver to Buyer
or cause to be executed and delivered to Buyer such other action as Buyer may
reasonably request so as more effectively to sell, assign and transfer to Buyer
title to and possession of the Acquired Assets as provided in this Agreement or
otherwise to consummate the transactions contemplated by this Agreement;
(b) After the Closing, and for a period not to exceed 7 years,
Buyer shall from time to time at Seller's request and expense for any out-of-
pocket costs, including reasonable
33
<PAGE>
attorneys' fees, execute and deliver to Seller such other instruments of
assumption as Seller may reasonably request so as more effectively to assume the
Assumed Liabilities or otherwise to consummate the transactions contemplated by
this Agreement; and
(c) After Closing Buyer shall promptly remit to Seller any and
all proceeds of the Reassigned Accounts Receivable referred to in Section 3.07
which may be received by Buyer.
9.04 BOOKS, RECORDS AND INFORMATION.
------------------------------
(a) Buyer agrees that all documents delivered to Buyer by Seller
pursuant to this Agreement shall be open for inspection by representatives of
Seller at any time during regular business hours for a period of 7 years (or for
such longer period as may be required by law or governmental regulation)
following the Closing and that Seller may during such period at its expense make
such copies thereof as Buyer may reasonably request. Seller agrees that all
documents and other tangible things that are retained by Seller pursuant to this
Agreement and that are related to the business or the Acquired Assets and the
Assumed Liabilities (including, without limitation, those books and records used
in connection with the preparation of Tax Returns, the Financial Statements, the
Closing Balance Sheet, the Acquisition Date Balance Sheet, and the financial
information to be provided pursuant to Section 9.02) shall be open for
inspection by representatives of Buyer at any time during regular business hours
for a period of 7 years (or for such longer period as may be required by law or
governmental regulation) following the Closing and that Buyer may during such
period as its expense make such copies thereof as it may reasonably request;
(b) Without limiting the generality of paragraph (a), neither
Buyer nor Seller shall destroy or give up possession of any item referred to in
paragraph (a) without first offering to the other the opportunity, at such
other's expense (but without any other payment), to obtain the same. Each party
shall promptly notify the other when it shall have no further need for such
other party to maintain any of the items referred to in paragraph (a) and
thereafter such other party shall be free to dispose of the same as it deems
fit;
(c) Each of Seller and Buyer shall use all reasonable efforts to
afford the other access to (i) in the case of Seller, employees of Seller who
remain employees of Seller following the Closing Date but are familiar with the
Acquired Assets or the business of Seller, and (ii) in the case of Buyer,
employees of Buyer who were previously employees of Seller, as such other shall
reasonably request for its proper corporate purposes, including, without
limitation, the defense of legal proceedings, the preparation and audit of Tax
Returns, and for the purposes provided in Section 10.04. Such access may include
interviews,
34
<PAGE>
assistance in the preparation of discovery requests (or responses thereto) and
appearance at depositions or legal proceedings. All out-of-pocket expenses
(including wage and salaries reasonably incurred by any party in connection with
this paragraph (c)) shall be paid or promptly reimbursed by the party requesting
such services;
(d) Buyer agrees to assume responsibility for preparing the Forms
W-2 and W-3 for the Buyer's employees who were formerly Seller's employees and
whom Buyer has retained. Buyer also agrees to include an explanation for the
difference between the amount shown on Form W-3 and the amount shown as having
been paid on the Forms 941 filed for calendar year 1996, as required in revenue
Procedure 84-77; and
(e) Buyer and Seller shall each maintain in confidence all
documents and other information not otherwise public which they may respectively
acquire as a consequence of the exercise of their respective rights pursuant to
this Section 9.04.
9.05 ALLOCATION OF PURCHASE PRICE; VALUE OF CONSIDERATION. SSET and
----------------------------------------------------
Seller have agreed that the consideration being paid by Buyer and SSET to Seller
is allocable as set forth on Schedule 9.05 and the Parties shall complete and
file an Internal Revenue Form 8594 in accordance with such allocation. Such
allocation shall not have any effect on the preparation of the Closing Balance
Sheet or the Acquisition Date Balance Sheet. The SSET Common Stock and Warrant
shall be valued by the Parties as set forth on Schedule 9.05.
9.06 GUARANTEES; POWERS; COLLECTION ACCOUNT AGREEMENT.
------------------------------------------------
(a) As of the Closing Date, Buyer shall indemnify Seller, in a
manner satisfactory to Seller in its reasonable discretion, against any claims,
liabilities or expenses incurred by Seller with respect to the performance by
Seller of its obligations under the guarantees, surety bonds and reimbursement
obligations listed on Schedule 9.06 (the "Seller Guarantees"). Buyer shall take
all actions necessary to replace the Seller Guarantees within 6 months after the
Closing Date and to ensure that Seller has no remaining obligations under such
Seller Guarantees after such time;
(b) As of the Closing Date, Seller will revoke, and shall hereby
be deemed to have revoked, all authorizations and powers of attorney of
employees of Seller to act on behalf of Seller or the business of Seller;
(c) For a period of thirty-two (32) days, Buyer may continue to
permit customers to remit payment to the lock box maintained with First
Interstate Bank, Phoenix, AZ. Seller shall instruct First Interstate Bank to
automatically remit
35
<PAGE>
lock box receipts to Buyer's account with First Interstate as follows: SSE
Datacom Acct. 0530-17444. Buyer shall cease using Seller's lock box on February
29, 1996.
10. PERFORMANCE ADJUSTMENT OF PURCHASE PRICE AND DISTRIBUTION.
---------------------------------------------------------
10.01 ADJUSTMENT SHARES AND GUARANTY FUND. The Parties agree that
-----------------------------------
shares of the Common Stock of SSET, and a sum of money which may become payable
by Buyer to Seller, shall be subject to the provisions of this Section 10, such
shares and money being the following:
(a) 100,000 shares of the Common Stock of SSET issued by SSET (on
behalf of Buyer, as part of the Purchase Price) to Seller, being the shares
represented by five certificates for 20,000 shares each, delivered at Closing
and described in Section 6.03(b) (the "Adjustment Shares"); and
(b) An amount of money which Buyer may become obligated to pay to
Seller (the "Guaranty Fund") computed in accordance with this subsection (b) and
distributable as provided in Section 10.03. The Guaranty Fund shall be the
amount, if any, by which the Market Price of a share of SSET Common Stock as of
the Closing is less than $10.00 per share times 100,000. At Closing, Seller and
Buyer shall jointly initial an agreed statement of the "Guaranty Fund" amount as
determined pursuant to this Section 10.01(b).
10.02 TWELVE MONTH PERFORMANCE. The Parties agree that the
------------------------
Adjustment Shares and the Guaranty Fund shall be distributed to Seller or Buyer
based upon the following:
(a) As used herein, "Gross Profit Margin" means the gross profit
margin achieved by Buyer during the Measuring Period (as hereinafter defined)
from the conduct by Buyer of Buyer's business in the Ordinary Course of Business
consistent with the accounting practices, procedures and operations employed by
Buyer, with the operations of Buyer conducted substantially the same as such
operations had been conducted by Seller during the 12 month period prior to
Closing, and with the product line of Seller as of the Closing and with such
gross profit margin determined in accordance with GAAP for a manufacturing
enterprise such as that conducted by Seller, to include all standard costs,
manufacturing overhead, all variances and other costs of sale. It is the intent
and agreement of the Parties that the determination of Gross Profit Margin
during the Measuring Period shall be computed in a manner which fairly
approximates the methods and procedures used by Seller in determining Seller's
Gross Profit Margin for the comparative 12 month period prior to Closing;
36
<PAGE>
(b) Measuring Period means the period commencing on the first
business day of the month in which the Closing Date occurred, and ending on the
last business day of the eleventh month following the month in which the Closing
occurred; and
(c) "Target Gross Margin" means the achieving by Buyer during the
Measuring Period of at least $4.463 million in Gross Profit Margin.
