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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of September 6, 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
ITEM 5. OTHER EVENTS.
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A. Stock Purchase by Alcatel Telspace, S.A. On September 6, 1996
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("Closing Date"), Alcatel Telspace, a societe anonyme organized under the laws
of France ("Alcatel"), purchased 625,000 shares of the common stock ("Common
Stock") of SSE Telecom, Inc. (the "Company") for aggregate consideration of
$7,826,500, or an average price of $12.52 per share.
Page 1 of 129
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Exhibit Index on Page 6
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Of the aggregate 625,000 shares of Common Stock purchased by Alcatel,
525,000 shares were purchased from the Company for cash consideration of
$6,751,500, or $12.86 per share, pursuant to a Stock Purchase and Investment
Agreement (the "Investment Agreement") between the Company and Alcatel dated as
of the Closing Date. 450,000 shares out of the 525,000 shares sold to Alcatel
by the Company represented a portion of the shares acquired by the Company in
its ongoing stock repurchase program and which were held in the treasury of the
Company.
Alcatel also purchased 100,000 shares of Common Stock from Frederick C.
Toombs and Daniel E. Moore, two members of the Company's senior management, for
aggregate cash consideration of $1,075,000, or $10.75 per share, pursuant to a
Stock Purchase Agreement dated as of the Closing Date (the "Selling Stockholder
Agreement"). In connection therewith, the Company and Messrs. Toombs and Moore
entered into an agreement providing for the Company's consent to the sale by
each of Messrs. Toombs and Moore of 50,000 shares of Common Stock to Alcatel,
and the agreement of Messrs. Toombs and Moore to the early exercise of certain
exercisable options and warrants and to limit any further disposition of shares
of the Common Stock held by them until after February 28, 1997.
The Company issued a warrant to Alcatel entitling the registered holder
thereof to acquire 300,000 shares of the Common Stock of the Company,
exercisable at any time during the period between September 7, 1996 and
September 6, 1999, at an exercise price equal to the market price at the time of
exercise, but not less than $11.00 per share (the "Warrant").
The Company and Alcatel entered into a registration rights agreement
("Registration Rights Agreement") with respect to the Common Stock acquired by
Alcatel under the Investment Agreement and the Selling Stockholder Agreement and
the Common Stock issuable upon exercise of the Warrant.
The Company, Alcatel, and six stockholders of the Company entered into a
stockholders agreement dated as of the Closing Date (the "Stockholder
Agreement") in which Alcatel and the stockholders of the Company that are
parties to the agreement agreed to certain rights of first refusal and co-sale
rights in respect to the disposition of common stock of the Company, on the
terms set forth in such Stockholder Agreement. In addition, the Company and the
stockholders of the Company that are parties to the agreement agreed to use
their best efforts to cause a nominee of Alcatel to be nominated for election
and such stockholders agreed to vote for the nominee to the Board of Directors
of the Company.
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In addition, by a separate agreement, the Company, Alcatel and six other
stockholders of the Company, entered into a voting agreement in which such
stockholders agreed to vote for a nominee of Alcatel to the Board of Directors
of the Company (the "Voting Agreement").
Effective as of the Closing Date, the Company and Alcatel entered into an
agreement providing for the procedure by which the Company and Alcatel may
jointly development certain products which have been identified and which will
continue to be identified as suitable to complement the available products of
SSET and Alcatel (the "Product Identification Agreement").
Under the Investment Agreement, the Company agreed to use the net sale
proceeds for working capital and to curtail by $3,500,000 the indebtedness under
the debentures issued by the Company to EchoStar Communications Corporation
("Echostar"). Concurrent with closing under the Investment Agreement, the
Company paid to Echostar the aggregate amount of $4,750,414 against principal
and accrued interest under the debentures, reducing the principal balance owed
under the debentures to $5,250,000.
There is no material relationship between Alcatel, or any of its
affiliates, any director or officer of Alcatel, or any associate of any director
or officer of Alcatel, 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. The Company and Alcatel
have collaborated in the development of satellite communications equipment in
the past and Alcatel has been a customer of the Company since 1989.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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(c) Exhibits
4.7 Common Stock Purchase Warrant from SSE Telecom, Inc. to
Alcatel Telspace, S.A., dated September 6, 1996.
9.2 Voting Agreement by and among SSE Telecom, Inc., Alcatel
Telspace, S.A., and certain stockholders of SSE Telecom, Inc., dated September
6, 1996.
9.3 Stockholder Agreement by and among SSE Telecom, Inc.,
Alcatel Telspace, S.A., and certain stockholders of SSE Telecom, Inc., dated
September 6, 1996.
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10.25 Stock Purchase and Investment Agreement by and between SSE
Telecom, Inc., and Alcatel Telspace, S.A., dated September 6, 1996. There is
included as part of this exhibit a listing of the exhibits to the Investment
Agreement, but such exhibits are not filed. Registrant undertakes to furnish
supplementally a copy of the omitted exhibits to the Commission upon request.
10.26 Registration Rights Agreement between SSE Telecom, Inc. and
Alcatel Telspace, S.A., dated September 6, 1996.
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SIGNATURES
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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: September 20, 1996 SSE TELECOM, INC.
By: /s/ Frederick C. Toombs
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Frederick C. Toombs
President
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INDEX TO EXHIBITS
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Page No.
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4.7 Common Stock Purchase Warrant from SSE
Telecom, Inc. to Alcatel Telspace, S.A.,
dated September 6, 1996. 7
9.2 Voting Agreement by and among SSE Telecom,
Inc., Alcatel Telspace, S.A., and certain
stockholders of SSE Telecom, Inc., dated
September 6, 1996. 23
9.3 Stockholder Agreement by and among SSE
Telecom, Inc., Alcatel Telspace, S.A.,
and certain stockholders of SSE Telecom,
Inc., dated September 6, 1996. 32
10.25 Stock Purchase and Investment Agreement by
and between SSE Telecom, Inc., and Alcatel
Telspace, S.A., dated September 6, 1996. 61
10.26 Registration Rights Agreement between SSE
Telecom, Inc. and Alcatel Telspace, S.A.,
dated September 6, 1996. 106
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THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES PURCHASABLE
HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THIS COMMON STOCK PURCHASE WARRANT
HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION
AND THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES PURCHASABLE HEREUNDER
MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY AND ITS COUNSEL TO THE EFFECT THAT THE PROPOSED TRANSACTION DOES NOT
INVOLVE A VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
APPLICABLE STATE SECURITIES LAWS, UNLESS SUCH COMMON STOCK PURCHASE WARRANT
OR THE SHARES PURCHASABLE HEREUNDER ARE SOLD PURSUANT TO RULE 144 OF THE
SECURITIES ACT.
SSE TELECOM, INC.
COMMON STOCK PURCHASE WARRANT
Dated: September 6, 1996
This is to certify that ALCATEL TELSPACE, a societe anonyme organized
under the laws of France (the "Holder") for good and valuable consideration,
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the receipt and sufficiency of which are hereby acknowledged, is entitled to
purchase from SSE TELECOM, INC., a Delaware corporation (the "Company"), at any
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time after the date hereof (the "Commencement Date") and not later than
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September 6, 1999 (the "Expiration Date"), Three Hundred Thousand (300,000)
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shares (the "Aggregate Number") of the fully paid and nonassessable common
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stock, $.01 par value per share, of the Company (the "Common Stock") at a
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purchase price per share equal to the Exercise Price. Under certain
conditions, the Aggregate Number may be increased or decreased all as more
fully set forth herein.
SECTION 1. The Warrant. This Common Stock Purchase Warrant (the
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"Warrant") is issued to the Holder under and pursuant to that certain Stock
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Purchase and Investment Agreement dated September 6, 1996 between the Company
and the Holder (the "Investment Agreement"). This Warrant and the rights and
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privileges of the Holder and the Company hereunder shall survive any termination
of the Investment Agreement.
SECTION 2. Transfers of the Warrant.
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(a) Subject to the restrictions set forth in this Section
2, the Holder may at any time and from time to time transfer this
Warrant in whole or in part (i) in its sole
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discretion and without the consent of the Company, to any Affiliate
of the Holder, or (ii) with the consent of the Company, to any other
Person (in either case a "Transferee"). This Warrant has not been,
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and the Common Stock issuable upon the exercise hereof may not have
been, registered under the Securities Act of 1933, as amended (the
"Securities Act"). This Warrant and such Common Stock are issued or
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issuable subject to the provisions and conditions contained herein
and the restrictive legend set forth herein, and the Holder and
every Transferee by accepting the same agrees with the Company to
such provisions and conditions, and represents to the Company that
this Warrant has been acquired, and that the Common Stock issuable
upon the exercise hereof will be acquired, for the account of such
Holder or Transferee, as the case may be, for investment purposes and
not with a view to or for sale in connection with any distribution
thereof.
(b) The holders of any Common Stock issued as a result of the
exercise of this Warrant by acceptance hereof and thereof agree to
comply in all respects with the provisions of this Section 2.
(c) The certificate representing the Common Stock issued upon
the exercise of this Warrant shall bear the restrictive legend set
forth below:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or any state securities
laws. The shares have been acquired for investment purposes and not
with a view to distribution, and may not be sold or offered for sale in
the absence of an effective registration statement under the Securities
Act of 1933, as amended, and any applicable state securities laws or an
opinion of counsel satisfactory to the corporation and its counsel to
the effect that the proposed transaction does not involve a violation
of the Securities Act of 1933, as amended, and any applicable state
securities laws, unless such shares are sold pursuant to Rule 144 of
the Securities Act."
(d) The rights granted hereunder to the Holder of this Warrant
shall pass to and inure to the benefit of all subsequent Transferees of
all or any portion of this Warrant (provided that the Holder and any
Transferee may hold such rights proportionally in the case of any
partial transfer hereof).
SECTION 3. Register for Warrant and Transfer and Exchanges Thereof.
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The Company shall initially record this Warrant on a register to be maintained
by the Company with its other stock books for that purpose, and from time to
time thereafter the Company shall transfer this Warrant on such register when
this Warrant is surrendered for transfer, properly endorsed, and accompanied by
appropriate instructions including evidence that such transfer is in compliance
with Section 2(a) hereof. Upon any such transfer, a new warrant with terms
identical hereto (except that the number of shares of Common Stock covered
thereby shall be the appropriate number in the event of a partial transfer of
this Warrant) shall be issued by the Company to the Transferee. In the event of
a partial transfer of this Warrant, a new warrant with terms identical hereto
(except for the number of shares of Common Stock covered hereby) shall be issued
for the remaining number of shares to the Holder. The surrendered Warrant shall
be cancelled. This Warrant may be exchanged at the
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option of the Holder, when surrendered at the Principal Office of the Company,
for other warrants with terms identical hereto (except for the number of shares
of Common Stock covered hereby) and representing in the aggregate the right to
purchase a like number of shares of Common Stock, subject to adjustment as more
fully set forth herein.
SECTION 4. Exercise.
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(a) At any time after the Commencement Date and on or before the
Expiration Date, this Warrant may be exercised by the Holder, in whole
at any time or in part from time to time, by presentation thereof to
the Company at its Principal Office during normal business hours on any
Business Day (the "Exercise Date") with the Election to Purchase, in
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the form attached hereto as Exhibit A (the "Election to Purchase"),
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duly executed. Simultaneously therewith, the Holder shall pay to the
Company, by wire transfer of immediately available funds, an amount
(the "Aggregate Exercise Price") determined by multiplying (i) the
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number of shares of Common Stock set forth in the Election to Purchase
as being acquired by (ii) the Exercise Price. If the Expiration Date is
not a Business Day, then this Warrant may be exercised on the next
succeeding Business Day.
(b) Upon receipt by the Company of this Warrant at its Principal
Office, accompanied by the Election to Purchase and the Aggregate
Exercise Price as set forth above, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that certificates representing such shares of
Common Stock shall not then be actually delivered. Upon such surrender
of this Warrant and payment of the Aggregate Exercise Price, the
Company shall issue and cause to be delivered with all reasonable
dispatch to, or upon the written order of, the Holder (and in such name
or names as the Holder may designate) a certificate or certificates for
the number of shares of Common Stock so purchased upon the exercise of
this Warrant.
(c) The Company shall not be required to deliver fractions of
Common Stock upon exercise of this Warrant. If any fraction of a share
of Common Stock would be deliverable upon an exercise of this Warrant,
the Company shall, in lieu of delivering such fraction of a share of
Common Stock, make a cash payment to the Holder in an amount equal to
the same fraction of the Exercise Price.
(d) In the event of a partial exercise of this Warrant, the
Company shall issue to the Holder a warrant with terms identical hereto
(except for the number of shares of Common Stock covered thereby) for
the unexercised portion hereof.
SECTION 5. Payment of Taxes. The Company shall pay all stamp taxes
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payable to the U.S. government or any state or political subdivision thereof and
attributable to the initial issuance of shares or other securities issuable upon
the exercise of this Warrant, including any tax or taxes which may be payable
because of the transfer involved in the issue or delivery of any certificates
for shares or other securities in a name other than that of the Holder in
respect of which such shares or securities are issued.
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SECTION 6. Mutilated or Missing Warrant. In case this Warrant is
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mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and in substitution for the Warrant which is lost, stolen or
destroyed, a new warrant with terms identical hereto and representing an
equivalent right or interest, but, if this Warrant is lost, stolen or destroyed,
only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction of such Warrant and an indemnity also reasonably
satisfactory to the Company.
SECTION 7. Reservation of Common Stock.
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(a) The Company shall at all times reserve and keep available
out of the aggregate of its authorized but unissued shares of capital
stock or its issued shares of capital stock held in its treasury, or
both, free of preemptive rights, such number of its duly authorized
shares of Common Stock as shall be sufficient to enable the Company at
any time to fulfill all its obligations hereunder (or if this Warrant
is transferred in whole or in part, then sufficient to enable the
Company at any time to fulfill all of its obligations hereunder to such
Transferees).
(b) If any shares of Common Stock reserved or to be reserved for
the purpose of the exercise of this Warrant require registration with
or approval of any governmental authority under any Law before such
shares may be validly delivered upon the exercise hereof, then the
Company covenants that it will, at its sole expense, secure such
registration or approval, as the case may be.
(c) The Company shall cause all shares of Common Stock issuable
upon the exercise of this Warrant to be (i) listed (or to be listed
subject to notice of issuance) on each securities exchange on which
shares of Common Stock are listed, or (ii) admitted for trading in any
inter-dealer quotation system on which shares of Common Stock are
traded.
(d) The Company covenants that all shares of Common Stock that
may be delivered upon the exercise of this Warrant in accordance with
the terms of this Warrant shall upon delivery by the Company be duly
authorized and validly issued, fully paid and nonassessable, free from
all taxes, liens and charges arising through the Company with respect
to the issue or delivery thereof and otherwise free of all other
security interests, encumbrances and claims of any nature whatsoever.
(e) The Company covenants that, upon the exercise of this
Warrant as herein provided, there will be credited to the Company's
Common Stock account an amount per share so issued as determined by the
Company's Board of Directors, which amount shall not be less than the
amount required by Law and by the Company's Certificate of
Incorporation as amended, as in effect on such exercise.
(f) The Company covenants that it will not take any action that
would cause the Common Stock to have a par value in excess of the
Exercise Price then in effect.
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SECTION 8. Adjustments to Aggregate Number. The Aggregate Number,
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after taking into consideration any prior adjustments pursuant to this
Section 8, shall be subject to adjustment from time to time as follows and,
thereafter, as adjusted, shall be deemed to be the Aggregate Number
hereunder:
(a) Adjustment for Certain Changes in Capital Stock of
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the Company. If at any time or from time to time after the date hereof
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the Company shall:
(i) pay a dividend or make a distribution on its
Common Stock in shares of its Common Stock,
(ii) subdivide its outstanding shares of Common Stock
into a larger number of shares of Common Stock;
(iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock;
(iv) make a distribution on its Common Stock in shares
of its capital stock other than Common Stock; or
(v) issue by reclassification of its Common Stock any
shares of capital stock;
then the Aggregate Number in effect immediately prior thereto shall be
adjusted and all other necessary adjustments shall be made so that the
Holder shall thereafter be entitled to receive, upon the exercise of
this Warrant, the number of shares of Common Stock and the number and
kind of shares of other capital stock of the Company that the Holder
would have owned or would have been entitled to receive after the
occurrence of such event had this Warrant been exercised immediately
prior to the occurrence of such event. If after such an adjustment the
Holder, upon the exercise of this Warrant, shall receive shares of two
or more classes of capital stock of the Company, the Board of Directors
of the Company shall determine in the good faith exercise of its
reasonable business judgment the allocation of the Aggregate Exercise
Price between the classes of capital stock.
(b) Adjustment for Common Stock Issuances. If at any
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time or from time to time after the date hereof the Company shall issue
or sell any shares of Common Stock which qualify as New Securities (as
such term is defined in the Investment Agreement) and provided that the
Holder exercises its rights to purchase all such New Securities which
it is entitled to purchase pursuant to the Investment Agreement, the
Aggregate Number in effect immediately prior thereto shall be adjusted
so that the Aggregate Number thereafter shall be determined by
multiplying (i) the Aggregate Number immediately prior to such action
by (ii) a fraction, the numerator of which shall be the sum of the
number of shares of Common Stock outstanding immediately prior to the
issuance of such shares of Common Stock and the number of such shares
of Common Stock so issued and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to the
issuance of such shares
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of Common Stock. The provisions of this Section 8(b) shall not apply to
any issuance of shares of Common Stock for which an adjustment is
otherwise provided under Section 8(a). No adjustment of the Aggregate
Number shall be made under this Section 8(b) upon the issuance of any
shares of Common Stock which are issued pursuant to (i) this Warrant or
(ii) the exercise of other subscription or purchase rights or options,
or the exercise of any conversion or exchange rights in any Convertible
Securities, provided that an adjustment shall previously have been made
upon the issuance of such other rights or upon the issuance of such
Convertible Securities (or upon the issuance of any warrants or other
rights therefor) pursuant ot Section 8(c) or 8(d) hereof.