10.03 DISTRIBUTION OF ADJUSTMENT SHARES AND GUARANTY FUND.
---------------------------------------------------
(a) Not later than 60 days after the end of the Measuring Period
Buyer shall cause to be delivered to Seller Buyer's computation of the Gross
Profit Margin, together with a certificate from an executive officer of Seller
certifying that the determination of Gross Profit Margin has been made in
accordance with the provisions of Section 10.3, and setting forth in reasonable
detail the amounts supporting the computation of Gross Profit Margin (the
"Buyer's Report"). Upon receipt by Seller of Buyer's Report, Seller shall be
entitled to request and receive any information reasonably requested by Seller
to permit Seller to review Buyer's computation of the Gross Profit Margin, and
Seller shall have 30 days after receipt by Buyer of all information reasonably
requested of Seller in which Seller may set forth any of Seller's objections
(the "Seller's Notice") to Buyer's Report. If within 10 days of the receipt by
Buyer of Seller's Notice Buyer and Seller are unable to resolve any differences,
then the matter shall be submitted to the McLean, Virginia office of KPMG Peat
Marwick, L.L.P. (the "Review Auditors") and the Review Auditors will conduct a
review of all such information as they shall deem necessary with respect to the
subject matter of the dispute and shall make a determination of the Gross Profit
Margin, which determination shall be final, conclusive and binding on Seller and
Buyer. If the determination of the Gross Profit Margin by the Review Auditors
does not change the distribution of the Adjustment Shares and Guaranty Fund from
that which would have been distributed based on Buyer's Report, then the costs
and expenses of the Review Auditors shall be borne entirely by Seller. As a
condition to serving as Review Auditors, immediately prior to its appointment
KPMG Peat Marwick shall deliver to Seller a letter certifying that such auditors
have no prior or existing client relationship with SSET or its affiliates. If
the determination of Gross Profit Margin by the Review Auditors increases the
amount of Adjustment Shares to be delivered to Seller from that which would have
been delivered to Seller under Buyer's Report, then the entire cost of the
Review Auditors shall be borne by Buyer;
(b) Promptly following determination of the Gross Profit Margin
by (x) the agreement of Buyer and Seller following receipt by Seller of Buyer's
Report and a resolution of
37
<PAGE>
any dispute, or (y) delivery of the report of the Review Auditors, Buyer and
Seller shall cause the Adjustment Shares and the Guaranty Fund to be distributed
or retained, as the case may be, in accordance with the following:
(i) if the Gross Profit Margin during the Measuring Period is
equal to or greater than the Target Gross Margin, then all of the Adjustment
Shares shall be retained by Seller. If the Gross Profit Margin is less than the
Target Gross Margin, the number of the Adjustment Shares in Column II below
shall be retained by Seller as corresponds to the Gross Profit Margin set forth
in Column I:
<TABLE>
<CAPTION>
I. II.
Gross Profit Margin Number of Adjustment Shares
- ------------------- ---------------------------
<S> <C>
$4.463 million to $4.150 million 100,000 Shares
If less than 4.150 million but more
than 4.050 million 80,000 Shares
If less than 4.050 million but more
than 3.950 million 60,000 Shares
If less than 3.950 million but more
than 3.850 million 40,000 Shares
If less than 3.850 million but more
than 3.750 million 20,000 Shares
If less than 3.750 million 0 Shares
</TABLE>
(ii) if any Adjustment Shares are retained by Seller, then for
each Adjustment Share retained by Seller, Seller shall receive from Buyer the
amount, if any, by which the Market Price as of the date that is one year after
the Closing Date (the "First Anniversary") of a share of SSET Common Stock is
less than $10.00 per share. The maximum amount payable by Buyer under the
preceding sentence shall not, however, exceed the total amount of the Guaranty
Fund; and
(iii) any Adjustment Shares which Seller is not entitled to
retain under (i) and (ii) above shall be promptly surrendered by Seller to
Buyer, together with stock transfer power suitably endorsed by Seller to permit
transfer of such shares to Buyer; and any portion of the Guaranty Fund not
required to be paid by Buyer to Seller under (ii) above shall be retained by
Buyer.
38
<PAGE>
10.04 COVENANTS OF THE PARTIES.
-------------------------
(a) From the Closing Date through 30 days after termination of
the Measuring Period, Seller and Shareholder shall be entitled to receive and
shall receive from Buyer monthly and quarterly financial statements of Buyer and
shall be entitled to have reasonable access to senior management of Buyer, for
the purposes of being reasonably informed as to any aspect of the business of
Buyer that will impact Buyer's Gross Profit Margin.
(b) Not earlier than 30 days prior to the last business day of
the month in which the Measuring Period terminates, as provided in Section
10.2(b), Buyer shall cause a physical inventory of Buyer's inventories to be
taken, all such inventories to be taken and valued by application of the same
procedures provided in Section 7.01. Buyer shall give Seller not less than 10
days prior written notice of the dates for the taking of such inventories, and
Seller shall be entitled to provide representatives of Seller to participate in
and observe the taking of the physical inventory.
11. EMPLOYMENT AND EMPLOYEE BENEFITS.
--------------------------------
11.01 OFFER OF EMPLOYMENT. Except as otherwise set forth in Schedule
-------------------
11.01, Buyer shall offer, on terms and conditions determined by Buyer,
employment to the employees of the Seller (the "Employees"), which terms and
conditions will include, among other things, the requirement that certain of
such persons will execute in connection with such employment the confidentiality
and nondisclosure agreement customarily used by SSET for its employees. Buyer's
employment of any such employees who accept such offer will commence at the
Closing Date.
11.02 ALLOCATION OF EMPLOYEE BENEFIT RESPONSIBILITIES.
-----------------------------------------------
(a) Except as otherwise provided in this Section 11, (i) Seller
shall pay, discharge and be responsible for payment of any and all medical and
dental insurance benefits (including any such benefits provided under any
Employee Benefit Plan) arising out of or relating to the employment of any
employees of Seller prior to or on the Closing Date other than any accrued
employee compensation and benefits reflected on the Closing Balance Sheet (or
the Acquisition Date Balance Sheet); and (ii) Buyer shall pay, discharge and be
responsible for all compensation and benefits (in accordance with Buyer's
benefit plans), including holiday pay for January 1, 1996, arising out of or
relating to the employment of any Employees by Buyer after the Closing Date and
any accrued employee compensation and benefits reflected on the Closing Balance
Sheet or, if applicable, Acquisition Date Balance Sheet;
39
<PAGE>
(b) In furtherance of the foregoing, (i) Seller shall pay,
discharge and be responsible for any and all claims incurred on or prior to the
Closing Date by any employees of the Seller and their dependents under its
medical and dental coverage plans, programs, policies and arrangements, and (ii)
Buyer shall be responsible for claims incurred by the Employees and their
dependents under Buyer's benefit plans after the Closing Date. For purposes of
this paragraph (b), a medical or dental claim shall be deemed to be incurred
when the services or supplies relating to the event that is the subject of the
claim were performed or provided, except in the case of injuries, in which case
the claim shall be deemed to be incurred at the time of the injury;
(c) Buyer agrees to administer COBRA requirements for terminated
employees of Seller;
(d) Seller agrees to perform all obligations required under Part
6 of Subtitle E of Title I of ERISA and Section 4980B of the Code with respect
to each "group health plan" (as defined in the Code and ERISA) with respect to
events occurring on or before the Closing Date; and
(e) Buyer shall credit, for purposes of vesting and eligibility
to participate under Buyer's 401K plan, all service of the transferred employee
with the Seller.
11.03 SEVERANCE PAYMENT OBLIGATION.
-----------------------------
(a) Seller shall be liable for any severance pay to which any
employee or former employee of Seller becomes entitled or claims to be entitled
as a result of (i) events occurring on or prior to the Closing Date, (ii) the
consummation of the transaction contemplated by this Agreement, (iii) a failure
of Buyer to offer employment to the excluded employee listed on Schedule 11.01,
or (iv) a rejection by such employee of Buyer's offer of employment for whatever
reason. Buyer shall incur as of and after the Closing Date any liabilities,
responsibilities and obligations for severance, termination indemnity, salary
continuation or other payments, liabilities or benefits relating to any employee
of Buyer arising after the Closing Date; and
(b) So long as Buyer complies with Section 11.01, Seller shall
not take, and represents that to the best of its Knowledge it has not taken, any
action to authorize the payment of any severance or termination benefits to any
Employee of Seller as a result of Buyer's acquisition of the business.
11.04 WORKERS' COMPENSATION. Seller shall be liable, to the extent
---------------------
provided by law, with respect to any injuries, illnesses or other condition
arising out of and in the course of employment of employees of Seller on or
prior to the Closing Date, for any workers' or workmens' compensation and for
any damages
40
<PAGE>
payable as a result of any related civil suits or proceedings, except to the
extent of any accrual on the Acquisition Date Balance Sheet as to which Buyer
shall be liable to the extent of such accrual. Buyer shall be liable for all
such workers' or workmens' compensation and damages payable in respect to
injuries, illnesses or other conditions arising out of and in the course of
employment by Buyer after the Closing Date (including the aggravation of any
injuries, illnesses or other conditions attributable (in whole or in part) to
events occurring prior to the Closing).
11.05 EMPLOYEE INFORMATION. Subject to any applicable legal
--------------------
restrictions, Seller and Buyer shall provide each other, in a timely manner,
with any information which the other may reasonably request with respect to any
employee, his employment with and compensation from Seller or Buyer or rights or
benefits under any Employee Benefit Plan or policy of seller or any employee
benefit plan of Buyer.
11.06 SELLER'S OBLIGATIONS UNDER RETIREMENT PLANS. Seller shall take
-------------------------------------------
such steps as are necessary to cause all Employee Pension Benefit Plans to
provide that the employees of Seller shall be fully vested as of the Closing
Date in the benefits accrued by the employees under such plans as of the Closing
Date.
12. INDEMNIFICATION.
---------------
12.01 INDEMNIFICATION BY SELLER AND SHAREHOLDER.
-----------------------------------------
(a) From and after the Closing, but subject to the conditions
and limitations set forth in this Agreement, Seller and Shareholder, jointly and
severally, shall defend, indemnify and save SSET and Buyer, jointly and
severally, and their directors, officers, employees and other affiliates
(collectively, the "Buyer Group") harmless from and against any and all claims,
actions, suits, demands, assessments, judgments, damages, losses, costs or
expenses (including, without limitation, fines, penalties, punitive damages and
attorneys' fees) (collectively, "Damages"), whether or not the result of any
third party claim, actually incurred or suffered by the Buyer Group resulting
from or arising out of any of the following:
(i) any breach of or inaccuracy in any representation or
warranty of Seller or Shareholder that is contained in Section 4 of this
Agreement;
(ii) any breach of failure to perform any covenant or
agreement of Seller or Shareholder that is contained in this Agreement;
(iii) any loss or expense which Buyer incurs or would incur,
if not indemnified by Seller, as the result of the assertion of any claim by any
Person for any matter or event
41
<PAGE>
that occurred arising prior to the Closing Date which was not included as a
Liability in the Acquisition Date Balance Sheet, where the payment of such claim
would have resulted in a reduction of the Purchase Price had the amount of such
claim been included in the Acquisition Date Balance Sheet;
(iv) the assertion of any claim against Buyer in respect to
any Liability of Seller or arising from the conduct of Seller's business prior
to the Closing Date which was not both (a) specifically disclosed by Seller to
Buyer in this Agreement and the schedules hereto, and (b) assumed by Buyer as an
Assumed Liability and included as a Liability in the Acquisition Date Balance
Sheet including, by way of example and not by limitation, any liabilities
arising out of, relating to, in the nature of, or caused by any breach of
contract, breach of warranty, tort, infringement, filing of Tax Returns and
payment of Taxes, or violation of law;
(v) the failure or breach by Fairchild or Seller of any of
their obligations or duties under the Premises Lease (including the guaranty
thereof by Fairchild), or any of their obligations and duties under the
Sublease;
(vi) any liabilities or loss sustained by Buyer as a result
of any of the properties and equipment used in the business of Seller prior to
the Closing Date, failing to have been free of asbestos, PCBs, methylene
chloride, trichloroethylene, transdichloroethylene, dioxins, dibenzofurans, and
Extremely Hazardous Substances;
(vii) any Liability for the payment of any commissions or
other remuneration, or any liability to refund any monies to any person in
connection with any revenues received by Seller prior to Closing, unless
reflected, and then to the extent so reflected, on the Acquisition Date Balance
Sheet;
(viii) any Liability arising from any of the matters
disclosed in Schedule 4.15, except to the extent of reserves established for any
such matter or matters or the Acquisition Date Balance Sheet; or
(ix) any of the Excluded Liabilities and Retained Assets;
and
(b) Notwithstanding the foregoing, there shall be no liability to
the Seller Group with respect to damages relating to clauses (i) through (vi) of
the preceding sentence until, and then only to the extent that, the aggregate
amount of Damages suffered by the Buyer Group relating to such clauses (i)
through (vi) exceeds $50,000, plus the "Unused Reserves" (as hereafter defined).
Further, Seller's and Shareholder's joint Liability for Damages relating to such
clauses (i) through (viii) shall in no
42
<PAGE>
event exceed the Purchase Price, as adjusted. Seller acknowledges and agrees
that in the event any Damages suffered by Buyer relate both to an Excluded
Liability and a representation, warranty, covenant or agreement of Seller, the
foregoing dollar limitation shall not apply to the portion of such Damages which
relates solely to such Excluded Liability, and Seller shall be required to
indemnify Buyer for the entire amount of the Damages which relate to such
Excluded Liability.
(c) As used in subsection (b) above, "Unused Reserves" means the
aggregate amount of the Warranty Reserve and the reserves for doubtful accounts,
as reflected on the Acquisition Date Balance Sheet, less the amount of such
reserves which have been used or applied in accordance with the provisions of
Sections 7.02 and 7.03.
12.02 INDEMNIFICATION BY BUYER. From and after the Closing, but
------------------------
subject to the conditions and limitations set forth in this Agreement, Buyer and
SSET, jointly and severally, shall defend, indemnify and save Seller and
Shareholder and their directors, officers, employees and other affiliates
(collectively, the "Seller Group") harmless from and against any and all
Damages, whether or not the result of any third party claim, actually incurred
or suffered by the Seller Group resulting from or arising out of (a) any
inaccuracy in or breach of any representation or warranty of Buyer or SSET that
is contained in this Agreement, (b) any breach or failure to perform any
covenant or other agreement of Buyer or SSET that is contained in this
Agreement, or (c) any of the Assumed Liabilities. Notwithstanding the
foregoing, there shall be no Liability to the Seller Group with respect to
Damages relating to clauses (a) or (b) of the preceding sentence until, and then
only to the extent that, the aggregate amount of Damages suffered by the Seller
Group relating to such clauses (a) or (b) under this Agreement exceeds $50,000.
Further, Buyer and SSET's joint Liability for Damages shall not exceed the
Purchase Price, as adjusted. The Seller acknowledges and agrees that the
foregoing dollar limitation shall not apply to any Damages suffered by Seller
relating to the Assumed Liabilities, and Buyer shall be required to indemnify
the Seller Group for the entire amount of any Damages which relate solely to
such Assumed Liabilities.
12.03 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION.
-----------------------------------------------------------
The representations, warranties and indemnification made by Seller and Buyer in
this Agreement shall survive the Closing (regardless of any investigation made
at any time by either party) for a period of 24 months after the Closing Date
(except for any matter in respect to Taxes, which shall survive the Closing for
the respective Statute of Limitations period relating to such taxes plus, in
each case, 30 calendar days) and shall not be merged into any instrument
delivered in connection with this Agreement; provided, however, that in each
case any claim for indemnification based on a representation or warranty which
was
43
<PAGE>
made in writing prior to the date on which such representation or warranty which
is to terminate may continue and shall not be affected by such termination,
provided that such claim is asserted in accordance with this Section 12.
12.04 DEFENSE OF CLAIMS; PAYMENT.
-------------------------
(a) Promptly, but in any event not later than 30 calendar days,
after receipt by any member of the Buyer Group, on the one hand, or any member
of the Seller Group, on the other hand (in any such case, the "Beneficiary"), of
notice of any claim or potential claim or the commencement of any action by any
person that is not a party to this Agreement or a member of the Buyer Group or
the Seller Group (a "Third Party Claim"), which could give rise to a right to
indemnification pursuant to Section 12.01 or 12.02, the Beneficiary shall give
the party who may become obligated to provide indemnification hereunder (the
"Indemnitor") written notice describing the Third Party Claim in reasonable
detail;
(b) If the Indemnitor acknowledges in writing that it would be
required to indemnify the Beneficiary against a Third Party Claim which is the
subject of a notice provided pursuant to Section 12.04(a), then the Indemnitor
shall have the right, at its option, to participate in or, by giving written
notice to the Beneficiary, to elect to assume the defense of such Third Party
Claim, at the Indemnitor's own expense and by its own counsel (who shall be
reasonably satisfactory to the Beneficiary). If the Indemnitor shall undertake
to assume the defense of any Third Party Claim, it shall promptly notify the
Beneficiary of its intention to do so, and the Indemnitor shall not be liable
for any attorney's fees and expenses subsequently incurred by the Beneficiary in
connection with the defense thereof; provided, however, that the Indemnitor has
taken reasonable steps necessary to defend diligently such Third Party Claim.
If the Indemnitor fails to promptly assume the defense of the Third Party Claim
or if it fails to take reasonable steps to defend diligently such Third Party
Claim, the Beneficiary may assume its own defense, and the Indemnitor shall be
liable for all reasonable costs or expenses paid or incurred in connection
therewith. The Beneficiary shall cooperate fully with, and provide appropriate
documentation as reasonably requested by the Indemnitor and its counsel in the
compromise of, or defense against, any such Third Party Claim. In any event,
the Beneficiary shall have the right, at its own expense except as otherwise
provided in this Section 12.04, to participate in the defense of such Third
Party Claim;
(c) The Beneficiary may at any time notify the Indemnitor of its
intention to settle or compromise any Third Party Claim which is the subject of
notice provided pursuant to Section 12.04(a), but shall not settle or compromise
such Third Party Claim without the consent of the Indemnitor. Any settlement or
44
<PAGE>
compromise of any Third Party Claim in accordance with the preceding sentence,
or any final judgment or decree entered on or in any Third Party Claim which the
Indemnitor did not assume the defense of in accordance herewith, shall be deemed
to have been consented to by, and shall be binding upon, the Indemnitor as fully
as if the Indemnitor had assumed the defense thereof and a final judgment or
decree had been entered in such Third Party Claim, or with regard to such Third
Party Claim, by a court of competent jurisdiction for the amount of such
settlement, compromise, judgment or decree. If the Beneficiary adjusts, settles
or compromises any Third Party Claim without the prior written consent of the
Indemnitor, the Beneficiary shall thereby waive any right to indemnity therefor
by the Indemnitor;
(d) Any claim by a Beneficiary on account of damages that does
not result from Third Party Claim (a "Direct Claim") shall be asserted by giving
the Indemnitor reasonably prompt written notice thereof, but in any event not
later than 30 calendar days after the Beneficiary becomes aware of such Direct
Claim. The remedies available to the Beneficiary for any Direct Claim shall
remain subject to the applicable terms and provision of this Section (including,
without limitation, Section 12.03); and
(e) A failure to give timely notice or to include any specified
information in any notice as provided in Section 12.04(a), (b) or (d) or
12.05(b) will not affect the rights or obligations of any party hereunder except
and only to the extent that (i) as a result of such failure, any party which was
entitled to receive such notice was deprived of its right to recover any payment
under its applicable insurance coverage or was otherwise damaged as a result of
such failure, or (ii) such notice was not given within the time period specified
in Section 12.03.