(c) Adjustment for Issuance of Rights, Options and Warrants. If
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at any time or from time to time after the date hereof the Company
shall issue or sell any options, warrants or other rights to subscribe
for or purchase or otherwise acquire any shares of Common Stock or any
Convertible Securities which qualify as New Securities (as such term is
defined in the Investment Agreement), whether or not the rights to
subscribe, purchase, exchange or convert thereunder are immediately
exercisable, and provided that the Holder exercises its rights to
purchase all such New Securities which it is entitled to purchase
pursuant to the Investment Agreement, then the Aggregate Number in
effect immediately prior thereto shall be adjusted as provided in
Section 8(b) on the basis that the maximum number of shares of Common
Stock issuable pursuant to all such options, warrants or other rights
or necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued.
(d) Adjustment for Issuance of Convertible Securities. If at any
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time or from time to time after the date hereof the Company shall issue
or sell Convertible Securities which qualify as New Securities (as such
term is defined in the Investment Agreement), whether or not the rights
to exchange or convert thereunder are immediately exercisable, and
provided that the Holder exercises its rights to purchase all such New
Securities which it is entitled to purchase pursuant to the Investment
Agreement, then the Aggregate Number in effect immediately prior
thereto shall be adjusted as provided in Section 8(b) on the basis that
the maximum number of shares of Common Stock necessary to effect the
conversion or exchange of all such Convertible Securities shall be
deemed to have been issued. No adjustment of the Aggregate Number shall
be made under this Section 8(d) upon the issuance of any Convertible
Securities which are issued pursuant to the exercise of any options,
warrants or other subscription or purchase rights if an adjustment
shall previously have been made upon the issuance of such options,
warrants or other rights pursuant to Section 8(c) hereof.
(e) Other Changes in Common Stock. In case at any time the
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Company shall after the date hereof initiate any transaction or be a
party to any transaction (including, without limitation, a merger,
consolidation, acquisition of capital stock of the Company by means of
a share exchange, the sale, lease, transfer, conveyance or other
disposition of all or substantially all of the Company's assets, a
liquidation, a charter amendment, or a recapitalization or
reclassification of the Common Stock) in
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which the previous outstanding Common Stock shall be changed into or
exchanged for different securities of the Company or common stock or
other securities of another corporation or interests in a non-corporate
entity or other property (including cash) or any combination of the
foregoing (each such transaction being herein called a "Transaction"),
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then, as a condition of the consummation of the Transaction, lawful,
enforceable and adequate provision shall be made so that the Holder
shall be entitled to receive upon the exercise of this Warrant at any
time on or after the consummation of the Transaction, in lieu of the
Common Stock issuable upon such exercise prior to such consummation,
the securities or other property (including cash) to which such Holder
would have been entitled upon consummation of the Transaction if such
Holder had exercised this Warrant immediately prior thereto (subject to
adjustments from and after the consummation date as nearly equivalent
as possible to the adjustments provided for in this Section 8). If a
purchase, tender or exchange offer is made to and accepted by the
holders of more than fifty percent (50%) of the outstanding Common
Stock (a "Stock Sale"), and if the Holder so designates in a written
----------
notice given to the Company, such Holder shall be entitled to receive
upon the exercise of this Warrant at any time on or after the
consummation of the Stock Sale, in lieu of the Common Stock issuable
upon exercise of this Warrant prior to the consummation of the Stock
Sale, the securities or other property to which such Holder would have
been entitled if such Holder had exercised this Warrant prior to the
expiration of such purchase, tender or exchange offer and had accepted
such offer (subject to adjustments from and after the consummation of
such purchase, tender or exchange offer as nearly equivalent as
possible to the adjustments provided for in this Section 8). The
Company will not effect any Transaction unless prior to the
consummation thereof each Person (other than the Company) which may be
required to deliver any securities or other property upon the exercise
of this Warrant as provided herein shall assume, by written instrument
delivered to the Holder, the obligation to deliver to such Holder such
securities or other property as in accordance with the foregoing
provisions such Holder may be entitled to receive and such Person shall
have similarly delivered to the Holder an opinion of counsel for such
Person, satisfactory to the Holder, which opinion shall state that all
of the terms of this Warrant, including, without limitation, the
provisions of this Section 8(e), shall thereafter continue in full
force and effect and shall be enforceable against the Company and such
Person in accordance with the terms hereof and thereof, together with
such other matters as the Holder may reasonably request. The foregoing
provisions of this Section 8(e) shall similarly apply to successive
Transactions.
(f) Other Action Affecting Common Stock. In case at any
-----------------------------------
time or from time to time after the date hereof the Company shall take
any action affecting its Common Stock, other than an action described
in Section 8(a), (b), (c), (d) or (e), then, unless in the opinion of
the Board of Directors of the Company such action will not have a
material adverse effect upon the rights of the Holder (taking into
consideration, if necessary, any prior actions which the Board of
Directors deemed not to materially adversely affect the rights of the
Holder), the Aggregate Number shall be adjusted in such manner and at
such time as the Board of Directors of the Company may in good faith
determine to be equitable in the circumstances.
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(g) Reversal of Adjustment. If at any time after any
----------------------
adjustment of the Aggregate Number shall have been made pursuant to
Section 8(c) or 8(d) on the basis of the issuance of options, warrants
or other rights or the issuance of Convertible Securities, such
options, warrants or rights or the right of conversion or exchange in
such Convertible Securities shall expire before the exercise of this
Warrant in whole or in part, and a portion of such options, warrants or
rights, or the right of conversion or exchange in respect of a portion
of such Convertible Securities, as the case may be, shall not have been
exercised, such previous adjustment as to such portion shall be
rescinded and annulled and the shares of Common Stock which were deemed
to have been issued by virtue of the computation made in connection
with such adjustment as to such portion shall no longer be deemed to
have been issued by virtue of such computation. Thereupon, a
recomputation shall be made of the effect of such options, warrants or
rights or Convertible Securities on the basis of treating the number of
shares of Common Stock, if any, theretofore actually issued pursuant to
the previous exercise of such options, warrants or rights or such right
of conversion or exchange as having been issued on the date or dates of
such exercise and, if and to the extent called for by the foregoing
provisions of this Section 8(g) on the basis aforesaid, a new
adjustment of the Aggregate Number shall be made, and such new
adjustment shall supersede the previous adjustment so rescinded and
annulled.
(h) Special Rules. The following provisions shall be applicable
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to the making of adjustments of the Aggregate Number hereinbefore
provided for in this Section 8:
(i) No adjustment of the Exercise Price shall be made
in connection with any adjustment of the Aggregate Number except
to the extent that an adjustment in the Minimum Exercise Price as
provided in the definition thereof has an effect on the Exercise
Price.
(ii) The sale or other disposition of any
issued shares of Common Stock owned or held by or for the account
of the Company or any of its Subsidiaries shall be deemed an
issuance thereof for the purposes of this Section 8.
(iii) The adjustments required by this Section 8 shall
be made whenever and as often as any specified event requiring an
adjustment shall occur.
(iv) In computing adjustments under Section 8,
fractional interests in Common Stock shall be taken into account
to the nearest one-thousandth (.001) of a share.
(i) Notices.
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(i) Whenever the Aggregate Number shall be adjusted
pursuant to this Section 8 and whenever the Minimum
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Exercise Price shall be adjusted as provided in the definition thereof,
unless the Holder indicates otherwise in writing, the Company shall
forthwith obtain a certificate signed by a firm of independent
accountants of recognized national standing selected by the Company,
setting forth, in reasonable detail, the event requiring the adjustment
and the method by which such adjustment was calculated, the new
Aggregate Number or Minimum Exercise Price, as the case may be, and, if
applicable, any new securities or property to which the Holder is
entitled. The Company shall promptly cause a copy of such certificate,
signed by the President of the Company, to be delivered to the Holder.
The Company shall keep at its Principal Office copies of all such
certificates and cause the same to be available for inspection at said
office during normal business hours by the Holder or any prospective
Transferee of the Warrant (in whole or in part).
(ii) In case the Company shall propose to take any
action that would result in an adjustment to the Aggregate Number
pursuant to this Section 8 or that would result in an adjustment
to the Minimum Exercise Price as provided in the definition
thereof, then in each such case, the Company shall give to the
Holder written notice of such proposed action which shall specify
the date on which the proposed action is to be taken and shall
also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action on the
Common Stock and on the Aggregate Number or on the Minimum
Exercise Price, as the case may be, after giving effect to any
adjustment which will be required as a result of such action. Such
notice shall be given by the Company at least twenty (20) days
prior to the date on which such proposed action is to be taken.
SECTION 9. Definitions. As used herein, the following defined terms
-----------
shall have the meanings indicated below:
"Affiliate" of a Person means a Person that directly or indirectly
---------
through one or more intermediates, controls, is controlled by, or is under
common control with, the first Person.
"After Event Share Price" shall have the meaning set forth in the
-----------------------
definition of Minimum Exercise Price.
"Aggregate Exercise Price" shall have the meaning set forth in
------------------------
Section 4(a).
"Aggregate Number" shall have the meaning set forth in the introductory
----------------
paragraph hereof.
"Before Event Share Price" shall have the meaning set forth in the
------------------------
definition of Minimum Exercise Price.
"Board of Directors" means the Board of Directors of the Company or any
------------------
authorized committee thereof.
- 9 -
<PAGE>
"Business Day" means any day which is not a Saturday, Sunday or legal
------------
holiday in New York, New York or Paris, France.
"Commencement Date" shall have the meaning set forth in the
-----------------
introductory paragraph hereof.
"Common Stock" shall have the meaning set forth in the introductory
------------
paragraph hereof.
"Company" shall have the meaning set forth in the introductory
-------
paragraph hereof.
"Control" (whether or not capitalized) means, with respect to a
-------
Person, the possession, directly or indirectly, of the power to direct or
cause the direction of the management policies of such Person whether through
the ownership of voting securities, by contract or otherwise and, in any event,
and without limitation of the foregoing, any Person fifty percent (50%) or more
of whose voting securities are owned by another Person shall be deemed to be
controlled that Person.
"Convertible Securities" means evidences of indebtedness, shares of
----------------------
stock or other securities which are convertible or exchangeable, with or without
payment of additional consideration in cash or property, for shares of Common
Stock, either immediately or upon the occurrence of a specified date or the
happening of a specified event.
"Election to Purchase" shall have the meaning set forth in Section
--------------------
4(a).
"Exercise Date" shall have the meaning set forth in Section 4(a).
-------------
"Exercise Price" means the arithmetic average (computed to three
--------------
decimal places) of the per share closing price of the Common Stock on NASDAQ for
the period of thirty (30) consecutive Business Days on which NASDAQ was open for
trading ending on the tenth Business Day preceding an Exercise Date. If the
Common Stock ceases to be traded on NASDAQ, the foregoing computation shall be
made with reference to any other nationally recognized securities exchange on
which the Common Stock is traded at the time such computation is made. If, at
such time, the Common Stock is not traded on such an exchange, the Exercise
Price shall be equal to the fair market value of one share of Common Stock as
mutually agreed upon by the Company and the Holder or, if such agreement cannot
be reached, as determined in accordance with the following procedure. Each of
the Company and the Holder shall select an internationally recognized investment
bank experienced in the industry to value a share of Common Stock. If the
difference in values determined by such investment banks is ten percent (10%) or
less of the lower value, the fair market value of such share of Common Stock
shall equal the mid-point between such two values. If such difference in values
is greater than ten percent (10%) of the lower value, such investment banks
shall jointly appoint a third investment bank to conduct a fair market valuation
of a share of Common Stock, and the value as so determined by such third
investment bank shall be the fair market value of such share of Common Stock.
Notwithstanding the foregoing, the Exercise Price shall not be less than the
Minimum Exercise Price.
-10-
<PAGE>
"Expiration Date" shall have the meaning set forth in the introductory
---------------
paragraph hereof.
"Holder" shall have the meaning set forth in the introductory paragraph
------
hereof.
"Investment Agreement" shall have the meaning set forth in Section 1.
--------------------
"Laws" means all laws, statutes, rules, regulations, ordinances and other
----
pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any governmental authority.
"Minimum Exercise Price" means US $11.00, provided that, in the event of any
----------------------
adjustment in the Aggregate Number as provided in Section 8.1(a), (b), (c), (d)
or (f), the Minimum Exercise Price then in effect shall be adjusted as follows:
(i) the arithmetic average (computed to three decimal places) of
the per share closing price of the Common Stock on NASDAQ for the period of
ten (10) consecutive Business Days on which NASDAQ was open for trading
ending on the date of the event causing the adjustment to the Aggregate
Number (the "Before Event Share Price") shall be computed; and
------------------------
(ii) the arithmetic average (computed to three decimal places) of
the per share closing price of the Common Stock on NASDAQ for the period of
ten (10) consecutive Business Days on which NASDAQ was open for trading
immediately following the date of the event causing the adjustment to the
Aggregate Number (the "After Event Share Price") shall be computed.
-----------------------
If the Before Event Share Price is greater than the After Event
Share Price, the Minimum Exercise Price then in effect shall be adjusted
downward by multiplying such Minimum Exercise Price by a fraction, the
numerator of which is the After Event Share Price and the denominator of
which is the Before Event Share Price. If the Before Event Share Price is
less than the After Event Share Price, the Minimum Exercise Price then in
effect shall be adjusted upward by multiplying such Minimum Exercise Price by
a fraction, the numerator of which is the After Event Share Price and the
denominator of which is the Before Event Share Price.
If the Common Stock ceases to be traded on NASDAQ, the foregoing
computations shall be made with reference to any other nationally recognized
securities exchange on which the Common Stock is traded at the time such
computations are made. In the event the Common Stock is not traded on such an
exchange at such time, an appropriate equitable adjustment shall be made to
the Minimum Exercise Price in light of the event causing the adjustment to
the Aggregate Number.
"NASDAQ" means the inter-dealer quotation system sponsored by the National
------
Association of Securities Dealers, Inc.
- 11 -
<PAGE>
"Person" means any natural person, corporation, general partnership, limited
------
partnership, proprietorship, limited liability company, joint venture, other
business organization, trust, union, association or governmental authority.
"Principal Office" means the Company's principal office at the address set
----------------
forth in Section 11 or such other principal office of the Company in the United
States of America the address of which shall have been set forth in a written
notice to the Holder.
"Securities Act" shall have the meaning set forth in Section 2(a).
--------------
"Stock Sale" shall have the meaning set forth in Section 8(e).
----------
"Subsidiary" of a Person means a Person that is, directly or indirectly,
----------
through one or more intermediates controlled by the first Person.
"Transaction" shall have the meaning set forth in Section 8(e).
-----------
"Transferee" shall have the meaning set forth in Section 2(a).
----------
"Warrant" shall have the meaning set forth in Section 1.
-------
SECTION 10. Registration Rights. The Common Stock issued or issuable upon
-------------------
the exercise of this Warrant by the Holder constitutes Registrable Securities as
defined in that certain Registration Rights Agreement between the Company and
the Holder dated September 6, 1996 and shall be entitled to all benefits
provided thereunder.
SECTION 11. Notices. All notices, requests and other communications
-------
hereunder shall be in writing and will be deemed to have been duly given (i)
when personally delivered, (ii) when sent by telefax to a party at the number
listed below for such party, (iii) three (3) Business Days after the day on
which the same has been delivered prepaid to an international courier service or
(iv) ten (10) Business Days after the deposit in the United States mail,
registered or certified, return receipt requested, postage prepaid, in each case
addressed to the party to whom such notice is to be given at the following
address for such party:
If to Purchaser: Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attn: Jacques Couet
Telefax No.: 331-46524596
With copies to: Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attn: Martine Funston, Esq.
Telefax No.: 331-46524595
- 12 -
<PAGE>
If to the SSE Telecom, Inc.
Company: 8230 Leesburg Pike, Suite 710
Vienna, Virginia 22182
Attn: Daniel E. Moore
Telefax No.: (703) 442-4507
With copies to: Surovell, Jackson, Colten & Dugan,P.C.
4010 University Drive, Suite 200
Fairfax, VA 22030
Attn: G. Donald Markle, Esq.
Telefax No.: (703) 591-2149
Either party from time to time may change its address, telefax number or
other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.
SECTION 12. Entire Agreement. This Warrant supersedes all prior discussions
----------------
and agreements among the parties with respect to the subject matter hereof and
contains the sole and entire agreement between the Company and the Holder hereto
with respect to the subject matter hereof.
SECTION 13. Waiver. Any term or condition of this Warrant may be waived at
------
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by either
party of any term or condition of this Warrant, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Warrant on any future occasion.
SECTION 14. Amendment. This Warrant may be amended, supplemented or modified
---------
only by a written instrument duly executed by or on behalf of the Holder and the
Company.
SECTION 15. Captions. The captions used in this Warrant have been inserted
--------
for convenience of reference only and do not define or limit the provisions
hereof.
SECTION 16. Exhibits. All exhibits referred to in this Warrant are
--------
hereby incorporated by reference into this Warrant and are hereby made a part
of this Warrant as if set out in full herein.
SECTION 17. Governing Law. This Warrant shall be governed by and
-------------
construed in accordance with the Laws of the State of Delaware applicable to
a contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
SECTION 18. Severability. Any provision of this Warrant which is
------------
prohibited or unenforceable in any jurisdiction, shall as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
- 13 -
<PAGE>
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Warrant to be issued
in its corporate name under seal as of the date first above written.
SSE TELECOM, INC., a
Delaware corporation
ATTEST:
By: /s/ G. Donald Markle By:/s/ Frederick C. Toombs
------------------------- -----------------------
Title: Secretary Name: Frederick C. Toombs
------------------ ---------------------
(CORPORATE SEAL) Title: President
--------------------
- 14 -
<PAGE>
EXHIBIT A
[date]
SSE TELECOM, INC.