12.05 DIRECT CLAIMS. Notwithstanding any other provisions of this Section
-------------
12, if:
(a) a Beneficiary suffers or may suffer Damages of the type for
which it is entitled to indemnification under the provisions of Sections 12.01
or 12.02 (as applicable), subject to the limitation of damages set forth in
Sections 12.01(b) and 12.02; and
(b) the Beneficiary gives written notice of such claim to the
Indemnitor, which notice must be given promptly after Beneficiary has knowledge
of such claim, and in any event within the time periods specified in Section
12.03 and which notice must include the assertion by the Beneficiary that it is
entitled to indemnification and a statement of the nature of the claim and the
amount of Damages being asserted by the Beneficiary; and
(c) such matter is not resolved by application of the
provisions of Section 12.04, and the
45
<PAGE>
Beneficiary and the Indemnitor are unable to resolve such claim within a period
of sixty (60) days, then, within the time periods specified in Section 12.03 or
within one hundred twenty (120) days after the Beneficiary notified the
Indemnitor in writing of such claim (whichever period is longer), the
Beneficiary may initiate an action to recover said Damages. In any action
commenced pursuant to this Section 12.05, the prevailing party shall be entitled
to recover reasonable attorney's fees and expenses and interest from the date of
loss as determined by the court, with interest at the Applicable Rate .
12.06 LIMITATIONS ON INDEMNIFICATION.
------------------------------
(a) For all purposes of this Section 12, the amount of Damages,
and the amount payable by an Indemnitor to a Beneficiary with respect thereto,
shall be reduced to the extent of any insurance proceeds received or receivable
by the Beneficiary with respect to such Damages. If the Beneficiary receives any
such insurance proceeds after the Indemnitor shall have made any payment to the
Beneficiary with respect to such Damages, the Beneficiary shall promptly return
such payment to the Indemnitor to the extent of such insurance proceeds
received. A Beneficiary shall use reasonable efforts to timely file claims for
insurance and receive insurance proceeds with respect to any Damages sustained
by such Beneficiary; and
(b) Upon making any payment pursuant to Sections 12.01 or 12.02,
the Indemnitor shall, to the extent of such payment, be subrogated to all rights
of the Beneficiary against any third party that is not an affiliate of the
Beneficiary against any third party that is not an affiliate of the beneficiary
in respect to the Damages to which the payment relates; provided, however, that
(i) the Indemnitor shall then be in material compliance with its obligations
under this Agreement in respect of such Damages, and (ii) until the Beneficiary
recovers full payment of its Damages, any and all claims of the Indemnitor
against any such third party on account of such payment will be subrogated and
subordinated in right of payment to the Beneficiary's rights against such third
party. Without limiting the generality of any other provision hereof, each such
Beneficiary and Indemnitor shall duly execute upon request all instruments
reasonably necessary to evidence and perfect the above-described subrogation and
subordination rights.
13. TERMINATION; REMEDY FOR BREACH.
------------------------------
13.01 TERMINATION OF AGREEMENT. Certain of the Parties may terminate
------------------------
this Agreement as provided below:
(a) SSET and Fairchild may terminate this Agreement, effective as
to all Parties, by mutual written consent at any time prior to the Closing;
46
<PAGE>
(b) SSET may terminate this Agreement by giving written notice to
the Seller at any time prior to January 20, 1996, if Buyer is not reasonably
satisfied with the results of its continuing business, legal, and accounting due
diligence regarding the Seller;
(c) Buyer may terminate this Agreement by giving written notice
to the Seller at any time prior to the Closing (i) in the event the Seller has
breached any material representation, warranty, or covenant contained in this
Agreement in any material respect, the Buyer has notified the Seller of the
breach, and the breach has continued without cure for a period of 10 days after
the notice of breach, or (ii) if the Closing shall not have occurred on or
before January 20, 1996 by reason of the failure of any condition precedent
under Section 8.01 (a) and (b) hereof (unless the failure results primarily from
the Buyer itself breaching any representation, warranty, or covenant contained
in this Agreement); and
(d) Seller may terminate this Agreement by giving written notice
to the Buyer at any time prior to the Closing (i) in the event the Buyer has
breached any material representation, warranty, or covenant contained in this
Agreement in any material respect, the Seller has notified the Buyer of the
breach, and the breach has continued without cure for a period of 10 days after
the notice of breach, or (ii) if the Closing shall not have occurred on or
before January 30, 1996 by reason of the failure of any condition precedent
under Section 8.02 (a) and (b) hereof (unless the failure results primarily from
the Seller itself breaching any representation, warranty, or covenant contained
in this Agreement).
13.02 EFFECT OF TERMINATION.
---------------------
(a) If this Agreement is terminated pursuant to Section 13.01 (a)
or (b), all rights and obligations of the Parties hereunder shall terminate
without any Liability of any Party to any other Party;
(b) With respect to any breach set forth in Section 13.01 (c)
or (d) above, each of the Parties acknowledges and agrees that the other Parties
would be irreparably damaged in the event any of the provisions of this
Agreement are not performed in accordance with their terms or otherwise are
breached. Accordingly, the nonbreaching Parties, in addition to any other remedy
to which they may be entitled, shall be shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof; or
(c) If this Agreement is terminated pursuant to Section 13.01 (c)
or (d) above, the nonbreaching Parties, in
47
<PAGE>
lieu of seeking the remedies provided for in subsection (b) above, may bring an
action against the defaulting parties to recover such damages as may be proven,
and the prevailing party shall be entitled to recover reasonable attorneys' fees
and interest at the Applicable Rate.
14. MISCELLANEOUS.
-------------
14.01 NOTICES. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing and shall be deemed to have been
given upon receipt if given by hand, or three business days after being mailed
by registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
If to SSET: SSE Telecom, Inc.
Attention: Daniel E. Moore, Executive
Vice President
8230 Leesburg Pike, Suite 710
Vienna, Virginia 22182
If to Buyer: SSE Datacom, Inc.
c/o SSE Telecom, Inc.
Attention: Daniel E. Moore, Executive
Vice President
8230 Leesburg Pike, Suite 710
Vienna, Virginia 22182
For notices to SSET or Buyer, copy to:
G. Donald Markle, Esquire
Hall, Markle, Sickels & Fudala, P.C.
4010 University Drive, Suite 200
Fairfax, Virginia 22030
If to Fairchild: The Fairchild Corporation
Attention: President
300 West Service Road
Chantilly, Virginia 22021
If to Seller: Fairchild Data Corporation
c/o The Fairchild Corporation
Attention: President
300 West Service Road
Chantilly, Virginia 22021
If to VSI: VSI Corporation
c/o The Fairchild Corporation
Attention: President
300 West Service Road
Chantilly, Virginia 22021
48
<PAGE>
For notices to Fairchild, Seller or VSI, copy to:
David I. Faust, Esquire
Faust, Rabbach, Stanger & Oppenheim
488 Madison Avenue
New York, New York 10022
14.02 HEADINGS; CONSTRUCTION. The section headings contained in
----------------------
this Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement. Terms which are defined in
this Agreement shall have the same meanings when used in the Exhibits and
Schedules to this Agreement. Unless the context of this Agreement otherwise
clearly requires, all pronouns and variations thereof shall be deemed to refer
to the masculine, feminine or neutral, singular or plural, as the identity of
the Person, Persons, Party or Parties may require.
14.03 BULK SALES. The Parties waive compliance with the bulk sale
----------
law of any state which may be applicable to the transactions contemplated by
this Agreement.
14.04 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
---------------------------------------
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
14.05 ENTIRE AGREEMENT. This Agreement and the agreements, documents
----------------
and instruments to be delivered under it constitute the entire agreement between
the Parties and supersedes any prior understandings, agreements, or
representations by or between the Parties, written or oral, to the extent they
related in any way to the subject matter hereof, including without limitation
any letter of intent which the Parties may have executed.
14.06 GOVERNING LAW. This Agreement shall be governed by and
-------------
construed in accordance with the domestic laws of the Commonwealth of Virginia
without giving effect to any choice or conflicts of law provision or rule
(whether of the State of or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the Commonwealth of
Virginia.
14.07 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall
---------------------------------------
issue any press release or make any public announcement relating to the subject
matter of this Agreement (prior to the Closing) without the prior written
approval of the other Parties; provided, however, that any Party may make any
public disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the disclosing Party will use its best efforts to advise the other Parties
prior to making the disclosure.
49
<PAGE>
14.08 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
-------------------------
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties; provided, however, that (except for the Seller's
obligation to transfer title to the Acquired Assets and Assumed Liabilities)
each of Buyer and Seller may (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates, and (ii) designate one or more of
its Affiliates to perform its obligations hereunder (in any or all of which
cases Buyer and Seller shall nonetheless shall remain responsible for the
performance of all of their obligations hereunder). Notwithstanding the
foregoing, nothing herein shall be deemed to limit Seller's rights to assign all
rights hereunder as collateral for the benefit of Citicorp North America, Inc.