- -------------------
- -------------------
Re: Election to Purchase Common Stock
The undersigned hereby elects to exercise the right of purchase
represented by the Warrant in accordance with Section 4 thereof to purchase
thereunder _____ shares of the Common Stock. Simultaneously herewith, the
undersigned is tendering to the Company the Aggregate Exercise Price in
connection with such exercise, and requests that certificates for such shares be
issued in the name of______________________________________________________
___________________________________________________________________ and be
delivered to__________________________________________________________________
___________________________________at_________________________________________.
If said number of shares shall not be all the shares of Common Stock purchasable
under the Warrant, the undersigned also requests that a new warrant for the
remaining number of shares purchasable under such Warrant be issued and
registered in the name of, and delivered to, the undersigned at the address
stated below.
Name of Warrant Holder:
----------------------------------------------
Address:
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
Signature: By:
------------------------------------------------
Name:
----------------------------------------------
Title:
---------------------------------------------
- 15 -
<PAGE>
VOTING AGREEMENT
----------------
This Voting Agreement (this "Agreement") is made and entered into as of
the Effective Date (as defined below) by and among SSE TELECOM, INC., a
Delaware corporation (the "Company"), ALCATEL TELSPACE, a societe anonyme
organized under the laws of France (the "Purchaser"), and each stockholder of
the Company who becomes a party to this Agreement by the execution of this
Agreement, or a like counterpart hereof (such entities and individuals are
referred to herein, collectively, as the "Stockholders" and, individually, as
a "Stockholder").
WITNESS:
--------
WHEREAS, the Company and Purchaser intend that Purchaser will acquire
shares of the common stock of the Company pursuant to the terms of a certain
Stock Purchase and Investment Agreement to be entered into by the Company and
Purchaser (the "Investment Agreement"); and
WHEREAS, to induce the Purchaser to enter into the Investment Agreement
and to purchase shares of the Company's common stock, the Company has agreed
to request the Stockholders to enter into this Agreement; and
WHEREAS, the Stockholders deem the purchase of common stock of the
Company by the Purchaser pursuant to the Investment Agreement to be in the
best interests of the Company, and the Stockholders are willing to enter into
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties contained herein and of the mutual benefits to
be derived herefrom, and intending to be legally bound, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.1 DEFINITIONS. As used in this Agreement, the following
-----------
defined terms have the meanings indicated below:
"AFFILIATE" of a person means a Person that directly or indirectly
-----------
through one or more intermediates, controls, is controlled by, or is under
common control with, the first Person. For purposes of this definition,
"control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise.
1
<PAGE>
"BOARD" has the meaning set forth in Article II.
-------
"COMMON STOCK" means the authorized Common Stock of the Company, par
--------------
value $.01 per share, whether or not issued and outstanding.
"COMPANY" has the meaning set forth in the introductory paragraph
---------
hereof.
"DGCL" has the meaning set forth in Article II.
"EFFECTIVE DATE" has the meaning set forth in Section 4.2
----------------
"ELECTION MEETING" has the meaning set forth in Article II.
------------------
"INVESTMENT AGREEMENT" has the meaning set forth in the recitals hereto.
----------------------
"PERSON" means any natural person, corporation, general partnership,
--------
limited partnership, proprietorship, limited liability company, joint venture,
other business organization, trust, union, association or governmental
authority.
"PURCHASER" has the meaning set forth in the introductory paragraph
-----------
hereof.
"PURCHASER DIRECTOR" has the meaning set forth in Article II.
--------------------
"PURCHASER NOMINEE" has the meaning set forth in Article II.
-------------------
"STOCKHOLDERS" and "STOCKHOLDER" have the meaning set forth in the
-------------- -------------
introductory paragraph hereof.
"SUCCESSOR PURCHASER DIRECTOR" has the meaning set forth in Article II.
------------------------------
"VOTING STOCK" means the Common Stock and any other capital stock or
--------------
securities issued by the Company having the ordinary power to vote in the
election of directors of the Company (other than such capital stock or
securities having such power only upon the occurrence of a contingency) now
owned or hereafter acquired by any Stockholder.
2
<PAGE>
ARTICLE II
BOARD REPRESENTATION
--------------------
At least thirty (30) days prior to establishing the date for any annual
or special meeting of stockholders of the Company at which the Board of
Directors of the Company (the "Board") will be elected (an "Election Meeting")
the Company shall notify the Purchaser of its intent to establish such date.
Upon its receipt of such notice, the Purchaser shall have the right, but not
the obligation, to designate an individual who may, but need not be, an
employee of the Purchaser or an Affiliate of the Purchaser (the "Purchaser
Nominee") for nomination to the Board. The Company and the Stockholders shall
use their best efforts to cause the Purchaser Nominee to be nominated
(including, but not limited to, making the Purchaser Nominee a member of the
recommended management slate of directors) for election to the Board at such
Election Meeting and elected thereat. In addition, each Stockholder agrees to
vote (whether in person or by proxy) all shares of Voting Stock of the Company
owned or held of record by such Stockholder at any Election Meeting in favor of
the election of the Purchaser Nominee to the Board.
In the event that any Purchaser Nominee is elected to the Board (the
"Purchaser Director") and thereafter such Purchaser Director dies, resigns, or
is removed (with or without cause) from the Board, then the Purchaser shall
have the right, but not the obligation, to designate a successor Purchaser
Director (the "Successor Purchaser Director") to fill the vacancy on the
Board. In the event the Purchaser designates such Successor Purchaser
Director, the Company and the Stockholders shall use their best efforts to
cause the remaining directors on the Board to elect the Successor Purchaser
Director in accordance with the certificate of incorporation and by-laws of
the Company and the Delaware General Corporation Law ("DGCL") as the successor
director to hold office for the unexpired portion of the term of the Purchaser
Director. In addition, if the stockholders of the Company have the right to
appoint a successor director pursuant to the terms of the certificate of
incorporation and by-laws of the Company and the DGCL, then the Company and
the Stockholders shall use their best efforts to cause the stockholders of the
Company to appoint the Successor Purchaser Director as the successor to the
Purchaser Director and, in connection therewith, each Stockholder agrees to
vote (whether in person or by proxy) all shares of Voting Stock of the Company
owned or held of record by such Stockholder in favor of the appointment of the
Successor Purchaser Director as the successor to the Purchaser Director.
3
<PAGE>
ARTICLE III
TERMINATION
-----------
This Agreement shall terminate (a) on the date on which the Purchaser and
all of the Affiliates of the Purchaser hold, in the aggregate, less than
500,000 shares of Common Stock, or (b) as to each Stockholder, the date on
which such Stockholder holds, of record and beneficially, less than 5,000
shares of Voting Stock. In addition to the foregoing, this Agreement shall
terminate in respect to O'Henry Partnership and in respect to Theodore J.
Georgelas and April Georgelas, if not earlier terminated, on September 30,
1998.
ARTICLE IV
MISCELLANEOUS
-------------
SECTION 4.1 NOTICES. All notices and other communications hereunder
-------
shall be in writing and will be deemed to have been duly given (i) when
personally delivered, (ii) when sent by telefax to a party at the number
listed below for such party, (iii) three (3) business days after the day on
which the same has been delivered prepaid to an international courier service,
or (iv) ten (10) business days after the deposit in the United States mail,
registered or certified, return receipt requested, postage prepaid, in each
case addressed to the party to whom such notice is to be given at the
following address for such party:
If to the Company SSE Telecom, Inc.
8230 Leesburg Pike
Suite 710
Vienna, Virginia 22182
U.S.A.
Attention: Daniel E. Moore
Telefax No.: 703-790-0486
With Copies to: Surovell, Jackson, Colten & Dugan, P.C.
4010 University Drive, Suite 200
Fairfax, Virginia 22030
U.S.A.
Attention: G. Donald Markle, Esquire
Telefax No.: 703-591-2149
If to the Purchaser: Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attention: Jacques Couet
Telefax No.: 331-46524596
4
<PAGE>
With Copies to: Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attention: Martine Funston, Esquire
Legal Counsel
Telefax No.: 331-46524595
If to the Stockholders: To the address and/or telefax number for each
Stockholder set forth below its signature
Any party hereto from time to time may change its address, telefax number or
other information for the purpose of notices to that party by giving notice
specifying such change to the other parties hereto.
SECTION 4.2 EFFECTIVE DATE. This Agreement shall be effective (the
--------------
"Effective Date") concurrent with closing under the Investment Agreement as to
each Person who has executed this Agreement at or prior to closing under the
Investment Agreement, and as of the date of execution of this Agreement by any
Person who becomes a party to this Agreement after closing under the
Investment Agreement.
SECTION 4.3 OWNERSHIP OF VOTING STOCK. Each Stockholder severally
-------------------------
represents to Purchaser that such Stockholder holds of record and
beneficially, as of the Effective Date, the number of shares of Common Stock
of the Company set forth after such Stockholder's signature.
SECTION 4.4 BENEFITS AND BINDING EFFECT. Neither this Agreement nor
---------------------------
any right, interest or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other parties hereto, provided
that the Purchaser may assign any or all rights or obligations of the
Purchaser hereunder to any Affiliate of the Purchaser. Nothing contained in
this Agreement shall restrict or inhibit the right of any Stockholder to
transfer or sell any shares of Common Stock owned by such Stockholder free and
clear from the terms and provisions of this Agreement, and any transferee of
such shares shall not be bound by this Agreement. Subject to the first
sentence of this Section 4.4, this Agreement is binding upon, and inures to
the benefit of and is enforceable by the parties hereto, and their respective
successors in interest.
SECTION 4.5 CAPTIONS. The captions used in this Agreement have been
--------
inserted for convenience of reference only and do not define or limit the
provisions hereof.
SECTION 4.6 GOVERNING LAW. This Agreement shall be governed by and
-------------
construed in accordance with the Laws of the State of Delaware applicable to a
contract executed and performed in such
5
<PAGE>
State, without giving effect to the conflicts of laws principles thereof.
SECTION 4.7 COUNTERPARTS. This Agreement may be executed in one or
------------
more counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
SECTION 4.8 SEVERABILITY. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
SECTION 4.9 NO THIRD PARTY BENEFICIARY. This Agreement shall not
--------------------------
confer any rights or remedies upon any Person other than the parties hereto and
their respective successors and permitted assigns.
IN WITNESS WHEREOF, the parties have executed this Voting Agreement as of
the Effective Date.
COMPANY:
SSE TELECOM, INC., a Delaware
corporation
By: /s/ Frederick C. Toombs
-----------------------------------------
Name: Frederick C. Toombs
---------------------------------------
Title: President
--------------------------------------
PURCHASER:
ALCATEL TELSPACE, a French societe
anonyme
By: /s/ Jerome de Vitry
-----------------------------------------
Name: Jerome de Vitry
---------------------------------------
Title: Director R&D and Product Management
-------------------------------------
ATTORNEY-IN-FACT
6
<PAGE>
SIGNATURE PAGE FOR STOCKHOLDERS
WHO BECOME PARTIES TO THE VOTING AGREEMENT
AMONG SSE TELECOM, INC., ALCATEL TELSPACE, S.A.,
AND CERTAIN STOCKHOLDERS OF SSE TELECOM, INC.
STOCKHOLDER:
O'HENRY PARTNERSHIP
By: /s/ Kimerly G. Henry
-----------------------------------
Kimerly Henry, General Partner
522 Cedar Creek Grade
Winchester, VA 22601
Telefax No.: (540) 662-0063
-----------------------
Shares of Common Stock: 141,339
---------------
Date of Execution: September 3, 1996
--------------------
THEODORE J. AND APRIL GEORGELAS,
TENANTS BY THE ENTIRETY
Shares of Common Stock: 113,071
---------------
/s/ Theodore J. Georgelas
--------------------------------------
Theodore J. Georgelas
Address: 7601 Lewinsville Road #250
------------------------------
McLean, VA 22102
--------------------------------------
Telefax No.: 703-893-3744
--------------------------
Date of Execution: 8/27/96
--------------------
/s/ April Georgelas
--------------------------------------
April Georgelas
Address: 720 Live Oak Dr.
------------------------------
McLean, VA 22101
--------------------------------------
Telefax No.: 703 821-3273
--------------------------
Date of Execution: 8-30-96
--------------------
7
<PAGE>
PRESCAP LIMITED PARTNERSHIP, a West
Virginia Limited Partnership
By: /s/ Frank S. Trumbower
-----------------------------------
Frank S. Trumbower, General
Partner
1430 Spring Hill Road, Suite 200
McLean, Virginia 22102
Telefax No.: 703-893-0608
Shares of Common Stock: 16,667
---------------
Date of Execution: 8-30-96
--------------------
PRINZ (U.S.A.) DISTRIBUTORS, INC.,
a Virginia Corporation
By: /s/ Frank S. Trumbower
-----------------------------------
Frank S. Trumbower, President
1430 Spring Hill Road, Suite 200
McLean, Virginia 22102
Telefax No.: 703-893-0608
Shares of Common Stock: 105,000
---------------
Date of Execution: 8-30-96
--------------------
AVENEL CAPITAL MANAGEMENT, INC. a
Virginia Corporation
By: /s/ Frank S. Trumbower
-----------------------------------
Frank S.Trumbower, President
1430 Spring Hill Road, Suite 200
McLean, Virginia 22102
Telefax No.: 703-893-0608
Shares of Common Stock: 10,000
---------------
Date of Execution: 8-30-96
--------------------
8
<PAGE>
=============================================================================
STOCKHOLDER AGREEMENT
BY AND AMONG
SSE TELECOM, INC.,
ALCATEL TELSPACE, S.A.
AND
CERTAIN OTHER STOCKHOLDERS
OF
SSE TELECOM, INC.
Dated as of September 6, 1996
===============================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
-----------
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------
ARTICLE II
APPROVAL OF TRANSACTIONS WITH PURCHASER
---------------------------------------
ARTICLE III
RIGHT OF FIRST REFUSAL
----------------------
SECTION 3.1 Grant of Right . . . . . . . . . . . . . . . . . . . . . . . 5
--------------
SECTION 3.2 Permitted Transfers of Voting Stock . . . . . . . . . . . . 6
-----------------------------------
SECTION 3.3 Liquidation of Venture America . . . . . . . . . . . . . . . 7
------------------------------
SECTION 3.4 No Adverse Effect for Failure to Purchase . . . . . . . . . 7
-----------------------------------------
ARTICLE IV
RIGHT OF CO-SALE
----------------
SECTION 4.1 Grant of Right . . . . . . . . . . . . . . . . . . . . . . . 7
--------------
SECTION 4.2 Transfer of Sale Proceeds . . . . . . . . . . . . . . . . . 8
-------------------------
SECTION 4.3 Liquidation of Venture America . . . . . . . . . . . . . . . 8
------------------------------
SECTION 4.4 No Adverse Effect for Failure to Participate . . . . . . . . 8
--------------------------------------------
ARTICLE V
BOARD REPRESENTATION
--------------------
AND OBSERVATION RIGHTS
----------------------
SECTION 5.1 Designation of Nominee by Purchaser . . . . . . . . . . . . 9
-----------------------------------
SECTION 5.2 Indemnification and Insurance . . . . . . . . . . . . . . . 9
-----------------------------
SECTION 5.3 Observation Rights . . . . . . . . . . . . . . . . . . . . . 10
------------------
</TABLE>
- i -
<PAGE>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
OF THE CURRENT STOCKHOLDERS
---------------------------
<TABLE>
<S> <C> <C>
SECTION 6.1 Organization, Good Standing, Due Authorization,
----------------------------------------------
Execution and Delivery by Entity Stockholder . . . . . . . . 10
--------------------------------------------
SECTION 6.2 Due Authorization, Execution and Delivery by
--------------------------------------------
Individual Stockholder . . . . . . . . . . . . . . . . . . .10
----------------------
SECTION 6.3 Title to Shares . . . . . . . . . . . . . . . . . . . . . . 11
---------------
SECTION 6.4 Consents; No Conflict . . . . . . . . . . . . . . . . . . . 11
---------------------
SECTION 6.5 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 12
----------
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
SECTION 7.1 Organization and Authority of the Purchaser . . . . . . . . 12
-------------------------------------------
SECTION 7.2 Due Authorization, Execution and Delivery . . . . . . . . . 12
-----------------------------------------
SECTION 7.3 Consents; No Conflict . . . . . . . . . . . . . . . . . . . 12
---------------------
SECTION 7.4 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------
ARTICLE VIII
TERMINATION
-----------
ARTICLE IX
VIOLATIONS AND LEGENDS
----------------------
SECTION 9.1 Violations of this Agreement . . . . . . . . . . . . . . . . 13
----------------------------
SECTION 9.2 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------
ARTICLE X
RESOLUTION OF DISPUTES
----------------------
ARTICLE XI
MISCELLANEOUS
-------------
SECTION 11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-------
SECTION 11.2 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 16
-----------------
</TABLE>
- ii -
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 11.3 Public Announcements.........................................16
--------------------
SECTION 11.4 Entire Agreement.............................................16
----------------
SECTION 11.5 Waiver.......................................................16
------
SECTION 11.6 Amendment....................................................16
---------
SECTION 11.7 Benefits and Binding Effect..................................17
---------------------------
SECTION 11.8 Captions.....................................................17
--------
SECTION 11.9 Exhibits and Schedules.......................................17
----------------------
SECTION 11.10 Governing Law................................................17
-------------
SECTION 11.11 Counterparts.................................................17
------------
SECTION 11.12 Severability.................................................17
------------
SECTION 11.13 No Third Party Beneficiary...................................17
--------------------------
SECTION 11.14 Authority of Venture America.................................17
----------------------------
</TABLE>
- iii -
<PAGE>
STOCKHOLDER AGREEMENT
---------------------
THIS STOCKHOLDER AGREEMENT (this "Agreement") is made and entered into
---------
as of the 6th day of September, 1996 by and among VENTURE AMERICA MANAGEMENT
LIMITED PARTNERSHIP, a Virginia limited partnership, FRANK S. TRUMBOWER,
a resident of Incline Village, Nevada, SARAH P. TRUMBOWER, a resident of
Berryville, Virginia, FREDERICK C. TOOMBS, a resident of Los Gatos,
California, DANIEL E. MOORE, a resident of McLean, Virginia, and FRANK J.
PETERNELL, a resident of Cupertino, California (such entities and individuals
are referred to herein, collectively, as the "Current Stockholders" and,
--------------------
individually, as a "Current Stockholder"), SSE TELECOM, INC., a Delaware
-------------------
corporation (the "Company"), and ALCATEL TELSPACE, a societe anonyme
-------
organized under the laws of France (the "Purchaser").
---------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, each Current Stockholder owns the number of shares of the
issued and outstanding common stock of the Company listed opposite his name
on Exhibit A attached hereto; and
---------
WHEREAS, simultaneously with the execution of this Agreement, (i)
the Purchaser will purchase 525,000 shares of the common stock of the Company
from the Company pursuant to the terms of that certain Stock Purchase and
Investment Agreement dated as of September 6, 1996 (the "Investment
----------
Agreement"), (ii) the Purchaser will purchase 100,000 shares of the common
- ---------
stock of the Company from certain Current Stockholders pursuant to the terms
of that certain Stock Purchase Agreement dated as of September 6, 1996 (the
"Selling Stockholder Agreement"), and (iii) the Company will issue to the
-----------------------------
Purchaser a Warrant dated September 6, 1996 to purchase 300,000 shares of
common stock of the Company upon the terms set forth therein (the "Warrant");
-------
and
WHEREAS, the execution of this Agreement by the parties hereto is a
condition precedent to the obligation of the Purchaser to consummate the
transactions contemplated by the Investment Agreement and the Selling
Stockholder Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties contained herein and of the mutual benefits to
be derived herefrom, and intending to be legally bound, the parties hereto
agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
-----------
SECTION 1.1 Definitions. As used in this Agreement, the following
-----------
defined terms have the meanings indicated below:
"Affiliate" of a Person means a Person that directly or indirectly
---------
through one or more intermediates, controls, is controlled by, or is under
common control with, the first Person.
"Board" has the meaning set forth in Section 5.1.
-----
"Board of Arbitration" has the meaning set forth in Article X.
--------------------
"Business Day" means any day which is not a Saturday, Sunday or
------------
legal holiday in New York, New York or Paris, France.
"Commercial Agreement" means that certain Joint Product
--------------------
Identification and Supply Agreement between the Company and the Purchaser
dated September 6, 1996.
"Common Stock" means the authorized common stock of the Company, par
------------
value $.01 per share, whether or not issued and outstanding.
"Company" has the meaning set forth in the introductory paragraph
-------
hereof.
"Contract" means all contracts, agreements, license agreements,
--------
leases, assignments, purchase agreements, indentures, mortgages, instruments
of indebtedness, security agreements, guaranties, purchase orders, sales
orders, and distribution agreements.
"Control" (whether or not capitalized) shall mean, with respect to a
-------
Person, the possession, directly or indirectly, of the power to direct or
cause the direction of the management policies of such Person whether through
the ownership of voting securities, by Contract or otherwise and, in any
event, and without limitation of the foregoing, any Person fifty percent
(50%) or more of whose voting securities are owned by another Person shall be
deemed to be controlled that Person.
"Current Stockholders" and "Current Stockholder" have the meanings
-------------------- -------------------
set forth in the introductory paragraph hereof.
"DGCL" has the meaning set forth in Section 5.1.
----
"Election Meeting" has the meaning set forth in Section 5.1.
----------------
"Financial Investor" means a Person meeting the requirements of Rule
------------------
13d-1(b)(1)(i) under the Securities Exchange Act of 1934, as amended.
- 2 -
<PAGE>
"Governmental Authority" means any court, tribunal, arbitrator,
----------------------
authority, agency, commission, official or other instrumentality of the
United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"Investment Agreement" has the meaning set forth in the recitals
--------------------
hereof.
"Laws" means all laws, statutes, rules, regulations, ordinances and
----
other pronouncements having the effect of law of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision or of any Governmental Authority.
"Liens" means any mortgage, pledge, assessment, security interest,
-----
lease, lien, adverse claim, levy, charge, rights of others, or other
encumbrance of any kind, or any conditional sale contract, title retention
contract or other contract to give any of the foregoing.
"Losses" means any and all damages, fines, costs, fees, penalties,
------
deficiencies, losses, amounts paid in settlement and expenses (including
without limitation interest, court costs, fees of attorneys, accountants and
other experts or other expenses of litigation or other proceedings or of any
claim, default or assessment).
"Permitted Transfer" has the meaning set forth in Section 3.2.
------------------
"Person" means any natural person, corporation, general partnership,
------
limited partnership, proprietorship, limited liability company, joint
venture, other business organization, trust, union, association or
Governmental Authority.
"Prorata Percentage" means, with respect to a Purchasing Stockholder, a
------------------
fraction, the numerator of which is the number of shares of Voting Stock owned
by such Purchasing Stockholder as of the date of the Voting Stock Notice and the
denominator of which is the total number of shares of Voting Stock owned by all
Purchasing Stockholders as of the date of the Voting Stock Notice.
"Purchaser" has the meaning set forth in the introductory paragraph
---------
hereof.
"Purchaser Director" has the meaning set forth in Section 5.1
------------------
"Purchaser Nominee" has the meaning set forth in Section 5.1.
-----------------
"Purchasing Stockholder" has the meaning set forth in Section 3.1.
----------------------
"Registration Rights Agreement" means that certain Registration
-----------------------------
Rights Agreement dated September 6, 1996, between the Company and the Purchaser.
"Representing Stockholder" has the meaning set forth in Article VI.
------------------------
- 3 -
<PAGE>
"Restricted Investor" means any Person, other than a Financial
-------------------
Investor or any Stockholder, who proposes to acquire Voting Stock if either
(i) such Person owns ten percent (10%) or more of the Total Voting Power of
the Company prior to such acquisition, or (ii) as a result of such
acquisition, such Person would own ten percent (10%) or more of the Total
Voting Power of the Company immediately following such acquisition.
"Rule 144" means Rule 144 promulgated under the Securities Act.
--------
"Rules of Arbitration" has the meaning set forth in Article X.
--------------------
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Selling Stockholder" has the meaning set forth in Section 3.1.
-------------------
"Selling Stockholder Agreement" has the meaning set forth in the
-----------------------------
recitals hereof.
"Stockholders" mean the Current Stockholders and the Purchaser,
------------
collectively, and "Stockholder" means any one of them.
-----------
"Subsidiary" of a Person means a Person that is, directly or
----------
indirectly, through one or more intermediates controlled by the first Person.
"Successor Purchaser Director" has the meaning set forth in Section
----------------------------
5.1.
"Total Voting Power of the Company" means the total number of votes
---------------------------------
which may be cast in the election of directors of the Company at any meeting
of stockholders of the Company if all securities entitled to vote in the
election of directors of the Company were present and voted at such meeting
(other than votes that may be cast only upon the occurrence of a
contingency).
"Venture America" has the meaning set forth in Section 3.3.
---------------
"Voting Agreement" means that certain Voting Agreement effective as
----------------
of the date of this Agreement, among the Company, the Purchaser and certain
other stockholders of the Company.
"Voting Stock" means the Common Stock and any other capital stock or
------------
securities issued by the Company having the ordinary power to vote in the
election of directors of the Company (other than such capital stock or
securities having such power only upon the occurrence of a contingency) now
owned or hereafter acquired by any Stockholder.
"Voting Stock Notice" has the meaning set forth in Section 3.1(a).
-------------------
"Warrant" has the meaning set forth in the recitals hereof.
-------
- 4 -
<PAGE>
ARTICLE II
APPROVAL OF TRANSACTIONS WITH PURCHASER
---------------------------------------
Each Current Stockholder hereby acknowledges, consents to and
approves all terms and conditions of the Investment Agreement, the Selling
Stockholder Agreement, the Registration Rights Agreement, the Voting
Agreement, the Commercial Agreement and all transactions contemplated
therein. Each Current Stockholder hereby waives and forever relinquishes any
and all preemptive rights, rights of first refusal or other rights to acquire
any shares of capital stock of the Company which such Current Stockholder has
pursuant to any Contract or otherwise and which would apply to the Common
Stock (i) issued or to be issued by the Company to the Purchaser pursuant to
the Investment Agreement, (ii) sold or to be sold by any Current Stockholder
to the Purchaser pursuant to the Selling Stockholder Agreement, or (iii)
issued or to be issued by the Company to the Purchaser pursuant to the
Warrant.
ARTICLE III
RIGHT OF FIRST REFUSAL
----------------------
SECTION 3.1 Grant of Right. If at any time a Stockholder (a
--------------
"Selling Stockholder") proposes to sell or transfer Voting Stock in any
-------------------
manner, directly or indirectly, to any Person, other than pursuant to a
Permitted Transfer in accordance with the terms of Section 3.2 hereof, then
each of the other Stockholders (a "Purchasing Stockholder") shall have a
----------------------
right of first refusal to purchase its Prorata Percentage of the shares of
such Voting Stock, on the terms pursuant to which such Selling Stockholder
proposes to sell or transfer such Voting Stock, in accordance with the
following procedure:
(a) Notice to Purchasing Stockholders. In the event a Selling
---------------------------------
Stockholder proposes to sell or transfer Voting Stock in a transaction
that would be subject to the foregoing right of first refusal, such
Selling Stockholder shall give each Purchasing Stockholder written
notice (the "Voting Stock Notice") of its intentions stating (i) a
-------------------
description of the Voting Stock proposed to be sold or transferred and
the identity of the transferee, (ii) the total number of shares of
Voting Stock proposed to be sold or transferred, (iii) the price per
share at which, and the other terms on which, such Voting Stock is
proposed to be sold or transferred, and (iv) the date of such notice.
(b) Exercise by Purchasing Stockholders. Within thirty (30)
-----------------------------------
days after the Voting Stock Notice is given to each Purchasing
Stockholder, such Purchasing Stockholder may elect to purchase, at the
price and on the terms specified in the Voting Stock Notice, the number
of shares of Voting Stock proposed to be sold or transferred by the
Selling Stockholder determined by multiplying all shares of Voting
Stock proposed to be sold or transferred by the Prorata Percentage of
such Purchasing Stockholder. An election to purchase shall be made by
the Purchasing Stockholder in writing and must be given to the Selling
Stockholder within such thirty (30) day period. Any such election made
by a Purchasing Stockholder shall constitute an
- 5 -
<PAGE>
irrevocable, legally binding obligation of such Purchasing
Stockholder to purchase its Prorata Percentage of the Voting Stock
on the terms set forth in the Voting Stock Notice, and the
Purchasing Stockholder and the Selling Stockholder shall use their
best efforts to secure any approvals required in connection
therewith. The closing of the sale of the Voting Stock by the
Selling Stockholder to a Purchasing Stockholder upon the exercise of
its rights under this Section 3.1 shall take place within thirty
(30) days following the date on which such election to purchase is
made, provided that such period shall be extended, as required, in
order to comply with applicable Laws.
(c) Back-Up Right. If any Purchasing Stockholder does
-------------
not exercise its right of first refusal to purchase shares of Voting
Stock hereunder within the time specified for such exercise
(including its failure to exercise the right granted in this
subsection (c)), such Purchasing Stockholder shall immediately so
notify all other Purchasing Stockholders, and each of the other
Purchasing Stockholders shall have the right to purchase its Prorata
Percentage of such shares of Voting Stock (determined without
counting the shares of Voting Stock owned by the Purchasing
Stockholder not exercising its right of first refusal) within a
period of five (5) days following the date on which such notice is
given.
(d) Failure to Exercise. The Selling Stockholder shall
-------------------
be free, subject to the co-sale rights set forth in Article IV
hereof, during the period of ninety (90) days following the
expiration of all rights of first refusal set forth in this Section
3.1, to sell or transfer the Voting Stock specified in the Voting
Stock Notice previously delivered to each Purchasing Stockholder
which is not purchased by Purchasing Stockholders to the proposed
transferee(s) described in the Voting Stock Notice and on terms no
less favorable to the Selling Stockholder than the terms specified
in the Voting Stock Notice. The proposed sale or transfer of any
such Voting Stock not sold or transferred by the Selling Stockholder
to such transferee(s) within such ninety (90) day period shall again
be subject to the restrictions set forth in this Section 3.1.
SECTION 3.2 Permitted Transfers of Voting Stock. The right of
-----------------------------------
first refusal contained in Section 3.1 hereof shall not apply to any sale or
transfer of Voting Stock made by a Selling Stockholder (a "Permitted
---------
Transfer"): (i) to another Stockholder or an Affiliate of another
- --------
Stockholder, (ii) pursuant to a bona fide public offering registered under the
Securities Act of either Voting Stock or securities exchangeable or exercisable
for Voting Stock or, if such securities being sold or transferred are registered
under the Securities Act, in any other public market transaction, (iii) pursuant
to Rule 144 (but excluding Rule 144A promulgated under the Securities Act), (iv)
pursuant to any repurchase by the Company, (v) pursuant to any bona fide gift to
a charitable organization, (vi) pursuant to any transfer to a Selling
Stockholder's ancestors, descendants, spouse or to a trustee for their benefit,
(vii) pursuant to community property or similar domestic relations laws, or
(viii) if the Purchaser is the Selling Stockholder, to an Affiliate of the
Purchaser. Notwithstanding the foregoing, any proposed sale or transfer pursuant
to subparagraph (vii) of this Section 3.2 shall not qualify as a Permitted
Transfer (and shall therefore be subject to the rights of first refusal in
Section 3.1) unless such Selling Stockholder notifies the Company and the
Stockholders (other than the Selling Stockholder) of such sale or transfer and
the proposed transferee furnishes the Company and the Stockholders (other than
the Selling Stockholder) with a
- 6 -
<PAGE>
written agreement to be bound by and comply with all provisions of this
Agreement applicable to the Selling Stockholder prior to receiving the Voting
Stock being transferred. In addition, notwithstanding the foregoing, any
proposed sale or transfer pursuant to subparagraphs (ii) or (iii) of this
Section 3.2 shall not qualify as a Permitted Transfer (and shall therefore be
subject to the rights of first refusal in Section 3.1) if the Selling
Stockholder solicits or arranges for the solicitation of orders to purchase
such Voting Stock by a Restricted Investor from an underwriter in
anticipation of or in connection with a registered public offering or from or
through a broker in anticipation of or in connection with a Rule 144
transaction or other public market transaction, provided that the execution
and performance of an underwriting agreement by the Selling Stockholder in
connection with a registered public offering shall not, in and of itself, be
considered soliciting or arranging for the solicitation of orders to purchase
Voting Stock. Simultaneous with any transfer described in subparagraph (v)
or (vi), the Selling Stockholder shall certify to each Stockholder (other
than the Selling Stockholder) that such transfer is not intended to
indirectly complete any transfer that would otherwise be restricted pursuant
to this Article III.
SECTION 3.3 Liquidation of Venture America. The Stockholders and
------------------------------
the Company acknowledge that Venture America Management Limited Partnership,
a Virginia limited partnership and a Current Stockholder ("Venture America"),
---------------
will undergo a complete liquidation on or before December 31, 1996, and that,
in connection therewith, the 250,366 shares of Common Stock currently owned
by Venture America will be distributed to the following partners thereof in
approximately equal amounts: Daniel E. Moore, James R. Ball, Otis F. Coston.
The provisions in this Article III shall not apply to the transfer
of such shares of Common Stock by Venture America to the foregoing
individuals in connection with the liquidation of Venture America described
above, provided that, in the case of any transfer to Mr. Ball or Mr. Coston,
such individual and, if legally necessary or appropriate, his spouse (if any)
agrees in writing to be bound by all provisions of this Agreement binding on
a Current Stockholder and that a copy of such agreement is delivered to each
party hereto before such transfer.
SECTION 3.4 No Adverse Effect for Failure to Purchase. The
-----------------------------------------
exercise or non-exercise of its right of first refusal by any Purchasing
Stockholder hereunder in one or more cases shall not adversely affect such
Purchasing Stockholder's right to exercise such right of first refusal with
respect to any subsequent proposed sale or transfer of Voting Stock by a
Selling Stockholder pursuant to this Article III.
ARTICLE IV
RIGHT OF CO-SALE
----------------
SECTION 4.1 Grant of Right. If at any time a Selling Stockholder
--------------
proposes to sell or transfer any Voting Stock in any manner, directly or
indirectly, to any Person, other than pursuant to a Permitted Transfer, and if
all shares of such Voting Stock are not purchased pursuant to the exercise of
the rights of first refusal with respect to such proposed sale or
- 7 -
<PAGE>
transfer set forth in Section 3.1 hereof, then each Purchasing Stockholder
shall have the right, exercisable by giving written notice to the Selling
Stockholder, within ten (10) days after the expiration of all unexercised
rights of first refusal pursuant to Sections 3.1(b) and (c), to participate
in such sale or transfer of Voting Stock by the Selling Stockholder on the
terms set forth in the Voting Stock Notice previously provided to such
Purchasing Stockholder pursuant to Section 3.1. If any Purchasing
Stockholder exercises such right of participation, the number of shares of
Voting Stock which such Selling Stockholder may sell or transfer shall be
correspondingly reduced. The right of participation of each Purchasing
Stockholder shall be subject to the following additional terms and
conditions:
(a) Calculation of Shares. The number of shares of
---------------------
Voting Stock which the Purchasing Stockholder may sell or transfer
(in whole or in part) shall be determined by multiplying (i) the
aggregate number of shares of Voting Stock which the Selling
Stockholder proposes to sell or transfer (following the exercise or
the expiration, as the case may be, of the rights of first refusal
set forth in Section 3.1) by (ii) a fraction, the numerator of which
is the number of shares of Voting Stock owned by the Purchasing
Stockholder as of the date of the Voting Stock Notice and the
denominator of which is the total number of shares of Voting Stock
owned by all Stockholders as of the date of the Voting Stock Notice.
(b) Delivery of Certificates. At the closing of the
------------------------
sale or transfer of the Voting Stock to the transferee, each
Purchasing Stockholder electing to participate therein pursuant to
this Section 4.1 shall deliver to the Selling Stockholder for
transfer to the transferee one or more stock certificates, properly
endorsed for transfer, which represent the number of shares of
Voting Stock which such Purchasing Stockholder elects to sell
pursuant to this Section 4.1.