(as Administrative Agent) ("Senior Lenders") under the bank credit agreements
between Fairchild and its affiliates and their Senior Lenders.
14.09 AMENDMENTS AND WAIVERS. No amendment of any provision of
----------------------
this Agreement shall be valid unless the same shall be in writing and signed by
the Parties hereto. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
14.10 SEVERABILITY. Any term or provision of this Agreement that
------------
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
14.11 NO THIRD PARTY BENEFICIARIES. This Agreement shall not
----------------------------
confer any rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns.
14.12 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.
14.3 APPORTIONMENTS. Local taxes and utilities shall be
--------------
prorated, adjusted and apportioned as of the Effective Date, in the manner
hereinafter set forth:
(a) Taxes: All real estate taxes, personal property taxes, sales
and use taxes, payroll taxes, unemployment compensation and other local taxes
(other than income taxes) shall
50
<PAGE>
be prorated as of the Effective Date, on the basis of current tax bills to be
presented by Seller at Closing. In the event that current tax bills are not
available at Closing, prorations shall be made post-Closing at such time as tax
bills are available. Buyer shall continue to file tax returns for such taxes
following Closing, in the same manner as such returns were filed by Seller prior
to Closing. Seller shall establish reserves for such taxes in the Closing Date
Balance Sheet. To the extent such reserves are inadequate to meet such tax
obligations when returns are filed, Seller shall immediately pay such additional
amounts for filing, and to the extent such reserves exceed such tax obligations,
Buyer shall return such excess amount to Seller.
(b) Utilities: Seller shall notify all utilities servicing the
Leased Premises of the change of ownership and direct that all future billings
for services rendered on or after the Effective Date be made to Buyer with no
interruption of services. Any charges for utilities which are paid on a monthly
basis shall be prorated as of the Effective Date. In the event the actual
amounts for such charges are not known as of the Closing Date, such charges
shall be prorated post-Closing once the actual charges become known.
[SIGNATURE PAGE TO FOLLOW]
51
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
SSE TELECOM, INC.
By: /s/ Daniel E. Moore
--------------------------------------
Title: Executive Vice President
----------------------------------
SSE DATACOM, INC.
By: /s/ Daniel E. Moore
---------------------------------------
Title: President
----------------------------------
THE FAIRCHILD CORPORATION
By: /s/ Mike T. Tully
--------------------------------------
Title: Vice President
----------------------------------
FAIRCHILD DATA CORPORATION
By: /s/ Donald E. Miller
---------------------------------------
Title: Vice President
----------------------------------
VSI CORPORATION
By: /s/ Mike T. Tully
--------------------------------------
Title: Vice President
----------------------------------
Signature Page to Asset Purchase Agreement
<PAGE>
EXHIBIT 4.6
-----------
WARRANT
<PAGE>
No. 96-001 Warrant to Purchase
-------------
January 28, 1996 50,000 Shares
- ------------------ -------------
Date of Issuance
PURCHASE WARRANT
FOR THE PURCHASE OF COMMON
SHARES OF THE PAR VALUE OF $.01 PER SHARE OF
SSE TELECOM, INC.
VOID AFTER 5:00 P.M., January 28, 1999 .
---------------------------
SSE Telecom, Inc., hereinafter called the "Corporation," a Delaware
corporation, hereby certifies that, for value received,
*** Fairchild Data Corporation ***
- -------------------------------------------------------------------------------
*** a Delaware corporation *** ,
- -------------------------------------------------------------------------------
or registered assigns, is entitled, subject to the conditions set forth herein,
and solely between 9:00 A.M., January 28, 1996 and 5:00 P.M.,
-------------------- --
January 28, 1999 , to purchase, in whole or in part, that
- ---------------------------------
certain number of fully paid and nonassessable shares set forth above of Common
Shares, of the par value of $.01 per share, hereinafter called the Common Shares
of the Corporation (subject to adjustment as set forth below), from the
Corporation at a purchase price of $11.09 per share (subject to
-------------
adjustment as set forth below), and to receive a certificate or certificates for
the Common Shares so purchased, upon presentment and surrender to the
Corporation of this Warrant, with the form of subscription duly executed and
accompanied by payment of the purchase price for each share purchased either in
cash or by certified or bank cashier's check payable to the order of the
Corporation.
NEITHER THIS WARRANT NOR THE COMMON SHARES ISSUABLE ON EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE FEDERAL SECURITIES LAWS OR THE
SECURITIES LAWS OF ANY STATE, AND NEITHER THIS WARRANT NOR ANY COMMON
SHARES ACQUIRED ON EXERCISE OF THIS WARRANT, MAY BE TRANSFERRED,
HYPOTHECATED, SOLD OR ASSIGNED, EXCEPT IN COMPLIANCE WITH THE PROVISIONS OF
THE SECURITIES ACT OF 1933, AND ANY APPLICABLE STATE SECURITIES LAWS.
Page 1 of 5
<PAGE>
The purchase rights represented by this Warrant are exercisable at the
option of the registered owner hereof, in whole or in part, at any time within
the stated period of validity, provided, however, that such purchase rights
shall not be exercisable with respect to a fraction of a share of Common Shares.
Exercise of the Warrant, in whole or in part, shall be by means of the
surrender of this Warrant Certificate, duly endorsed (unless endorsement is
waived by the Corporation) at the office of the Corporation, and upon payment to
it by certified or official bank check or checks of the purchase price of the
Common Shares purchased. The Corporation agrees that the Common Shares so
purchased shall be deemed to be issued to the registered holder hereof on the
date on which this Warrant Certificate shall have been surrendered and payment
made for such shares as aforesaid. The certificates for such shares shall be
delivered to the registered holder hereof within a reasonable time, not
exceeding five (5) business days, after Warrants evidenced hereby shall have
been so exercised.
Instead of any fractional Common Shares which would otherwise be issuable
upon exercise of the Warrants evidenced hereby (or portion hereof), the
Corporation shall pay a cash adjustment in respect of such fractional Common
Share in an amount equal to the same fraction of the then current fair value of
a Common Share, as determined in good faith by the Board of Directors of the
Corporation. In case of the purchase of less than all the shares purchasable
under this Warrant, the Corporation shall (without charge) cancel this Warrant
upon the surrender hereof and shall execute and deliver a new Warrant of like
tenor and date for the balance of the shares purchasable hereunder.
The Corporation agrees at all times to reserve or hold available a
sufficient number of Common Shares solely to cover the number of shares issuable
upon the exercise of this Warrant. The Corporation shall not take any action
which results in any adjustment of the exercise price hereunder if the total
number of Common Shares issued and issuable after such action upon exercise of
the Warrants evidenced hereby would exceed the total number of Common Shares
authorized by the Certificate of Incorporation of the Corporation.
This Warrant shall not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Corporation, or to any other rights
whatsoever except the rights herein expressed and such as are set forth, and no
dividends shall be payable or accrue in respect of this Warrant or the interest
represented hereby or the shares purchasable hereunder until or unless, and
except to the extent that, this Warrant shall be exercised.
This Warrant is exchangeable upon the surrender hereof by the registered
owner to the Corporation for new Warrants of like tenor and date representing in
the aggregate the right to purchase the
Page 2 of 5
<PAGE>
number of shares purchasable hereunder, each of such new Warrants to represent
the right to purchase such number of shares as shall be designated by the
registered owner at the time of such surrender.
The issuance of this Warrant is subject to the following further terms and
conditions:
1. If at any time or from time to time the Corporation shall by
subdivision, consolidation, reclassification of shares, dividend payable in
Common Shares, stock split, or otherwise, change as a whole the outstanding
Common Shares into a different number or class of shares, the number and class
of shares so changed shall, for the purposes of this Warrant and the terms and
conditions hereof, replace the shares outstanding immediately prior to such
change, and the Warrant purchase price in effect, and the number of shares
purchasable under this Purchase Warrant, immediately prior to the date upon
which such change shall become effective, shall be proportionately adjusted.
2. If at any time while this Warrant is outstanding the Corporation shall
consolidate with or merge into another corporation, the holder hereof shall
thereafter be entitled upon exercise hereof to purchase, with respect to each
share of Common Shares purchasable hereunder immediately prior to the date upon
which such consolidation or merger shall become effective, the securities or
property to which a holder of one share of Common Shares would have been
entitled upon such consolidation or merger, without any change in, or payment in
addition to, the Warrant purchase price in effect immediately prior to such
merger or consolidation, and the Corporation shall take such steps in connection
with such consolidation or merger as may be necessary to assure that all of the
provisions of this Warrant shall thereafter be applicable, as nearly as
reasonably may be, in relation to any securities or property thereafter
deliverable upon the exercise of this Warrant. The Corporation shall not effect
any such consolidation or merger unless prior to the consummation thereof the
successor corporation (if other than the Corporation) resulting therefrom shall
assume by written instrument executed and mailed to the registered holder hereof
at the address of such holder shown on the books of the Corporation, the
obligation to deliver to such holder such securities or property as in
accordance with the foregoing provisions such holder shall be entitled to
purchase. A sale of all or substantially all of the assets of the Corporation
for a consideration (apart from the assumption of obligations) consisting
primarily of securities shall be deemed a consolidation or merger for the
forgoing purposes. The foregoing provisions of this Section 2 shall similarly
apply to successive reorganizations, reclassifications, mergers, consolidations
or disposition of assets.
Page 3 of 5
<PAGE>
3. Upon the happening of any event requiring an adjustment of the Warrant
purchase price hereunder or the number of Common Shares purchasable hereunder,
the Corporation shall forthwith give written notice thereof to the registered
holder of this Warrant stating the adjusted Warrant purchase price and/or the
adjusted number of Common Shares purchasable upon the exercise hereof resulting
from such event and setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based. The Board of Directors of
the Corporation, in good faith, shall determine the computation made hereunder.
In case any voluntary or involuntary dissolution, liquidation, or winding up of
the Corporation shall at any time be proposed, the Corporation shall give at
least 30 days' prior written notice thereof to the registered holder hereof
stating the date on which such event is to take place and the date (which shall
be at least 30 days after the giving of such notice) as of which the holders of
Common Shares of record shall be entitled to exchange their Common Shares for
securities or other property deliverable upon such dissolution, liquidation, or
winding up (on which date, in the event such dissolution, liquidation, or
winding up shall actually take place, this Warrant and all rights with respect
hereto shall terminate). Notices pursuant to this paragraph shall be given by
first class mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder appearing in the records of the
Corporation.
4. For the purposes of the foregoing paragraphs (1) through (3), the term
"Common Shares" shall include the aggregate number of shares that the
Corporation, by its Certificate of Incorporation, as from time to time amended,
is authorized to issue, which are not limited to a fixed sum or percentage of
the par value in respect of the rights of the holders thereof to participate in
dividends or in distribution of assets upon the voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation.
5. Upon issuance, the Common Shares issuable hereunder shall be subject
to the registration rights set forth in the Registration Rights Agreement dated
this date between Fairchild Data Corporation and the Corporation, to the same
extent as if the provisions of said Agreement were reproduced in their entirety
in this Warrant Certificate.
6. Upon receipt by the Corporation of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant Certificate, and (in case
of loss, theft or destruction) of indemnity reasonably satisfactory to the
Corporation, and upon surrender and cancellation if this Warrant Certificate, if
mutilated, the Corporation will make and deliver to the registered holder a new
Warrant Certificate, of like tenor, in lieu of this Warrant Certificate.
Page 4 of 5
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed
by the signatures of its duly authorized officers and the corporate seal
hereunto affixed.
Dated: January 28, 1996
----------------------
SSE TELECOM, INC.
By: /s/ Daniel E. Moore
---------------------------------
Executive Vice President
ATTEST:
[Corporate Seal]
/s/ G. Donald Markle
- ---------------------------------
Secretary
FORM OF SUBSCRIPTION
--------------------
The undersigned hereby irrevocably subscribes for __________ shares of your
Common Shares pursuant to and in accordance with the terms and conditions of
this Warrant, and herewith makes payment of
__________________________________________________________________
($____________________) therefor, and requests that a certificate for such
shares be issued in the name of the undersigned and be delivered to the
undersigned at the address stated below and, if such number of shares shall not
be all of the shares purchasable hereunder, that a new Warrant of like tenor for
the balance of the remaining shares purchasable hereunder be delivered to the
undersigned at the address stated below:
Dated:___________________
Signed:________________________________
Address:_______________________________
_______________________________
______________________________
Page 5 of 5
<PAGE>
EXHIBIT 10.22
-------------
SUBLEASE AGREEMENT
<PAGE>
SUBLEASE AGREEMENT
------------------
THIS AGREEMENT made this 28th day of January, 1996, by and between
FAIRCHILD DATA CORPORATION, a Delaware corporation, ("Sublessor"); SSE DATACOM,
INC., a Delaware corporation ("Sublessee"); THE FAIRCHILD CORPORATION, a
Delaware corporation ("Fairchild"); and SSE TELECOM, INC., a Delaware
corporation ("SSET");.
WHEREAS, pursuant to an Amended And Restated Lease Agreement dated August
2, 1985, by and between L.D. HANCOCK CO., as landlord ("Lessor") and Sublessor,
as tenant, as amended by Amendment Number 1 on September 28, 1987, and Amendment
Number 2 To Amended And Restated Lease Agreement dated September 1, 1993
(collectively, the "Prime Lease"), a copy of which is attached hereto as Exhibit
"A", Sublessor leased certain premises (the "Premises") more fully described in
the Prime Lease;
WHEREAS, Sublessee desires to sublease a portion of the Premises from
Sublessor (the "Subleased Premises");
WHEREAS, Sublessor and Sublessee desire to enter into this sublease
agreement defining the terms and conditions of such sublease, and defining the
rights, duties, and liabilities of the parties hereto (the "Sublease");
WHEREAS, Sublessor and Sublessee, among others, are parties to that certain
asset purchase agreement, pursuant to which, among other things, Sublessor
agreed to sell, and Sublessee agreed to purchase, certain of the assets of
Sublessor (the "Asset Purchase Agreement");
WHEREAS, Sublessor is an indirect wholly-owned subsidiary of Fairchild;
WHEREAS, it is a condition of the Sublessee's entering into this Sublease
that Fairchild guaranty the payment and performance of each and every obligation
or liability of Sublessor under the Prime Lease and this Sublease; and
WHEREAS, Sublessee is a wholly-owned subsidiary of SSET and it is a
condition of the Sublessor's entering into this Sublease that SSET guaranty the
payment and performance of each and every obligation or liability of Sublessee
under this Sublease;
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises herein contained and other good and valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. Subleased Premises. Subject to the terms of the Prime Lease,
-------------------
Sublessor subleases to Sublessee and Sublessee leases and hires from Sublessor
the Subleased Premises as being outlined in
<PAGE>
black on the annexed Exhibit "B". Sublessor represents that the Premises
consists of 126,000 square feet and the parties agree that the Subleased
Premises shall consist of 46,000 square feet, so that the Sublessee's
proportionate share of the Premises is 36.5% (hereinafter referred to as
Sublessee's "Pro Rata Share"). Sublessee acknowledges that Sublessor is leasing
the Premises pursuant to the Prime Lease, which is incorporated herein by
reference. Except as otherwise expressly provided herein, (a) as to the
Subleased Premises, this Sublease is subject to and made upon all the terms,
covenants and conditions of the Prime Lease, with the same force and effect as
if such terms, covenants and conditions were fully set forth herein, and (b) as
to the Subleased Premises, Sublessee hereby assumes and agrees to be bound by
the same responsibilities, rights, privileges and duties that Sublessor has to
and from Lessor.
2. Term. The term of this Sublease shall be for the period commencing on
-----
the "Sublease Commencement Date" (as defined herein), and ending on the last day
of the twenty-third month following the month in which the Sublease Commencement
Date occurred. The Sublease Commencement Date shall be the "Effective Date"
under the Asset Purchase Agreement.
3. Base Rent. Sublessee agrees to pay to Sublessor as rent for the
----------
Subleased Premises, without prior notice or demand, during the term of this
Sublease, the sum of One Hundred and Forty-Four Thousand and no/100 Dollars
($144,000.00), payable Twelve Thousand and no/100 Dollars ($12,000.00) per month
(the "Base Rent"). Sublessee shall pay each such monthly installment to
Sublessor on or before the first day of each calendar month. Should the term of
this Sublease Commencement Date be a day other than the first day of a calendar
month, then the rent for the month in which the Sublease Commencement Date
occurs shall be prorated, based on a thirty (30) day calendar month.
4. Sublessee's Pro Rata Share of Operating Expenses.
------------------------------------------------
(a) In addition to the Annual Base Rent provided for in Section 4
hereof, during the term of this Sublease, Sublessee shall reimburse Sublessor
Sublessee's Pro Rata Share of all taxes, insurance and other operating expenses
required to be paid and paid by Sublessor under the Prime Lease attributable to
the periods of Sublessee's occupancy of the Subleased Premises. Such amounts
shall be payable promptly following Sublessor's provision to Sublessee of
written notice (and supporting documentation) declaring such amounts to be due
and payable.
(b) The parties acknowledge that the Premises are not currently
separately metered for the Subleased Premises, for the exterior and the parking
lots of the Premises, or for any other areas separate from the Subleased
Premises. Therefore, the parties agree:
-2-
<PAGE>
(i) So long as no portion of the Premises is physically
occupied or used by anyone other than the Sublessee under this
Sublease, Sublessee shall pay for all utilities serving the
Premises, including the Subleased Premises. Sublessor and
Sublessee agree to negotiate in good faith to determine a
reasonable monetary amount to be paid by Sublessor to Sublessee
to reimburse Sublessee for the utility charges paid by Sublessee
relating to the portion of the Premises not occupied by
Sublessee; and
(ii) If at any time during the initial term or any Renewal
Term of this Sublease, any portion of the Premises is let or
occupied by someone other than Sublessee, Sublessor shall arrange
for the installation of a utility meter for the Subleased
Premises and Sublessor shall be responsible for the payment of
any deposits or similar charges required to be paid in connection
therewith. Sublessee shall be responsible for and shall pay when
due: (x) all costs and charges for utilities separately metered
for the Subleased Premises to the utilities providing such
service; and (y) Sublessee's Pro Rata Share of operating expenses
for the common areas of the Premises, pro rated and paid in
accordance with subparagraph (a) above.