SECTION 4.2 Transfer of Sale Proceeds. The stock certificate or
-------------------------
certificates which each Purchasing Stockholder delivers to the Selling
Stockholder pursuant to Section 4.1(b) shall be delivered by the Selling
Stockholder to the transferee in consummation of the sale or transfer
pursuant to the terms and conditions specified in the Voting Stock Notice,
and the Selling Stockholder shall promptly thereafter remit to such
Purchasing Stockholder that portion of the sale proceeds to which the
Purchasing Stockholder is entitled by reason of its participation in such
sale.
SECTION 4.3 Liquidation of Venture America. The provisions in this
------------------------------
Article IV shall not apply to any transfer of shares of Common Stock in
connection with the liquidation of Venture America which satisfies the
requirements of Section 3.3.
SECTION 4.4 No Adverse Effect for Failure to Participate. The
--------------------------------------------
exercise or non-exercise of its co-sale rights by any Purchasing Stockholder
hereunder in one or more cases shall not adversely affect such Purchasing
Stockholder's right to exercise such right of co-sale with respect to any
subsequent proposed sale or transfer of Voting Stock by a Selling Stockholder
pursuant to this Article IV.
- 8 -
<PAGE>
ARTICLE V
BOARD REPRESENTATION
--------------------
AND OBSERVATION RIGHTS
----------------------
SECTION 5.1 Designation of Nominee by Purchaser. At least thirty
-----------------------------------
(30) days prior to establishing the date for any annual or special meeting of
stockholders of the Company at which the Board of directors of the Company
(the "Board") will be elected (an "Election Meeting") the Company shall
----- ----------------
notify the Purchaser of its intent to establish such date. Upon its receipt
of such notice, the Purchaser shall have the right, but not the obligation,
to designate an individual who may, but need not be, an employee of the
Purchaser or an Affiliate of the Purchaser (the "Purchaser Nominee") for
-----------------
nomination to the Board. The Company and the Current Stockholders shall use
their best efforts to cause the Purchaser Nominee to be nominated (including,
but not limited to, making the Purchaser Nominee a member of the recommended
management slate of directors) for election to the Board at such Election
Meeting and elected thereat. In addition, each Current Stockholder agrees to
vote (whether in person or by proxy) all shares of Voting Stock of the
Company owned or held of record by such Current Stockholder at any Election
Meeting in favor of the election of the Purchaser Nominee to the Board.
In the event that any Purchaser Nominee is elected to the Board (the
"Purchaser Director") and thereafter such Purchaser Director dies, resigns,
------------------
or is removed (with or without cause) from the Board, then the Purchaser
shall have the right, but not the obligation, to designate a successor
Purchaser Director (the "Successor Purchaser Director") to fill the vacancy
----------------------------
on the Board. In the event the Purchaser designates such Successor Purchaser
Director, the Company and the Current Stockholders shall use their best
efforts to cause the remaining directors on the Board to elect the Successor
Purchaser Director in accordance with the certificate of incorporation and by-
laws of the Company and the Delaware General Corporation Law ("DGCL") as the
----
successor director to hold office for the unexpired portion of the term of
the Purchaser Director. In addition, if the stockholders of the Company have
the right to appoint a successor director pursuant to the terms of the
certificate of incorporation and by-laws of the Company and the DGCL, then
the Company and the Current Stockholders shall use their best efforts to
cause the stockholders of the Company to appoint the Successor Purchaser
Director as the successor to the Purchaser Director and, in connection
therewith, each Current Stockholder agrees to vote (whether in person or by
proxy) all shares of Voting Stock of the Company owned or held of record by
such Stockholder in favor of the appointment of the Successor Purchaser
Director as the successor to the Purchaser Director.
SECTION 5.2 Indemnification and Insurance. The Company shall
-----------------------------
indemnify and hold harmless each of the Purchaser Nominee, the Purchaser
Director and the Successor Purchaser Director from and against any and all
Losses arising out of or related to his service as a director of the Company
or any Affiliate of the Company to the maximum extent permitted by Law
(including, without limitation, the DGCL), the certificate of incorporation
of the Company and the bylaws of the Company. In addition, throughout the
term of this Agreement, the Company shall maintain in effect directors and
officers liability insurance covering each of the Purchaser Nominee, the
Purchaser Director and the Successor Purchaser
- 9 -
<PAGE>
Director in his capacity as a director of the Company and providing the
following minimum benefits: $3,000,000 combined limits. The obligations of the
Company in this Section 5.2 shall survive the termination of this Agreement. The
Company shall not, without the prior written consent of the Purchaser, (i) amend
any provision of its certificate of incorporation or bylaws pertaining to the
indemnification of directors, or (ii) reduce the minimum benefits under the
foregoing directors insurance.
SECTION 5.3 Observation Rights. If at any time neither a Purchaser
------------------
Nominee (or a Purchaser Director) nor a Successor Purchaser Director is
serving on the Board, the Purchaser shall have the right to have a
representative designated by it attend all meetings of the Board and observe
all proceedings transacted at such meetings. The Company shall provide to
such representative copies of all notices, minutes, consents, and other
materials that it provides to its directors at the same time it provides such
information to directors. Notwithstanding the foregoing, the Company reserves
the right to exclude such representative from any meeting or any part thereof
if the Company believes, upon advice of counsel, that such exclusion is
reasonably necessary to preserve the attorney-client privilege, to protect
highly confidential proprietary information or for other similar reasons.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
OF THE CURRENT STOCKHOLDERS
---------------------------
Each Current Stockholder (the " Representing Stockholder") hereby
------------------------
severally represents and warrants to the Purchaser as follows:
SECTION 6.1 Organization, Good Standing, Due Authorization,
-----------------------------------------------
Execution and Delivery by Entity Stockholder. If the Representing
- --------------------------------------------
Stockholder is Venture America: (i) the Representing Stockholder is duly
organized, validly existing and in good standing as a limited partnership
under the laws of the State of its formation and has the partnership power
and authority to enter into and perform its obligations under this Agreement,
(ii) the execution, delivery and performance of this Agreement by the
Representing Stockholder and the consummation of the transactions
contemplated hereby by the Representing Stockholder have been duly authorized
by all necessary partnership action on the part of the Representing
Stockholder, (iii) this Agreement has been duly executed and delivered by the
Representing Stockholder, and (iv) this Agreement constitutes the legal,
valid and binding obligations of the Representing Stockholder enforceable
against the Representing Stockholder in accordance with its terms, except
that such enforcement (A) may be limited by bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally, and (B) is
subject to the availability of equitable remedies, as determined in the
discretion of the court before which such a proceeding may be brought.
SECTION 6.2 Due Authorization, Execution and Delivery by Individual
-------------------------------------------------------
Stockholder. If the Representing Stockholder is an individual: (i) the
- -----------
Representing Stockholder has full authority to execute and deliver this
Agreement, to perform his or her obligations hereunder and to consummate the
transactions contemplated hereby, (ii) this Agreement has been duly
- 10 -
<PAGE>
executed and delivered by the Representing Stockholder, and (iii) this
Agreement constitutes the legal, valid and binding obligations of the
Representing Stockholder enforceable against the Representing Stockholder in
accordance with its terms, except that such enforcement (A) may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally, and (B) is subject to the availability of equitable remedies, as
determined in the discretion of the court before which such a proceeding may
be brought.
SECTION 6.3 Title to Shares.
---------------
(a) Title. The Representing Stockholder owns
-----
beneficially and of record all of the shares of Common Stock set
forth opposite such Representing Stockholder's name on Exhibit A, and
---------
the Representing Stockholder owns no other shares of capital stock of
the Company. Upon the delivery of and payment for any shares of
Common Stock to be sold by the Representing Stockholder to the
Purchaser pursuant to Article III, the Purchaser will acquire good
and valid title to all such shares of Common Stock from the
Representing Stockholder, free and clear of all Liens.
(b) Stock Rights. Except as disclosed on Exhibit B, the
------------
Representing Stockholder is not a party to or bound by, or the
beneficiary of, (i) any outstanding subscriptions, options, warrants,
rights (including conversion rights, preemptive rights or rights of
first refusal) or Contracts, orally or in writing, obligating the
Company or any of its Subsidiaries, contingently or otherwise, to
issue or sell, or cause to be issued or sold, any shares of capital
stock or other equity interest, or any securities convertible into or
exchangeable for capital stock or other equity interest, in the
Company or any of its Subsidiaries, (ii) any outstanding rights or
Contracts, orally or in writing, obligating the Company or any of its
Subsidiaries, contingently or otherwise, to purchase or redeem, or
cause to be purchased or redeemed, any shares of capital stock or
other equity interest, or any securities convertible into or
exchangeable for capital stock or other equity interest, in the
Company or any of its Subsidiaries, or (iii) any Contract or
understanding, oral or written, which obligates the Representing
Stockholder to purchase or sell any capital stock or other security
of the Company or any of its Subsidiaries, which affects or relates
to the voting or giving of written consents with respect to any
capital stock or other security of the Company or any of its
Subsidiaries or which otherwise relates to any such capital stock or
other security.
(c) Registration Rights. The Representing Stockholder
-------------------
does not have any registration rights (including, without limitation,
demand or piggyback rights) with respect to any capital stock or
other securities of the Company or any of its Subsidiaries.
SECTION 6.4 Consents; No Conflict. The Representing Stockholder is
---------------------
not required to obtain the consent, authorization or approval of any Person,
or any authorization, approval or permit from any Governmental Authority, as a
condition to the consummation of this Agreement. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
will not conflict with, result in the termination of, contravene or constitute
a default under, or be an event which with the giving of notice or
- 11 -
<PAGE>
passage of time or both will become a default under, or give to others any
rights of termination or cancellation of, or accelerate the performance
required by or maturity of, or result in the creation of any material Lien or
loss of any rights with respect to the Representing Stockholder pursuant to
any of the terms, conditions or provisions of or under, any applicable Law,
the articles of formation (if any) of the Representing Stockholder, or any
Contract to which the Representing Stockholder is a party or which is
otherwise binding upon the Representing Stockholder.
SECTION 6.5 Disclosure. The representations and warranties of the
----------
Representing Stockholder contained in this Agreement and in any schedule,
certificate, or agreement furnished by the Representing Stockholder to the
Purchaser pursuant to this Agreement do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements herein or therein, in the light of the circumstances under which
they were made, not misleading.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser hereby represents and warrants to the Current
Stockholders as follows:
SECTION 7.1 Organization and Authority of the Purchaser. The
-------------------------------------------
Purchaser is a societe anonyme duly organized, validity existing and in good
standing under the laws of France. The Purchaser has full corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated herein.
SECTION 7.2 Due Authorization, Execution and Delivery. The
-----------------------------------------
execution, delivery and performance of this Agreement by the Purchaser and
the consummation by the Purchaser of the transactions contemplated herein
have been duly authorized by all necessary corporate action on the part of
the Purchaser, and this Agreement has been duly executed and delivered by the
Purchaser. This Agreement constitutes the legal valid and binding
obligations of the Purchaser enforceable against the Purchaser in accordance
with their respective terms, except that such enforcement (i) may be limited
by bankruptcy, insolvency, moratorium or similar laws affecting creditors'
rights generally, and (ii) is subject to the availability of equitable
remedies, as determined in the discretion of the court before which such a
proceeding may be brought.
SECTION 7.3 Consents; No Conflict. The Purchaser is not required
---------------------
to obtain the consent, authorization or approval of any Person, or any
authorization, approval or permit from any Governmental Authority, as a
condition to the consummation of this Agreement by the Purchaser. The
execution and delivery of this Agreement by the Purchaser and the
consummation of the transactions contemplated hereby will not conflict with,
result in the termination of, contravene or constitute a default under, or be
an event which with the giving of notice or passage of time or both will
become a default under, or give to others any rights of termination or
cancellation of, or accelerate the performance required by or maturity of, or
result in the creation of any material Lien or loss of any rights with
respect to the
- 12 -
<PAGE>
Purchaser pursuant to any of the terms, conditions or provisions of or under,
any applicable Law, the certificate of incorporation or by-laws of the
Purchaser, or any Contract to which the Purchaser is a party or which is
otherwise binding upon the Purchaser.
SECTION 7.4 Disclosure. The representations and warranties of the
----------
Purchaser contained in this Agreement and in any schedule, certificate or
agreement furnished by the Purchaser to the Current Stockholders pursuant to
this Agreement do not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE VIII
TERMINATION
-----------
This Agreement shall (a) terminate in its entirety on the date on
which the Purchaser and all of the Affiliates of the Purchaser hold, in the
aggregate, less than 500,000 shares of Voting Stock provided that on such
date such shares so held represent less than 8% of the outstanding shares of
Voting Stock on a fully diluted basis, and (b) shall terminate as to each
Current Stockholder or any Person that becomes a party hereto after the date
hereof on the date on which such Current Stockholder or such other Person, as
the case may be, holds, of record and beneficially, less than 10,000 shares
of Voting Stock.
ARTICLE IX
VIOLATIONS AND LEGENDS
----------------------
SECTION 9.1 Violations of this Agreement. Any attempt to transfer
----------------------------
shares of Voting Stock in violation of Articles III or IV hereof shall be
void and the Company agrees that it will not effect such a transfer nor will
it treat any alleged transferee as the holder of such shares. In addition to
all other rights and remedies available to the Purchaser under this Agreement
at Law or in equity for a violation of Article III of this Agreement by a
Selling Stockholder, if any Selling Stockholder transfers Voting Stock in a
transaction which violates Article III hereof, the Company shall, at the
option of the Purchaser, sell to the Purchaser the number of shares of Voting
Stock which the Purchaser was entitled to purchase from such Selling
Stockholder had such Selling Stockholder complied with the provisions of
Article III in connection with such transfer at the price required by Article
III. The Purchaser may exercise such right to purchase by notifying the
Company in writing within thirty (30) days following the discovery by the
Purchaser of the violation of Article III by such Selling Stockholder.
SECTION 9.2 Legends. Each certificate representing shares of the
-------
capital stock of the Company now or hereafter owned by any Stockholder, which
does not represent shares registered under the Securities Act, shall be
endorsed with the following legend:
- 13 -
<PAGE>
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED."
ARTICLE X
RESOLUTION OF DISPUTES
----------------------
The parties hereto shall attempt to settle all disputes arising in
connection with this Agreement through good faith negotiations. In the event
any such dispute cannot be resolved within sixty (60) days after any party
involved in such dispute notifies the other parties involved in such dispute
that the dispute is to be resolved pursuant to this Article X, then any such
party may submit such dispute to arbitration. Any dispute submitted to
arbitration pursuant to this Article X shall be finally and conclusively
determined in accordance with the Rules of Arbitration of the International
Chamber of Commerce (the "Rules of Arbitration") then in effect by the
--------------------
decision of three (3) arbitrators selected in accordance with the Rules of
Arbitration, unless the parties shall agree on a single arbitrator (the
"Board of Arbitration"). The Board of Arbitration shall meet in New York,
--------------------
New York and shall render a decision in writing (concurred in by a majority
of the members of the Board of Arbitration if more than one) with respect to
and stating the amount, if any, which any party hereto is required to pay to
any other party hereto in respect of such dispute. To the extent practical,
the decision of the Board of Arbitration shall be rendered no more than
thirty (30) days following commencement of proceedings with respect thereto.
The Board of Arbitration shall cause its written decision to be delivered to
each of the parties involved in such dispute. Any decision made by the Board
of Arbitration (either prior to or after the expiration of such thirty (30)
day period) shall be final, binding and conclusive on the parties hereto and
entitled to be enforced to the fullest extent permitted by Law and entered in
any court of competent jurisdiction.
All parties hereto hereby consent to the jurisdiction of the foregoing
Board of Arbitration and to the jurisdiction of any state or federal court
located in the States of New York or Delaware and any national court located in
France for the purpose of enforcing the decision or award of the Board of
Arbitration. All parties hereto agree that service of process may be made on any
such party by personal delivery or by registered or certified mail addressed to
the appropriate party at the address for such party specified in Section 11.1
hereof. The submission to the jurisdiction of the courts referred to above for
the purpose of enforcing the decision or award of the Board of Arbitration shall
not (and shall not be construed so as to) limit the right of any party to file
or commence proceedings against any other party in any other court of competent
jurisdiction for the purpose of enforcing the decision or award of the Board of
Arbitration nor shall the filing or commencement of proceedings in any one or
more jurisdictions for such purpose preclude the filing or taking of proceedings
in any other jurisdiction for such purpose (whether concurrently or not) if and
to
- 14 -
<PAGE>
the extent permitted by applicable Law. Each and every arbitration
proceeding commenced pursuant to this Article X shall be consolidated with
any arbitration proceeding then pending under this Article X. All fees,
costs and expenses in relation to the arbitration, including, but not limited
to, attorneys' fees shall be paid by such parties as determined by the Board
of Arbitration.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Notices. All notices, requests and other communications
-------
hereunder shall be in writing and will be deemed to have been duly given (i)
when personally delivered, (ii) when sent by telefax to a party at the number
listed below for such party (if any), (iii) three (3) Business Days after the
day on which the same has been delivered prepaid to an international courier
service, or (iv) ten (10) Business Days after the deposit in the United States
mail, registered or certified, return receipt requested, postage prepaid, in
each case addressed to the party to whom such notice is to be given at the
following address for such party:
If to the Company:
SSE Telecom, Inc.
8230 Leesburg Pike, Suite 710
Vienna, Virginia 22182
U.S.A.
Attn: Daniel E. Moore
Telefax No.: (703) 442-4507
With copies to:
Surovell, Jackson, Colton & Dugan, P.C.
4010 University Drive, Suite 200
Fairfax, Virginia 22030
Attn: G. Donald Markle, Esq.
Telefax No.: (703) 591-2149
If to the Purchaser:
Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attn: Jacques Couet
Telefax No.: 331-46524596
- 15 -
<PAGE>
With copies to:
Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attn: Martine Funston, Esq.
Telefax No.: 331-46524595
If to the Current Stockholders:
To the address and/or telefax
number for each Current
Stockholder set forth below its
signature
Any party hereto from time to time may change its address, telefax number or
other information for the purpose of notices to that party by giving notice
specifying such change to the other parties hereto.
SECTION 11.2 Fees and Expenses. The Company, the Current
-----------------
Stockholders and the Purchaser shall each bear their or its own expenses in
connection with the negotiation and preparation of this Agreement, all
documents and instruments contemplated hereby, and the consummation of the
transactions contemplated hereby, including, without limitation, the fees and
expenses of their respective counsel, accountants, investment bankers and
consultants.
SECTION 11.3 Public Announcements. Except as otherwise required by
--------------------
Law, no party hereto shall issue any press release or make any other public
announcement with respect to the transactions contemplated hereby without the
approval of the other parties hereto, which approval shall not be unreasonably
withheld or delayed.
SECTION 11.4 Entire Agreement. This Agreement supersedes all prior
----------------
discussions and agreements among the parties hereto with respect to the
subject matter hereof and contains the sole and entire agreement among the
parties hereto with respect to the subject matter hereof.
SECTION 11.5 Waiver. Any term or condition of this Agreement may be
------
waived at any time by the party hereto that is entitled to the benefit
thereof, but no such waiver shall be effective unless set forth in a written
instrument duly executed by or on behalf of the party waiving such term or
condition. No waiver by any party hereto of any term or condition of this
Agreement, in any one or more instances, shall be deemed to be or construed as
a waiver of the same or any other term or condition of this Agreement on any
future occasion.
SECTION 11.6 Amendment. This Agreement may be amended, supplemented or
---------
modified only by a written instrument duly executed by or on behalf of each
party hereto.
- 16 -
<PAGE>
SECTION 11.7 Benefits and Binding Effect. Neither this Agreement nor
---------------------------
any right, interest or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other parties hereto and any
attempt to do so will be void, provided that the Purchaser may assign any or
all rights or obligations of the Purchaser hereunder to any Affiliate of the
Purchaser. Subject to the preceding sentence, this Agreement is binding upon,
inures to the benefit of and is enforceable by the parties hereto and their
respective successors and assigns.
SECTION 11.8 Captions. The captions used in this Agreement have been
--------
inserted for convenience of reference only and do not define or limit the
provisions hereof.
SECTION 11.9 Exhibits and Schedules. All exhibits and schedules
----------------------
referred to in this Agreement, all attachments to such exhibits or schedules,
and any other attachment to this Agreement are hereby incorporated by
reference into this Agreement and hereby are made a part of this Agreement as
if set out in full herein.
SECTION 11.10 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the Laws of the State of Delaware applicable to a
contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
SECTION 11.11 Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
SECTION 11.12 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.13 No Third Party Beneficiary. This Agreement shall not
--------------------------
confer any rights or remedies upon any Person other than the parties hereto and
their respective successors and permitted assigns.
SECTION 11.14 Authority of Venture America. Simultaneously with
----------------------------
the execution of this Agreement, Venture America shall deliver to the
Purchaser copies of resolutions duly adopted by the general partner or the
partners of Venture America (or such other individuals or entities) as are
necessary to legally authorize Venture America to execute and perform its
- 17 -
<PAGE>
obligations under this Agreement, together with an incumbency certificate of
each individual who will be executing this Agreement on behalf of Venture
America (including the name, title and signature of each such individual).
IN WITNESS WHEREOF, the parties have executed this Stockholder
Agreement as of the date first written above.
COMPANY:
SSE TELECOM, INC.,
a Delaware corporation
By: /s/ Frederick C. Toombs
-----------------------------------
Name: Frederick C. Toombs
----------------------------------
Title: President
---------------------------------
PURCHASER:
ALCATEL TELSPACE, a
French societe anonyme
By: /s/ Jerome de Vitry
--------------------------------------
Name: Jerome de Vitry
------------------------------------
Title: Director R & D Product Management
-----------------------------------
Attorney-In-Fact
STOCKHOLDERS:
VENTURE AMERICA MANAGEMENT LIMITED
PARTNERSHIP, a Virginia Limited
Partnership
By: /s/ Daniel E. Moore
-------------------------------------
Name: Daniel E. Moore
Title: General Partner
Address: 8230 Leesburg Pike
Suite 710
Vienna, VA 22182
Telefax No.: 703-790-0486
- 18 -
<PAGE>
/s/ FRANK S. TRUMBOWER
------------------------------------------
FRANK S. TRUMBOWER
Address: 774 Mays Boulevard
Unit 10-356
Incline Village, NV 89451
Telefax No.: 703-893-0608
------------------------
/s/ FREDERICK C. TOOMBS
-----------------------------------------
FREDERICK C. TOOMBS
Address: 16251 Shannon Road
Los Gatos, CA 95032
Telefax No.: 408-358-2024
/s/ SARAH P. TRUMBOWER
-----------------------------------------
SARAH P. TRUMBOWER
Address: Route 3, Box 5470
Berryville, VA 22611
Telefax No.: 540-935-2543
------------------------
/s/ DANIEL E. MOORE
-----------------------------------------
DANIEL E. MOORE
Address: 1629 Wrightson Drive
McLean, VA 22101
Telefax No.: 703-893-0743
/s/ FRANK J. PETERNELL
-----------------------------------------
FRANK J. PETERNELL
Address: 2023 El Ranchero Drive
(Blue Lake Springs)
Arnold, CA 95223
Telefax No.:
-----------------------------
- 19 -
<PAGE>
The undersigned company hereby waives its right to purchase any
shares of Voting Stock owned by Frank J. Peternell which is contained in that
certain Amendment to Employment Agreement dated as of July 1, 1996, by and
between the undersigned and Mr. Peternell to the extent such right is
inconsistent with any rights granted to the Stockholders herein and further
agrees that any such rights granted to the Stockholders shall have priority
over such right of the undersigned.
SSE TECHNOLOGIES, INC.
By: /s/ Frederick C. Toombs
-------------------------------------
Name: Frederick C. Toombs
-----------------------------------
Title: President
----------------------------------
- 20 -
<PAGE>
COMMUNITY PROPERTY ACKNOWLEDGEMENT
The undersigned, as the spouse of Frederick C. Toombs, hereby
acknowledges that she has read the foregoing Stockholder Agreement and consents
to the terms therof, including, without limitation, the restrictions on transfer
of the shares held in the name of her spouse.
/s/ Jean Toombs
---------------------------
Jean Toombs
-21-
<PAGE>
COMMUNITY PROPERTY ACKNOWLEDGEMENT
The undersigned, as the spouse of Frank J. Peternell, hereby acknowledges
that she has read the foregoing Stockholder Agreement and consents to the terms
thereof, including, without limitation, the restrictions on transfer of the
shares held in the name of her spouse.
/s/ Crystal M. Peternell
------------------------
Crystal M. Peternell
-22-
<PAGE>
LIST OF EXHIBITS
----------------
Exhibit A Schedule of Stockholders
Exhibit B Exceptions Regarding Stock Rights
-23-
<PAGE>
EXHIBIT A
SCHEDULE OF STOCKHOLDERS
<TABLE>
<CAPTION>
STOCKHOLDER CLASS SHARES
- ----------- ----- ------
<S> <C> <C>
Frank S. Trumbower Common 228,816
Venture America Management
Limited Partnership/1/ Common 250,366
Frederick C. Toombs/2/ Common 167,737
Daniel E. Moore/3/ Common 94,911
Frank J. Peternell Common 122,400
Sarah P. Trumbower Common 192,827
</TABLE>
- ------------------
/1/ This partnership expects to liquidate by December 31, 1996, and the
shares will be distributed to Daniel E. Moore, James R. Ball, and Otis T.
Coston.
/2/ Includes the 50,000 shares being sold to Alcatel Telspace under the
Selling Stockholder Agreement.
/3/ Includes the 50,000 shares being sold to Alcatel Telspace under the
Selling Stockholder Agreement.
-24-
<PAGE>
EXHIBIT B
1. Frederick C. Toombs has the following options:
(i) August 1, 1992 - 10,000 shares at $2.88 per share, fully vested.
(ii) September 23, 1994 - 40,000 shares at $6.00 per share, 10,000
shares vested; an additional 10,000 shares vest September 23,
1996.
Reference is hereby made to the Employment Agreement of Mr. Toombs dated
October 1, 1991 for certain other additional rights held by Mr. Toombs with
respect to the Common Stock of the Company.
2. Daniel E. Moore has a beneficial interest in the approximately 250,366
shares of Common Stock owned by Venture America Management Limited Partnership
("Venture America"). On the distribution of the shares of Common Stock owned by
Venture America, it is expected that Mr. Moore shall receive approximately
one-third of such shares. Mr. Moore also has the following options and
warrants:
(i) Option September 23, 1994 - 50,000 shares at $6.00 per share,
12,500 shares vested; an additional 12,500 shares vest
September 23, 1996.
(ii) Warrant for 50,000 shares issued August 1, 1992 at an exercise
price of $2.88 per share, of which all 50,000 shares were
exercised at or immediately prior to closing under this
Agreement. This warrant expires August 1, 1997.
Reference is hereby made to the Employment Agreement of Daniel E. Moore,
dated January 1, 1994 for certain other additional rights held by Mr. Moore with
respect to the Common Stock of the Company.
3. Frank S. Trumbower has the following options:
(i) March 28, 1995 - 10,000 shares at $7.38 per share, fully vested.
4. Frank J. Peternell has the following options:
(i) September 23, 1994 - 6,000 shares at $6.00 per shares; 1,500
shares vested.
Reference is hereby made to the Amendment to Employment Agreement of Mr.
Peternell dated July 1, 1996 for certain rights held by the Company with respect
to the Common Stock owned by Mr. Peternell.
<PAGE>
================================================================================
STOCK PURCHASE AND INVESTMENT AGREEMENT
BY AND BETWEEN
ALCATEL TELSPACE, S.A.
AND
SSE TELECOM, INC.
Dated as of September 6, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
-----------
[S] [C] [C]
SECTION 1.1 Definitions............................................. 1
-----------
ARTICLE II
ISSUANCE AND SALE OF STOCK
--------------------------
AND WARRANT
-----------
[S] [C] [C]
SECTION 2.1 Description of Transactions............................. 8
---------------------------
SECTION 2.2 Closing................................................. 9
-------
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
<TABLE>
<S> <C> <C>
SECTION 3.1 Organization, Good Standing and Qualification........... 9
---------------------------------------------
SECTION 3.2 Due Authorization, Execution and Delivery............... 9
-----------------------------------------
SECTION 3.3 Capitalization.......................................... 10
--------------
SECTION 3.4 Subsidiaries............................................ 11
------------
SECTION 3.5 Consents; No Conflict................................... 11
---------------------
SECTION 3.6 SEC Filings; Financial Statements....................... 12
---------------------------------
SECTION 3.7 Property and Assets..................................... 13
-------------------
SECTION 3.8 Tax Matters............................................. 13
-----------
SECTION 3.9 Business Contracts...................................... 14
------------------
SECTION 3.10 Employee and Consultant Agreements...................... 16
----------------------------------
SECTION 3.11 Litigation and Claims................................... 16
---------------------
SECTION 3.12 Labor Matters, etc...................................... 16
-------------------
SECTION 3.13 Intellectual Property Rights............................ 16
----------------------------
SECTION 3.14 Compliance.............................................. 17
----------
SECTION 3.15 Employee Benefits....................................... 17
-----------------
SECTION 3.16 Insurance............................................... 18
---------
SECTION 3.17 Environmental Matters................................... 19
---------------------
SECTION 3.18 Offer or Sale of Shares and Warrant..................... 19
-----------------------------------
SECTION 3.19 Brokers................................................. 19
-------
SECTION 3.20 Transactions With Directors, Officers,.................. 19
Employees and Affiliates.......................
------------------------
SECTION 3.21 Echostar Investment..................................... 20
-------------------
SECTION 3.22 Disclosure.............................................. 20
----------
</TABLE>
ii
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
<TABLE>
<S> <C> <C>
SECTION 4.1 Organization and Authority of the Purchaser............. 20
-------------------------------------------
SECTION 4.2 Due Authorization, Execution and Delivery............... 20
-----------------------------------------
SECTION 4.3 Consents; No Conflict................................... 21
---------------------
SECTION 4.4 Brokers................................................. 21
-------
SECTION 4.5 Purchase Entirely for Own Account....................... 21
---------------------------------
SECTION 4.6 Investment Experience................................... 21
---------------------
SECTION 4.7 Restricted Securities................................... 22
---------------------
SECTION 4.8 Disclosure.............................................. 22
----------
</TABLE>
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
<TABLE>
<S> <C> <C>
SECTION 5.1 Limitations on Disposition of Stock..................... 22
-----------------------------------
SECTION 5.2 Legends................................................. 22
-------
SECTION 5.3 Proceeds of Sale of Stock............................... 23
-------------------------
SECTION 5.4 Echostar Situation...................................... 23
------------------
SECTION 5.5 Delivery of Budgets and Other Information............... 23
-----------------------------------------
SECTION 5.6 Access to Business...................................... 23
------------------
SECTION 5.7 Right of First Offer.................................... 24
--------------------
SECTION 5.8 Special Purchase Rights................................. 25
-----------------------
SECTION 5.9 Subsidiary Stock........................................ 26
----------------
SECTION 5.10 Confidential Treatment.................................. 26
----------------------
SECTION 5.11 Advice of Changes....................................... 26
-----------------
SECTION 5.12 Further Assurances...................................... 26
------------------
</TABLE>
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
------------------------------------------
<TABLE>
<S> <C> <C>
SECTION 6.1 Accuracy of Representations and Warranties.............. 27
------------------------------------------
SECTION 6.2 Performance of Agreements............................... 27
-------------------------
SECTION 6.3 Bring-Down Certificate.................................. 27
----------------------
SECTION 6.4 Corporate Documents..................................... 27
-------------------
SECTION 6.5 Opinion of Company Counsel.............................. 27
--------------------------
SECTION 6.6 No Material Adverse Change.............................. 27
--------------------------
SECTION 6.7 No Adverse Proceedings.................................. 28
----------------------
SECTION 6.8 Other Assurances........................................ 28
----------------
SECTION 6.9 Consents and Approvals.................................. 28
----------------------
SECTION 6.10 Closing Under Selling Stockholder Agreement............. 28
-------------------------------------------
SECTION 6.11 Execution of Transaction Documents and Warrant.......... 28
----------------------------------------------
</TABLE>
iii
<PAGE>
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
----------------------------------------
<TABLE>
<S> <C> <C>
SECTION 7.1 Accuracy of Representations and Warranties.............. 28
------------------------------------------
SECTION 7.2 Performance of Agreements............................... 29
-------------------------
SECTION 7.3 Bring-Down Certificate.................................. 29
----------------------
SECTION 7.4 Purchaser's Documents................................... 29
---------------------
SECTION 7.5 No Adverse Proceedings.................................. 29
----------------------
SECTION 7.6 Other Assurances........................................ 29
----------------
SECTION 7.7 Consents and Approvals.................................. 30
----------------------
</TABLE>
ARTICLE VIII
INDEMNIFICATION
---------------
<TABLE>
<S> <C> <C>
SECTION 8.1 Survival................................................ 30
--------
SECTION 8.2 Indemnification by the Company.......................... 30
------------------------------
SECTION 8.3 Indemnification by the Purchaser........................ 30
--------------------------------
SECTION 8.4 Method of Asserting Claims.............................. 31
--------------------------
SECTION 8.5 Continued Liability for Indemnity Claims................ 33
----------------------------------------
SECTION 8.6 Limitations on Indemnification.......................... 34
------------------------------
SECTION 8.7 Exclusive Remedies...................................... 34
------------------
SECTION 8.8 Time Limits on Claims................................... 34
---------------------
</TABLE>
ARTICLE IX
TERMINATION
-----------
<TABLE>
<S> <C> <C>
SECTION 9.1 Grounds for Termination................................. 34
-----------------------
SECTION 9.2 Effect of Termination................................... 35
---------------------
SECTION 9.3 Termination for Breach.................................. 35
----------------------
</TABLE>
ARTICLE X
MISCELLANEOUS
-------------
<TABLE>
<S> <C> <C>
SECTION 10.1 Notices................................................. 35
-------
SECTION 10.2 Fees and Expenses....................................... 36
-----------------
SECTION 10.3 Public Announcements.................................... 36
--------------------
SECTION 10.4 Entire Agreement........................................ 36
----------------
SECTION 10.5 Waiver.................................................. 36
------
SECTION 10.6 Amendment............................................... 36
---------
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 10.7 Benefits and Binding Effect............................. 36
---------------------------
SECTION 10.8 Captions................................................ 37
--------
SECTION 10.9 Exhibits and Schedules.................................. 37
----------------------
SECTION 10.10 Governing Law........................................... 37
-------------
SECTION 10.11 Counterparts............................................ 37
------------
SECTION 10.12 Severability............................................ 37
------------
SECTION 10.13 No Third Party Beneficiary.............................. 37
--------------------------
</TABLE>
v
<PAGE>
STOCK PURCHASE AND INVESTMENT AGREEMENT
THIS STOCK PURCHASE AND INVESTMENT AGREEMENT (the "Agreement") is made as
---------
of September 6, 1996, by and between SSE TELECOM, INC., a Delaware corporation
(the "Company"), and ALCATEL TELSPACE, a societe anonyme organized under the
-------
laws of France (the "Purchaser").
---------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and its subsidiaries are engaged in the business of
manufacturing and selling satellite telecommunication equipment; and
WHEREAS, shares of the common stock of the Company are publicly traded on
the NASDAQ Exchange; and
WHEREAS, the Purchaser desires to purchase an aggregate of 625,000 shares
of the common stock of the Company, 525,000 of which the Purchaser desires to
purchase from the Company and 100,000 of which the Purchaser desires to purchase
from certain existing stockholders of the Company (the "Selling Stockholders");
--------------------
and
WHEREAS, the Company desires to issue and sell 525,000 shares of the common
stock of the Company to the Purchaser on the terms and conditions set forth in
this Agreement; and
WHEREAS, simultaneously with the closing under this Agreement, the
Purchaser will purchase 100,000 shares of the common stock of the Company from
the Selling Stockholders pursuant to the terms of that certain Stock Purchase
Agreement dated September 6, 1996 (the "Selling Stockholder Agreement").