(c) In the event that any tenants other than the Sublessee occupy
any part of the Premises, the total available parking spaces, which currently
number 430, will be allocated among all of the tenants, including Sublessee, pro
rata according to the total amount of square footage occupied by each tenant
relative to the total amount of square footage of the Premises which is occupied
by all tenants.
5. Sublessor Representations, Warranties and Covenants.
---------------------------------------------------
Sublessor covenants and agrees with Sublessee that at all times during the
term of this Sublease, Sublessor:
(i) Will pay all rent payable by Sublessor pursuant to the
Prime Lease and will perform all other obligations imposed on
Sublessor pursuant to the Prime Lease, including, but not limited
to, the obligations set forth in Section 10 of the Prime Lease;
(ii) Will not terminate the Prime Lease or take any other
action which would adversely affect Sublessee's use or occupancy
of the Subleased Premises; and
-3-
<PAGE>
(iii) Will not modify the Prime Lease without the prior written
consent of Sublessee and any modification made without such consent
shall be null and void and shall have no effect on the rights of
Sublessee under this Sublease.
6. Sublessee's Remedies. Sublessee shall have the right at any time,
---------------------
after thirty (30) days notice to Sublessor, at the expense of Sublessor, to take
any action required to be taken, but not timely taken or initiated, by the
Sublessor, which may be necessary to prevent a default by the Sublessor under
the terms of the Prime Lease. To the extent that Lessor fails or refuses to
perform its obligations thereunder with respect to the Subleased Premises,
Sublessee shall use its best efforts to cause Lessor to perform such
obligations.
7. Notice. Whenever under this Sublease or the Prime Lease, a provision
-------
is made for notice of any kind, it shall be deemed sufficient notice and service
thereof if such notice is delivered or mailed to Sublessor or Sublessee at the
following respective addresses:
Sublessor: Fairchild Data Corporation
c/o The Fairchild Corporation
Attention: General Counsel
300 West Service Road
Chantilly, Virginia 22021
Sublessee: SSE DataCom, Inc.
c/o SSE Telecom, Inc.
Attention: Daniel E. Moore, Executive
Vice President
8230 Leesburg Pike, Suite 710
Vienna, Virginia 22182
Fairchild: The Fairchild Corporation
Attention: General Counsel
300 West Service Road
Chantilly, Virginia 22021
SSET SSE Telecom, Inc.
Attention: Daniel E. Moore, Executive
Vice President
8230 Leesburg Pike, Suite 710
Vienna, Virginia 22182
Such mailing shall be by certified mail, return receipt requested. Address for
notice may be changed by notice in writing delivered hereunder.
-4-
<PAGE>
9. Quiet Enjoyment. So long as Sublessee pays all of the rent and
---------------
charges due hereunder and performs all of its other obligations hereunder,
Sublessee shall peaceably and quietly have, hold, and enjoy the Subleased
Premises free from any hindrance by Sublessor.
10. Guaranty of Fairchild.
---------------------
(a) Fairchild, for itself and its successors and assigns, absolutely
and unconditionally guarantees to Sublessee, its successors and assigns, the
prompt and full payment and performance of each and every other obligation or
liability, direct or contingent, of Sublessor under this Sublease, or under the
Prime Lease, and the performance and observance by Sublessor of all of the
terms, covenants and conditions contained in this Sublease on its part to be
performed or observed.
(b) In the event Sublessor fails to perform or observe any of the
other terms, covenants or conditions contained in this Sublease or in the Prime
Lease on its part to be performed or observed, Sublessee may proceed directly
against Fairchild, for the full amount due under this Sublease without being
required first to institute suit against Sublessor.
(c) The covenants and agreements contained in this Sublease shall be
binding upon Fairchild and its successors and assigns, and shall inure to the
benefit of Sublessee and its successors and assigns.
11. Guaranty of SSET.
----------------
(a) SSET, for itself and its successors and assigns, absolutely and
unconditionally guarantees to Sublessor, its successors and assigns, the prompt
and full payment and performance of each and every other obligation or
liability, direct or contingent, of Sublessee under this Sublease, and the
performance and observance by Sublessee of all of the terms, covenants and
conditions contained in this Sublease on its part to be performed or observed.
(b) In the event Sublessee fails to perform or observe any of the
other terms, covenants or conditions contained in this Sublease on its part to
be performed or observed, Sublessor may proceed directly against SSET, for the
full amount due under this Sublease without being required first to institute
suit against Sublessee.
(c) The covenants and agreements contained in this Sublease shall be
binding upon SSET and its successors and assigns, and shall inure to the benefit
of Sublessor and its successors and assigns.
-5-
<PAGE>
12. Assignment. Sublessee may, at any time, assign this Sublease or
----------
sublet the Subleased Premises to a joint venture, company, or other entity owned
and controlled, in whole or in part, by Sublessee, and which assumes all of the
rights, duties and obligations of Sublessee under this Sublease, provided,
however, that any such assignment shall not release Sublessee and SSET from
their respective obligations hereunder.
[SIGNATURE PAGE TO FOLLOW]
-6-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Sublease to be executed as
of the date set forth above.
SSE TELECOM, INC.
By: /s/ Daniel E. Moore
--------------------------------------
Title: Executive Vice President
----------------------------------
SSE DATACOM, INC.
By: /s/ Daniel E. Moore
---------------------------------------
Title: President
----------------------------------
THE FAIRCHILD CORPORATION
By: /s/ Mike T. Tully
--------------------------------------
Title: Vice President
----------------------------------
FAIRCHILD DATA CORPORATION
By: /s/ Donald E. Miller
--------------------------------------
Title: Vice President
----------------------------------
Signature page to Sublease Agreement
<PAGE>
EXHIBIT A TO SUBLEASE AGREEMENT
[Amended And Restated Lease Agreement dated August 2, 1985, by and between
L.D. Hancock Co. and Fairchild Data Corporation, Amendment Number 1 To
Amended And Restated Lease Agreement dated September 28, 1987 and Amendment
Number 2 To Amended And Restated Lease Agreement dated September 1, 1993]
<PAGE>
EXHIBIT B TO SUBLEASE AGREEMENT
[Outline of Subleased Premises]
<PAGE>
EXHIBIT 10.23
-------------
REGISTRATION AGREEMENT
<PAGE>
REGISTRATION AGREEMENT
----------------------
THIS AGREEMENT dated January 28, 1996, is between SSE TELECOM, INC., a
Delaware corporation (the "Company") and FAIRCHILD DATA CORPORATION, a Delaware
corporation ("Data").
The Company and Data are parties, together with others, to an
Asset Purchase Agreement of even date herewith (the "Asset Purchase Agreement").
Certain capitalized terms used herein shall have the meanings set forth in
Section 8 hereof. Capitalized terms used herein without definition have the
meaning given to them in the Asset Purchase Agreement.
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. DEMAND REGISTRATIONS.
--------------------
(a) REQUESTS FOR REGISTRATION. At any time during the Registration
-------------------------
Period, the holders of at least 50% of the Registrable Securities may request
registration under the Securities Act of all or part of their Registrable
Securities. Each request for a Demand Registration shall specify the
approximate number of Registrable Securities requested to be registered. Within
ten 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 paragraph l(c), all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 30 days after the receipt of the Company's
notice. Any registration requested pursuant to this paragraph l(a) is referred
to herein as a "Demand Registration".
(b) NUMBER OF DEMAND REGISTRATIONS. The holders of Registerable
------------------------------
Securities, as a group and not individually, will be entitled to require only
one Demand Registration pursuant to this Section 1. A registration will not
count as a Demand Registration unless and until:
(i) it has remained effective for 365 days or such shorter period
as shall be required to sell all of the securities registered pursuant thereto
(but not before the expiration of the applicable prospectus delivery period);
provided that in any event the Company will pay all Registration Expenses in
connection with any registration initiated as a Demand Registration but which is
not counted as a Demand Registration hereunder, or under clause (ii) in
subparagraph (c) below, and
1
<PAGE>
(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 which are of
the same class as the Registrable Securities which are held by holders who have
demand registration rights similar 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 securities requesting registration, 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 the included in
such registration.
(d) RESTRICTIONS ON DEMAND REGISTRATIONS. The Company may postpone
------------------------------------
for up to three months the filing or the effectiveness of a registration
statement for a Demand Registration if 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
shareholders, and if the Company provides the holders of the Registrable
Securities with a written explanation of the reasons for such delay; provided
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 count as a Demand
Registration hereunder and the Company will pay all Registration Expenses in
connection with such registration, and the Registration Period shall be extended
as provided in the definition of such term set forth in Section 8 below.
2
<PAGE>
(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 will
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 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 Person 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.
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 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 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 Registerable Securities
to be included in the offering shall be determined in accordance with paragraphs
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.
(b) PIGGYBACK EXPENSES. The Registration Expenses of the holders of
------------------
Registrable Securities will be paid by the Company in all Piggyback
Registrations.
3
<PAGE>
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is
---------------------------------
a primary registration 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, 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 registrations, pro rata among the holders requesting
inclusion in the Registration Statement in the same manner as provided in (d)
below.