-----------------------------
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties contained herein and of the mutual benefits to be
derived herefrom, and intending to be legally bound, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.1 Definitions. As used in this Agreement, the following defined
-----------
terms have the meanings indicated below:
"Affiliate" of a Person means a Person that directly or indirectly through
---------
one or more intermediates, controls, is controlled by, or is under common
control with, the first Person.
<PAGE>
"Assets" of a Person means all rights, titles and interests in, to and
------
under all of the properties, assets, rights, claims and Contracts of every kind,
character and description owned or held by such Person, whether real, personal
or mixed, tangible or intangible (including goodwill), and whether now owned or
hereafter acquired, including, without limitation, all assets reflected on the
financial statements of such Person, as the same may exist on the Closing Date.
"Agreement" has the meaning set forth in the introductory paragraph hereof.
---------
"Benefit Plan" means any Plan established by the Company or any of its
------------
Subsidiaries, or any predecessor or Affiliate of the Company or any of its
Subsidiaries, existing at the Closing or prior thereto, to which the Company or
any of its Subsidiaries contribute or have contributed on behalf of any present
or former Employee, officer, director, independent contractor or consultant (in
each case rendering services to the Company or any of its Subsidiaries) or under
which any such individual or any beneficiary thereof is covered, is eligible for
coverage or has benefit rights.
"Board of Arbitration" has the meaning set forth in Section 8.4(c).
--------------------
"Business" means the business and activities currently conducted by the
--------
Company and its Subsidiaries and such business and activities as are conducted
at any time hereafter.
"Business Day" means any day which is not a Saturday, Sunday or legal
------------
holiday in New York, New York or Paris, France.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
------
Liability Act of 1980, as amended, and the rules and regulations promulgated
thereunder.
"CERCLIS" means the Comprehensive Environmental Response and Liability
-------
Information System, as provided for by 40 C.F.R. (S)300.5.
"Claim Notice Period" has the meaning set forth in Section 8.4(b).
-------------------
"Closing" has the meaning set forth in Section 2.2.
-------
"Closing Date" has the meaning set forth in Section 2.2.
------------
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
----
and regulations promulgated thereunder.
"Commercial Agreement" means that certain Joint Product Identification and
--------------------
Supply Agreement to be entered into between the Company and the Purchaser in the
form of Exhibit A hereto.
---------
"Common Stock" means the authorized common stock of the Company, par value
------------
$.01 per share, whether or not issued and outstanding.
- 2 -
<PAGE>
"Company" has the meaning set forth in the introductory paragraph hereof.
-------
"Contracts" means all contracts, agreements, license agreements, leases,
---------
assignments, purchase agreements, indentures, mortgages, instruments of
indebtedness, security agreements, guaranties, purchase orders, sales orders,
and distribution agreements.
"Control" (whether or not capitalized) means, with respect to a Person, the
-------
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of such Person whether through the
ownership of voting securities, by Contract or otherwise and, in any event, and
without limitation of the foregoing, any Person fifty percent (50%) or more of
whose voting securities are owned by another Person shall be deemed to be
controlled that Person.
"Echostar" has the meaning set forth in Section 3.21.
--------
"Echostar Debenture" has the meaning set forth in Section 3.21.
------------------
"Echostar Letter" has the meaning set forth in Section 3.21.
---------------
"Echostar Stock" has the meaning set forth in Section 3.21.
--------------
"Employee" means each full time employee of the Company or any of its
--------
Subsidiaries.
"Environmental Law" means all Laws and Orders concerning pollution or
-----------------
protection of the environment, public health and safety, or employee health and
safety, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water,
groundwater, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes including, without limitation, CERCLA, the Resource Conservation and
Recovery Act, as amended, the Clean Air Act, as amended, the Clean Water Act, as
amended, and the Occupational Safety and Health Act, as amended, and similar
state and local laws, rules and regulations.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and the rules and regulations promulgated thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Financial Investor" means a Person meeting the requirements of Rule 13d-
------------------
1(b)(1)(i) under the Exchange Act.
"Financial Statements" has the meaning set forth in Section 3.6.
--------------------
"First Offer Notice" has the meaning set forth in Section 5.7(a).
------------------
- 3 -
<PAGE>
"GAAP" means generally accepted accounting principles, consistently
----
applied.
"Governmental Authority" means any court, tribunal, arbitrator, authority,
----------------------
agency, commission, official or other instrumentality of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision.
"Hazardous Materials" means (i) any petroleum or petroleum products,
-------------------
flammable or explosive materials, radioactive materials, asbestos in any form
that is friable, urea formaldehyde foam insulation and transformers or other
equipment that contain dielectric fluid containing levels of polychlorinated
biphenyls (PCBs), (ii) any chemicals or other materials or substances which are
now or hereafter become defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants"
or words of similar import under any Environmental Law, and (iii) any other
chemical or other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated by any Governmental Authority under any
Environmental Law.
"Income Taxes" means all Taxes relating to income, profits, gross receipts,
------------
net worth or capital.
"Indemnified Party" means any Person claiming indemnification under any
-----------------
provision of Article VIII.
"Indemnifying Party" means any Person against whom a claim for
------------------
indemnification is being asserted under any provision of Article VIII.
"Indemnity Notice" has the meaning set forth in Section 8.4(b).
----------------
"Indemnity Response Period" has the meaning set forth in Section 8.4(b).
-------------------------
"Intellectual Property" means all patents and patent rights, trademarks and
---------------------
trademark rights, trade names and trade name rights, service marks and service
mark rights, service names and service name rights, brand names, inventions,
processes, formulae, copyrights and copyright rights, trade dress, business and
product names, logos, slogans, trade secrets, industrial models, processes,
designs, methodologies, computer programs (including all source codes) and
related documentation, technical information, manufacturing, engineering and
technical drawings, know-how and all pending applications for and registrations
of patents, trademarks, service marks and copyrights.
"IRS" means the United States Internal Revenue Service.
---
"June Balance Sheet" has the meaning set forth in Section 3.6(c).
------------------
"Knowledge of the Company" means the actual knowledge of any of the
------------------------
officers or directors of the Company or any of its Subsidiaries.
- 4 -
<PAGE>
"Laws" means all laws, statutes, rules, regulations, ordinances and other
----
pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental Authority.
"Liabilities" means all indebtedness, obligations and other liabilities
-----------
(whether absolute, accrued, contingent, fixed or otherwise, or whether known or
unknown, or whether due or to become due).
"Licenses" means all licenses, permits, certificates of authority,
--------
variances, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental Authority.
"Liens" means any mortgage, pledge, assessment, security interest, lease,
-----
lien, adverse claim, levy, charge, rights of others or other encumbrance of any
kind, or any conditional sale contract, title retention contract or other
contract to give any of the foregoing.
"Losses" means any and all damages, fines, costs, fees, penalties,
------
deficiencies, losses, amounts paid in settlement and expenses (including without
limitation interest, court costs, fees of attorneys, accountants and other
experts or other expenses of litigation or other proceedings or of any claim,
default or assessment).
"Multiemployer Plan" has the meaning set forth in Section 3.15(h).
------------------
"NPL" means the National Priorities List under CERCLA.
---
"New Securities" means any shares of, or securities convertible into or
--------------
exchangeable for any shares of, any class of the capital stock of the Company,
provided that such term does not include: (i) the Stock, (ii) securities issued
pursuant to the acquisition of another business entity by the Company by merger,
purchase of substantially all of the assets of such entity, or other
reorganization whereby the Company, following such transaction, owns not less
than a majority of the voting power of such entity, (iii) shares of Common
Stock, or options to purchase shares of Common Stock (and the shares of Common
Stock issuable upon exercise of such options), in each case issued pursuant to
any arrangement approved by the Board of Directors of the Company to employees,
officers, directors or consultants of the Company or any of its Subsidiaries,
(iv) shares of Common Stock issued in connection with any stock split, stock
dividend or recapitalization of the Company, (v) shares of Common Stock issued
upon the exercise of warrants, options or convertible securities if the issuance
of such warrants, options or convertible securities was subject to the right of
first offer granted under Section 5.7 or occurred prior to the date of this
Agreement and shares of Common Stock issued upon the exercise of the Warrant, or
(vi) securities sold by the Company to the public in an offering pursuant to a
registration statement filed with the SEC under the Securities Act, provided
that the exception in this clause (vi) shall apply in the case of an
underwritten public offering only if the managing underwriter of such offering
advises the Company in writing that in its good faith judgment the purchase
right of the Purchaser in connection with such offering would be incompatible
with the success of the offering.
- 5 -
<PAGE>
"Order" means any writ, judgment, decree, injunction, charge or similar
-----
order of any Governmental Authority (in each such case whether preliminary or
final).
"Ordinary Course of Business" means the ordinary course of business
---------------------------
consistent with past custom and practice.
"PBGC" means the Pension Benefit Guaranty Corporation established under
----
ERISA.
"Pension Benefit Plan" means each Benefit Plan which is a pension benefit
--------------------
plan within the meaning of Section 3(2) of ERISA.
"Permitted Lien" means (i) any Lien for Taxes not yet due or delinquent or
--------------
being contested in good faith by appropriate proceedings, (ii) any statutory
Lien arising in the Ordinary Course of Business by operation of Law with respect
to a Liability that is not yet due or delinquent, (iii) any minor imperfection
of title or recorded easements, covenants or other restrictions which
individually or in the aggregate with other such items would not have a material
adverse effect on the Business, and (iv) mortgages and security interests
securing the repayment of borrowed money entered into by the Company or any of
its Subsidiaries in the Ordinary Course of Business, the terms of which have not
been breached or violated by the Company or any of its Subsidiaries.
"Person" means any natural person, corporation, general partnership,
------
limited partnership, proprietorship, limited liability company, joint venture,
other business organization, trust, union, association or Governmental
Authority.
"Plan" means any bonus, incentive compensation, deferred compensation,
----
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation, unemployment or other employee benefit plan, practice, policy or
arrangement of any kind, whether written or oral, including, but not limited to,
any "employee benefit plan" as defined in Section 3(3) of ERISA.
"Purchase Price" has the meaning set forth in Section 2.1(a).
--------------
"Purchaser" has the meaning set forth in the introductory paragraph hereof.
---------
"Purchaser Percentage" means a fraction (i) the numerator of which is the
--------------------
total number of shares of Common Stock owned by the Purchaser, and (ii) the
denominator of which is the total number of shares of Common Stock outstanding
at the time the First Offer Notice is given (in each case assuming the
conversion of all shares, if any, convertible into Common Stock).
"Registration Rights Agreement" means the Registration Rights Agreement to
-----------------------------
be entered into by the Company and the Purchaser in the form of Exhibit B
---------
hereto.
- 6 -
<PAGE>
"Restricted Investor" means any Person, other than a Financial Investor or
-------------------
any Selling Stockholder, who proposes to acquire Voting Stock if either (i) such
Person owns ten percent (10%) or more of the Total Voting Power of the Company
prior to such acquisition, or (ii) as a result of such acquisition, such Person
would own ten percent (10%) or more of the Total Voting Power of the Company
immediately following such acquisition.
"Rule 144" has the meaning set forth in Section 4.7.
--------
"Rules of Arbitration" has the meaning set forth in Section 8.4(c).
--------------------
"SEC" means the Securities and Exchange Commission.
---
"SEC Reports" has the meaning set forth in Section 3.6(a).
-----------
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Selling Stockholder" means any individual stockholder of the Company that
-------------------
is a party to the Selling Stockholder Agreement.
"Selling Stockholder Agreement" has the meaning set forth in the last
-----------------------------
recital hereof.
"Stock" means all shares of Common Stock to be issued and sold by the
-----
Company to the Purchaser hereunder.
"Stockholder Agreement" means the Stockholder Agreement to be entered into
---------------------
by the Company and certain stockholders of the Company in the form of Exhibit C
---------
hereto.
"Subsidiary" of a Person means a Person that is, directly or indirectly,
----------
through one or more intermediates controlled by the first Person.
"Tax Returns" means any return, declaration, report, claim for refund, or
-----------
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Tax" means any federal, state, local or foreign income, gross receipts,
---
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Third Party Claim" has the meaning set forth in Section 8.4(a).
-----------------
"Third Party Claim Notice" has the meaning set forth in Section 8.4(a).
------------------------
"Third Party Claim Notice Period" has the meaning set forth in
-------------------------------
Section 8.4(a).
- 7 -
<PAGE>
"Third Party Claim Response Period" has the meaning set forth in Section
---------------------------------
8.4(a).
"Total Voting Power of the Company" means the total number of votes which
---------------------------------
may be cast in the election of directors of the Company at any meeting of the
stockholders of the Company if all securities entitled to vote in the election
of directors of the Company were present and voted at such meeting (other than
votes that may be cast only upon the occurrence of a contingency).
"Transaction Documents" means, collectively, the Stockholder Agreement, the
---------------------
Registration Rights Agreement, the Commercial Agreement and the Voting
Agreement.
"Treasury Regulations" means the regulations prescribed under the Code.
--------------------
"Voting Agreement" means the Voting Agreement to be entered into by the
----------------
Company, the Purchaser and certain other stockholders of the Company in the form
of Exhibit D hereto.
---------
"Voting Stock" means the Common Stock and any other capital stock or
------------
securities issued by the Company having the ordinary power to vote in the
election of directors of the Company (other than such capital stock or
securities having such power only on the occurrence of a contingency).
"Voting Stock Notice" has the meaning set forth in Section 5.8(b).
-------------------
"Warrant" has the meaning set forth in Section 2.1(b).
-------
"Warrant Price" has the meaning set forth in Section 2.1(b).
-------------
ARTICLE II
ISSUANCE AND SALE OF STOCK
--------------------------
AND WARRANT
-----------
Section 2.1 Description of Transactions.
---------------------------
(a) Stock Transaction. Subject to the terms and conditions of this
-----------------
Agreement, the Purchaser agrees to purchase at the Closing, and the
Company agrees to sell and issue to the Purchaser at the Closing, 525,000
shares of the authorized and unissued Common Stock of the Company for a
purchase price of US $12.86 per share, and for an aggregate purchase price
of US $6,751,500.00 (the "Purchase Price"), payable in cash. At the
--------------
Closing, the Company shall deliver to the Purchaser a certificate
representing the Stock purchased by the Purchaser, free and clear of all
Liens, duly executed by the appropriate officers of the Company and
bearing or accompanied by all requisite stock transfer stamps, and the
Purchaser shall pay to the Company the Purchase Price by wire transfer of
immediately available funds to the
- 8 -
<PAGE>
account designated by the Company at least one Business Day prior to the
Closing Date or, if no such account is designated, by bank or certified
check.
(b) Warrant Transaction. Subject to the terms and conditions of this
-------------------
Agreement, the Purchaser agrees to purchase at the Closing, and the Company
agrees to sell and issue to the Purchaser at the Closing, a Warrant in the
form of Exhibit E hereto (the "Warrant") for a purchase price of US $10
--------- -------
(the "Warrant Price"). At the Closing, the Company shall deliver to the
-------------
Purchaser the Warrant, free and clear of all Liens, duly executed by the
appropriate officers of the Company, and the Purchaser shall pay to the
Company the Warrant Price by wire transfer of immediately available funds
to the account designated by the Company at least one Business Day prior to
the Closing Date or, if no such account is designated, by bank or certified
check.
(c) Other Transactions. Subject to the terms and conditions of this
------------------
Agreement, at the Closing the Company shall execute and deliver the
Transaction Documents.
SECTION 2.2 Closing. The purchase and sale of the Stock and the Warrant
-------
(the "Closing") shall take place at the offices of Moore & Van Allen, PLLC,
-------
NationsBank Corporate Center, 100 North Tryon Street, Floor 47, Charlotte, North
Carolina, 28202-4003, at 9:00 a.m., on the third Business Day following the
fulfillment or waiver of the conditions precedent referred to in Articles VI and
VII hereof or at such other time and place as the Company and the Purchaser
mutually agree upon in writing (the "Closing Date").
------------
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to the Purchaser as follows:
SECTION 3.1 Organization, Good Standing and Qualification. Each of the
---------------------------------------------
Company and its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the State of its incorporation and has
all requisite corporate power and authority to carry on its Business as now
conducted and as proposed to be conducted by it, to own the Assets owned by it
and to lease the Assets held by it under lease. Each of the Company and its
Subsidiaries is duly qualified to transact business and is in good standing in
each jurisdiction where the character of the Assets it owns, leases or operates,
or the conduct of its Business, requires such qualification, other than in any
jurisdiction where the failure to so qualify would not have a material adverse
effect on its Business. The Company has the corporate power and authority to
enter into and perform its obligations under this Agreement, the Warrant and the
Transaction Documents.
SECTION 3.2 Due Authorization, Execution and Delivery. The execution,
-----------------------------------------
delivery and performance of this Agreement, the Warrant and the Transaction
Documents by the Company and the consummation of the transactions contemplated
hereby and thereby by the Company have been duly authorized by all necessary
corporate action on the part of the
- 9 -
<PAGE>
Company. This Agreement constitutes, and the Warrant, the Transaction Documents
and all other instruments and documents to be executed and delivered by the
Company hereunder will, when executed and delivered, constitute, the legal,
valid and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except as such enforcement (i) may be
limited by bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally, and (ii) is subject to the availability of
equitable remedies, as determined in the discretion of the court before which
such a proceeding may be brought.
SECTION 3.3 Capitalization.
--------------
(a) Authorized and Issued Capital Stock of the Company. The
--------------------------------------------------
authorized capital stock of the Company consists, and will consist as of
the Closing, of 10,000,000 shares of Common Stock, and 5,933,421 shares of
Common Stock have been duly and validly issued, are fully-paid and
nonassessable and are the only issued and outstanding shares of capital
stock of the Company. Each Selling Stockholder owns beneficially and of
record the number of shares of Common Stock described on Schedule 3.3(a).