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration
-----------------------------------
is an underwritten secondary registration 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, the Company will use its
best efforts to include in such registration the securities requested to be
included therein by the holders requesting such registration and the Registrable
Securities requested to be included in such registration, 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.
3. HOLDBACK AGREEMENTS
-------------------
(a) 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 days prior to and during the 120-day period
beginning on the date specified in writing by Company to the holder as being the
intended 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.
(b) 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 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.
4
<PAGE>
4. REGISTRATION PROCEDURES.
-----------------------
Whenever the holders of Registrable Securities have requested that any
Registrable Securities be registered pursuant to this Agreement, the Company
will use diligent 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 Securities and Exchange Commission a
registration statement on the appropriate form with respect to such Registrable
Securities and use all reasonable efforts to cause such registration statement
to become effective;
(b) Prepare and file with the Securities and Exchange Commission 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 120 consecutive days 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;
(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 sellers;
(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);
(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
5
<PAGE>
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, and, at the request of any such seller, the Company will
prepare 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;
(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 properties of the Company as shall
be reasonably necessary to enable them to exercise their 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, 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
information so deemed;
(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;
(h) If the offering is to be underwritten, enter into such agreements
(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 Corporation and updates thereof (which counsel and
opinions, in
6
<PAGE>
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 Corporation'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.
5. REGISTRATION EXPENSES.
---------------------
(a) 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) To the extent Registration Expenses are not required to be paid by
the Company, each holder of securities included in any registration hereunder
will pay those Registration Expenses allocable to the registration of such
holder's securities so included, and any Registration Expenses not so allocable
will be borne by all sellers of securities included in such registration in
proportion to the aggregate selling price of the securities to be so registered.
Further, such holders shall bear, pro rata, such further and other expenses as
may be required under any applicable securities law or regulation (including,
without limitation, the Statement of Policy Regarding Selling Expenses and
Selling Securities Holders as adopted by the North American Securities
Administration Association, Inc.).
6. 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, "Holder Indemnified Parties")
against all losses, claims, damages, liabilities and
7
<PAGE>
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, at 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
(1) 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, (2) 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, or (3) any violation
by the Company of any federal, state or common law rule or regulation applicable
to the Company and relating to action of or inaction by the Company 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 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 (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
8
<PAGE>
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 by 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 at 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 (1) any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement in which such holder's Qualified 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, (2) 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 to the extent, but only to the extent, in the cases
described in clauses (1) and (2), 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 thereof and if 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, (3) any violation by such holder of any
federal, state or common law, rule or regulation applicable to such holder and
relating to action of or inaction by such holder in connection with any such
registration, and (4) 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 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
9
<PAGE>
the prospectus was amended or supplemented); provided, however, that the
aggregate amount which any such holder shall be required to pay pursuant to this
paragraph (b) shall be limited to the dollar 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 and transfer
taxes applicable thereto) pursuant to the registration statement giving rise to
such claim. 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 paragraph (a) or (b) of written notice of the
commencement of any action, suit, proceeding, investigation or threat thereof
made in writing 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 paragraph (a) or (b) 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 for any legal expenses of counsel or any other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation 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. 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 (1) such judgment or settlement does not impose any
obligation or liability upon the indemnified party other than the execution,
delivery or approval thereof, and (2)
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such judgment or settlement 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 for all persons that may
be entitled to or obligated to provide indemnification or contribution under
this Section.
(d) ADDITIONAL INDEMNIFICATION. Indemnification similar to that
--------------------------
specified in the preceding subsections of this Section (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or qualification of
securities under any state securities or blue sky laws.
(e) CONTRIBUTION. If the indemnification provided for in this Section
------------
is unavailable to or insufficient to hold harmless an indemnified party under
paragraph (a) or (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 paragraph (a) or (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 paragraph (e) 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 paragraph (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 paragraph (e). 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 paragraph (e) of written notice of the commencement
of any action, suit, proceeding, investigation or threat thereof made in writing
with respect to which a claim for contribution may be made against an
indemnifying party under this paragraph (e), 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
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in writing of the commencement thereof (if the notice specified in paragraph (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 paragraph (e) except to the extent that the indemnifying party is
actually prejudiced by the failure to give notice. Notwithstanding anything in
this paragraph to the contrary, no indemnifying party (other than the Company)
shall be required pursuant to this paragraph to contribute any amount which
exceeds the amount by which the dollar amount of the proceeds received by such
indemnifying party from the sale of Registrable Securities and other securities
of the Company (after deducting any underwriting commissions, discounts and
transfer taxes applicable thereto) the offering to which the losses, claims,
damages, liabilities or expenses of the indemnified parties relate exceeds the
amount of any losses, claims, damages, liabilities and expenses which such
indemnifying party has otherwise been required to pay as indemnity or
contribution hereunder by reason of such losses, claims, damages, liabilities or
expenses.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this paragraph 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 the immediately preceding paragraph.
If indemnification is available under this Section, the indemnifying
parties shall indemnify each indemnified party to the fullest extent provided in
paragraphs (a) and (b), without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this paragraph. The provisions of this paragraph 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.
(f) 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) in respect of losses, claims, damages,
liabilities and expenses of the underwriters of such offering.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS No Person may participate
-------------------------------------------
in any registration hereunder which is underwritten unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the
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Person or Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of 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.
8. DEFINITIONS
-----------
"Demand Registration" has the meaning set forth in Section l(a).
---------------------
"NASDAQ" means the National Association of Securities Dealers
--------
Automated Quotation System.
"Piggyback Registration" has the meaning set forth in
------------------------
Section 2.
"Registrable Securities" means the SSET Securities issued by the
------------------------
Company to Data as part of the Purchase Price under the Asset Purchase
Agreement, including any shares of Common Stock issued on exercise of all or any
part of the Warrant, and all securities issued with respect thereto, whether by
way of dividend, stock split, recapitalization or otherwise.
"Registration Period" means the period of one year commencing as of
---------------------
the date two years after the Closing Date under the Asset Purchase Agreement,
provided, however, such one year period shall be extended if, and to the extent
that, the Company has postponed the filing or the effectiveness of a
registration statement for a Demand Registration under Section 1(d) above.
"Securities Act" means the Securities Act of 1933, as amended, or any
----------------
similar federal law then in force.
"Warrant" has the meaning given to it in the Asset Purchase Agreement.
---------
9. MISCELLANEOUS.
-------------
(a) RULE 144. The Company agrees that it will file the reports
--------
required to be filed by it under the Act and the Exchange Act and the rules and
regulations thereunder, to the extent required from time to time to enable the
holders of Registrable Securities to sell such securities within the limitations
of the exemptions provided by Rule 144 of the Act, or any successor rule or
regulation thereto.
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(b) DISTRIBUTION BY DATA. The provisions of this Agreement shall be
--------------------
binding upon and inure to the benefit of Data and any direct or indirect parent
of Data who acquires any of the Registrable Securities from Data upon Data's
Liquidation or the distribution of any of the Registrable Securities.
(c) UNDERTAKINGS OF THE HOLDERS OF REGISTRABLE SECURITIES.
-----------------------------------------------------
(i) If any Registrable Securities are included in a registration
statement, the holder thereof will not (until further notice) effect sales
thereof after receipt of telegraphic or 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.
(ii) 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
Securities Exchange Act of 1934, as amended, and any rules promulgated
thereunder by the Commission 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.
(iii) At the end of the 120-day period during which the Company
is obligated to keep a registration statement current and effective as described
herein, the holders of Registrable Securities included in the registration
statement shall discontinue sales thereof pursuant to such registration
statement upon receipt of notice from the Company of its intention to register
any of such securities which remain unsold.
(c) REMEDIES. Any Person having rights under any provision of this
--------
Agreement will be entitled to enforce such rights 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.
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(d) SUCCESSORS AND ASSIGNS. Subject to the provisions of paragraph
----------------------
(b) above, all covenants and agreements in this Agreement by or on behalf of any
of the parties hereto will bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not.
(e) INCORPORATION OF ASSET PURCHASE AGREEMENT PROVISIONS. The
----------------------------------------------------
paragraphs entitled "Severability", "Counterparts", "Headings; Construction",
"Entire Agreement", "Amendments and Waivers" and "Governing Law" of the Asset
Purchase Agreement are hereby incorporated in this Agreement by reference and
made a part hereof, except that the provisions of such paragraphs shall refer to
this Agreement rather than the Purchase Agreement and shall continue to apply
hereto regardless of whether the Purchase Agreement is no longer in effect.
(f) NOTICES. All notices, demands or other communications to be given
-------
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable express courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent: (i) if to the Company, to its principal place of
business as of the date such Notice is given, or (ii) if to the holder of
Registrable Securities, at such holder's address as shown on the stock registry
of the Company.
(g) COUNTERPARTS. This Agreement may be executed in counterparts.
------------
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
SSE TELECOM, INC.
By: /s/ Daniel E. Moore
--------------------------------------
Title: Executive Vice President
-----------------------------------
FAIRCHILD DATA CORPORATION
By: /s/ Donald E. Miller
--------------------------------------
Title: Vice President
-----------------------------------
Signature Page to Registration Agreement