---------------
Schedule 3.3(a) also sets forth the number of shares of Common Stock held
---------------
in the treasury of the Company immediately prior to the Closing under this
Agreement.
(b) Authorized and Issued Capital Stock of Subsidiaries. The
---------------------------------------------------
authorized capital stock of each Subsidiary of the Company consists, and
will consist as of Closing, of the number and class of shares set forth
beside the name of such Subsidiary on Schedule 3.3(b). The issued and
---------------
outstanding shares of capital stock of each Subsidiary of the Company shown
beside the name of such Subsidiary on Schedule 3.3(b) have been validly
---------------
issued, are fully paid and non-assessable and are the only issued and
outstanding shares of capital stock of such Subsidiary. All issued and
outstanding shares of capital stock of each Subsidiary are owned
beneficially and of record by the Company.
(c) Stock Rights. Except as set forth on Schedule 3.3(c), (i) there
------------ ---------------
are no outstanding subscriptions, options, warrants, rights (including
conversion or preemptive rights) or Contracts, orally or in writing,
obligating the Company or any of its Subsidiaries, contingently or
otherwise, to issue or sell, or cause to be issued or sold, any shares of
capital stock or other equity interest, or any securities convertible into
or exchangeable for capital stock or other equity interest, in the Company
or any of its Subsidiaries, (ii) there are no outstanding rights or
Contracts, orally or in writing, obligating the Company or any of its
Subsidiaries, contingently or otherwise, to purchase or redeem, or cause to
be purchased or redeemed, any shares of capital stock or other equity
interest, or any securities convertible into or exchangeable for capital
stock or other equity interest, in the Company or any of its Subsidiaries,
and (iii) neither the Company nor any of its Subsidiaries is a party to or
bound by any Contract or understanding, oral or written, and, to the
Knowledge of the Company, there is no Contract or understanding, oral or
written, between any Persons, which affects or relates to the voting or
giving of written consents with respect to any
-10-
<PAGE>
security of the Company or any of its Subsidiaries or by a director of the
Company or any of its Subsidiaries other than the Voting Agreement and the
Stockholder Agreement.
(d) Valid Issuance of Stock and Warrant. The Stock has been duly
-----------------------------------
and validly authorized and, when issued, sold and delivered by the Company
to the Purchaser in accordance with the terms hereof for the consideration
expressed herein, will be duly and validly issued, fully-paid and
nonassessable, free and clear of any preemptive right or other right to
acquire and free and clear of all Liens. The Common Stock issuable upon
exercise of the Warrant has been duly and validly reserved by the Company.
The Common Stock issuable upon exercise of the Warrant has been duly
authorized and, when issued in compliance with the terms of the Warrant,
will be duly and validly issued, fully paid and nonassessable, free and
clear of any preemptive right or other right to acquire and free and clear
of all Liens. The Stock, Warrant and the Common Stock issuable upon the
exercise of the Warrant will be issued to the Purchaser by the Company
hereunder or thereunder in compliance with all applicable federal and state
securities Laws.
(e) No Preemptive Rights. The execution, delivery and performance
--------------------
of this Agreement by the Company and the consummation of the transactions
contemplated hereby will not (i) give rise to or result in any preemptive
rights, rights of first refusal or other rights to acquire any shares of
capital stock or other equity interest, or any securities convertible into
or exchangeable for capital stock or other equity interest, in the Company
or any of its Subsidiaries, in favor of any Person, or (ii) result in any
anti-dilution adjustment pursuant to any outstanding security, warrant,
option or other Contract of the Company or any of its Subsidiaries.
(f) Registration Rights. Except as set forth on Schedule 3.3(f),
------------------- ---------------
neither the Company nor any of its Subsidiaries (i) has granted any
registration rights, including piggyback rights, to any Person which are
currently outstanding, or agreed to grant any such rights to any Person
subsequent to the date hereof, or (ii) is otherwise under any obligation to
register on behalf of any Person any of its securities pursuant to any Law
applicable to the sale, exchange or issuance of securities including
without limitation the Securities Act.
SECTION 3.4 Subsidiaries. Except as set forth on Schedule 3.4 hereof and
------------ ------------
except for the capital stock of the Subsidiaries of the Company owned by the
Company as set forth on Schedule 3.3(b), neither the Company nor any of its
---------------
Subsidiaries owns, directly or indirectly, any shares of capital stock or other
equity interest, or any securities convertible into or exchangeable for capital
stock or other equity interest, in any Person or has a commitment to contribute
to the capital of, make loans to, or share in the profits or losses of, any
other Person.
SECTION 3.5 Consents; No Conflict. The Company is not required to obtain
---------------------
the consent, authorization or approval of any Person, or License from any
Governmental Authority, as a condition to the consummation of this Agreement,
the Warrant or the Transaction Documents by the Company. The execution and
delivery of this Agreement, the
-11-
<PAGE>
Warrant and the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby will not conflict
with, result in the termination of, contravene or constitute a default under, or
be an event which with the giving of notice or passage of time or both will
become a default under, or give to others any rights of termination or
cancellation of, or accelerate the performance required by or maturity of, or
result in the creation of any material Lien or loss of any rights with respect
to the Company pursuant to any of the terms, conditions or provisions of or
under, any applicable Law, the certificate of incorporation or by-laws of the
Company, or any Contract to which the Company is a party or which is otherwise
binding upon the Company or to which the Assets of the Company are subject.
SECTION 3.6 SEC Filings; Financial Statements.
---------------------------------
(a) SEC Filings. Each of the Company and its Subsidiaries has filed
-----------
all forms, reports and documents required to be filed by it with the SEC
(collectively, the "SEC Reports"). As of their respective dates, the SEC
-----------
Reports (i) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such SEC Reports, and (ii)
did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such
filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) Financial Statements. Each of the consolidated financial
--------------------
statements (including, in each case, any related notes thereto) contained
in the SEC Reports (collectively, the "Financial Statements"), including
--------------------
any SEC Reports filed after the date hereof until the Closing, (i)
complies, or when filed will comply, as to form in all material respects
with the rules and regulations of the SEC with respect thereto, (ii) was,
or when filed will be, prepared in accordance with GAAP (except as may be
indicated in the notes thereto or, in the case of unaudited interim
Financial Statements, as may be permitted by the SEC on Form 10-Q under the
Exchange Act), and (iii) fairly presented, or when filed will fairly
present, in all material respects the consolidated financial position of
the Company and its Subsidiaries as at the respective dates thereof and the
consolidated results of their operations and cash flows for the periods
indicated, except that the unaudited interim Financial Statements were, or
when filed will be, subject to normal year-end audit adjustments.
(c) No Undisclosed Liabilities. Except for Liabilities reflected on
--------------------------
the consolidated balance sheet of the Company and its Subsidiaries
contained in the Financial Statements for the period ending as of June 29,
1996 (the "June Balance Sheet"), neither the Company nor any of its
------------------
Subsidiaries has any Liabilities of a nature required to be disclosed on a
consolidated balance sheet or in the related notes to consolidated
financial statements prepared in accordance with GAAP other than
Liabilities incurred since the date of the June Balance Sheet in the
Ordinary Course of Business.
-12-
<PAGE>
(d) No Material Adverse Changes. Since June 29, 1996, there has not
---------------------------
been (i) any change in the Assets, Liabilities, condition (financial or
otherwise), affairs, earnings, Business, operations or prospects of the
Company or any of its Subsidiaries from that reflected in the Financial
Statements dated as of June 29, 1996, except changes in the Ordinary Course
of Business which have not been, either individually or in the aggregate,
materially adverse to the Business, (ii) any damage, destruction or loss,
whether or not covered by insurance, materially adverse to the Business,
(iii) any waiver by the Company or any of its Subsidiaries of a valuable
right or of a material debt owed to them, (iv) any loans made by the
Company or any of its Subsidiaries to their Employees, officers or
directors other than advances of expenses made in the Ordinary Course of
Business, (v) any declaration or payment of any dividend or other
distribution of the Assets of the Company or any of its Subsidiaries or any
direct or indirect redemption, purchase or acquisition of any of the
securities of the Company or any of its Subsidiaries other than repurchases
of Common Stock from terminated employees, consultants, officers and
directors pursuant to written agreements, or (vi) to the Knowledge of the
Company, any other event or condition of any character which has had a
material adverse affect on the Business. Since June 29, 1996, the Company
and its Subsidiaries have conducted the Business in the Ordinary Course of
Business.
SECTION 3.7 Property and Assets.
-------------------
(a) Owned Assets. Each of the Company and its Subsidiaries holds
------------
good, marketable and indefeasible title to all of its owned Assets, free
and clear of all Liens except Permitted Liens.
(b) Leased Assets. Each of the Company and its Subsidiaries is in
-------------
possession of and has valid leasehold interests in and valid rights under
Contract to use all Assets which it holds under leases, free and clear of
all Liens except Permitted Liens.
(c) Condition of Assets. Each of the Company and its Subsidiaries
-------------------
has maintained all tangible Assets material to its Business in good repair,
working order and operating condition, subject only to ordinary wear and
tear.
SECTION 3.8 Tax Matters.
-----------
(a) Tax Returns. (i) Each of the Company and its Subsidiaries has
-----------
duly and timely filed all Tax Returns that it was required to file prior to
the date hereof, (ii) all such Tax Returns were correct and complete in all
material respects, and (iii) neither the Company nor any of its
Subsidiaries is currently the beneficiary of any extension of time within
which to file any Tax Return.
(b) Compliance. (i) All Taxes that are or may become payable by the
----------
Company or any of its Subsidiaries or chargeable as a Lien upon their
Assets (whether or not shown on any Tax Return) as of the date hereof have
been duly and timely paid, and (ii) each of the Company and its
Subsidiaries has complied in all
-13-
<PAGE>
material respects with applicable Law relating to the reporting, payment
and withholding of Taxes in connection with amounts paid to its Employees,
creditors, independent contractors or other third parties and has, within
the time and in the manner prescribed by Law, withheld from such amounts
and timely paid over to the proper Governmental Authorities all such
amounts required to be so withheld and paid over under applicable Law.
There is no Lien on any of the Assets of the Company or any of its
Subsidiaries that arose in connection with any failure (or alleged
failure) to pay any Tax.
(c) Claims. (i) No claim (other than a claim that has been finally
------
settled) has ever been made by a Governmental Authority in a jurisdiction
where either the Company or any of its Subsidiaries does not file Tax
Returns or pay or collect Taxes in respect of a particular type of Tax
imposed by that jurisdiction that either the Company or any of its
Subsidiaries (as the case may be) is or may be subject to an obligation to
file Tax Returns or pay or collect Taxes in respect of such Tax in that
jurisdiction, and (ii) there has been no claim or issue (other than a claim
or issue that has been finally settled) concerning any liability for Taxes
of the Company or any of its Subsidiaries either (A) asserted, raised or
threatened by any Governmental Authority in writing or (B) to the Knowledge
of the Company, pending.
(d) Waivers. Neither the Company nor any of its Subsidiaries has
-------
(i) waived any statute of limitations, (ii) agreed to any extension of the
period for assessment or collection or (iii) executed or filed any power of
attorney, in each case with respect to any Taxes, which waiver, agreement
or power of attorney is currently in force.
(e) Consents. Neither the Company nor any of its Subsidiaries has
--------
filed a consent under Section 341(f) of the Code concerning collapsible
corporations and there are no outstanding adjustments for Income Tax
purposes applicable to the Company or any of its Subsidiaries required as a
result of changes in methods of accounting effected on or before the date
hereof.
(f) Tax Sharing Agreements. Neither the Company nor any of its
----------------------
Subsidiaries is a party to or bound by or has any obligation under any Tax
allocation, sharing, indemnity or similar agreement or arrangement, and
neither the Company nor any of its Subsidiaries (i) is or has been a member
of any group of companies (other than the Company and its Subsidiaries)
filing a consolidated, combined or unitary Income Tax Return or (ii) has
any liability for the Taxes of any Person under Section 1.1502-6 of the
Treasury Regulations (or any similar provision of state, local or foreign
Law) as a transferee, successor, indemnitor or guarantor by Contract or
otherwise.
SECTION 3.9 Business Contracts.
------------------
(a) Description of Business Contracts. Schedule 3.9(a) contains a
--------------------------------- ---------------
true and complete list of each of the following Contracts to which the
Company or any of its Subsidiaries is a party:
-14-
<PAGE>
(i) all Contracts (excluding Benefit Plans) providing
for a commitment of employment or consultation services for a
specified or unspecified term to, or otherwise relating to the
employment or the termination of employment or the severance of, any
Employee;
(ii) all Contracts with any Person containing any
provision or covenant prohibiting or materially limiting the ability
of any of the Company or any of its Subsidiaries to engage in any
business activity or compete with any Person in connection with the
Business, or prohibiting or materially limiting the ability of any
Person to compete with the Company or any of its Subsidiaries in
connection with the Business;
(iii) all material partnership, joint venture or
stockholders' Contracts with any Person;
(iv) all Contracts with customers, distributors,
dealers, manufacturer's representatives or sales agencies with whom
the Company or any of its Subsidiaries deals in connection with the
Business which in any case involve the payment or potential payment,
pursuant to the terms of any such Contract, by or to the Company or
any of its Subsidiaries of more than $100,000 annually;
(v) all Contracts relating to the future disposition or
acquisition of any Assets individually or in the aggregate material to
the Business, other than dispositions or acquisitions of raw materials
or inventory in the Ordinary Course of Business;
(vi) all collective bargaining or similar labor
Contracts covering any Employee; and
(vii) all other Contracts (other than Benefit Plans) to
which the Company or any of its Subsidiaries is a party that (A)
involve the prospective payment or potential payment, pursuant to the
terms of any such Contract, by or to the Company or any of its
Subsidiaries of more than $100,000 annually and (B) cannot be
terminated within sixty (60) days after giving notice of termination
without resulting in any material cost or penalty to the Company or
any of its Subsidiaries.
(b) Status of Business Contracts. Each Contract required to be
----------------------------
disclosed in Schedule 3.9(a), and each other Contract to which the Company
---------------
or any of its Subsidiaries is a party and which is material to the Business
as currently conducted or as proposed to be conducted, are in full force
and effect and constitute the legal, valid and binding obligations of the
Company or one of its Subsidiaries, as the case may be, enforceable against
the Company or one of its Subsidiaries, as the case may be, in accordance
with their terms. Except as disclosed in Schedule 3.9(b), neither the
---------------
Company nor any of its Subsidiaries which is a party to any such Contract
nor, to the Knowledge of the Company, any other party to any such Contract,
is in violation or
-15-
<PAGE>
breach of or default under any such Contract (or with notice or lapse of
time or both, would be in violation or breach of or default under any such
Contract) the effect of which would have a material adverse effect on the
Business.
SECTION 3.10 Employee and Consultant Agreements. Each Employee and each
----------------------------------
consultant of the Company or any of its Subsidiaries has executed an agreement
prohibiting the unauthorized disclosure or use of confidential and proprietary
information of the Company or any of its Subsidiaries where such confidential or
proprietary information is provided by the Company or its Subsidiaries to such
Person. To the Knowledge of the Company, no such Employees or consultants are in
violation thereof. To the Knowledge of the Company, no Employees are obligated
under any Contract, or are subject to any Order, that would interfere with the
use of his/her best efforts to promote the interests of the Company and its
Subsidiaries or that would conflict with the Business as conducted or as
proposed to be conducted or that would be breached or violated as a result of
the transactions contemplated hereby.
SECTION 3.11 Litigation and Claims. Neither the Company nor any of its
---------------------
Subsidiaries is a party to or, to the Knowledge of the Company, is threatened to
be made a party to, any charge, complaint, action, suit, arbitration,
proceeding, hearing, or investigation (i) which questions or challenges the
right of the Company to enter into this Agreement, the Warrant or any
Transaction Document, or (ii) which, individually or in the aggregate with all
other such items, would have a material adverse effect on the Business.
SECTION 3.12 Labor Matters, etc. Neither the Company nor any of its
------------------
Subsidiaries is a party to or bound by any collective bargaining or other labor
agreement, and there are no labor unions or other organizations representing any
Employees. There has not occurred or been threatened any material strike,
slowdown, picketing, work stoppage, concerted refusal to work overtime or other
similar labor activity by or with respect to any Employees. There are no labor
disputes currently subject to any grievance procedure, arbitration or litigation
and there is no representation petition pending or threatened in each case with
respect to any Employee. To the Knowledge of the Company no officer or key
Employee, or any group of key Employees, intends to terminate their employment
with the Company or any of its Subsidiaries, and neither the Company nor any of
its Subsidiaries has the present intention to terminate the employment of any of
the foregoing. The employment of each officer and Employee of the Company is
terminable at the will of the Company.
SECTION 3.13 Intellectual Property Rights. The Company and its
----------------------------
Subsidiaries have all right, title and interest in, or valid rights under
Contract to use, all Intellectual Property material to the Business as currently
being conducted or as proposed to be conducted, without any conflict with or
infringement on the rights of others. All registrations with and applications to
Governmental Authorities in respect of Intellectual Property owned by the
Company or any of its Subsidiaries are valid and in full force and effect.
Neither the Company nor any of its Subsidiaries has received any notice that it
is in default (or with the giving of notice or lapse of time or both, would be
in default) in any material respect under any Contract to use Intellectual
Property. To the Knowledge of the Company, no Intellectual Property owned or
used by the Company or any of its Subsidiaries is being infringed upon by any
other Person. Neither the Company nor any of its Subsidiaries has received
notice
-16-
<PAGE>
that it is infringing any Intellectual Property of any other Person. Except for
inventions already assigned to the Company or its Subsidiaries, the Company does
not believe it is or will be necessary to utilize any inventions of any Employee
(or individual whom it or any of its Subsidiaries currently intends to hire)
made prior to his or her employment by the Company or any of its Subsidiaries.
SECTION 3.14 Compliance. Neither the Company nor any of its Subsidiaries
----------
is in breach or violation of any provision of its certificate of incorporation
or bylaws. Neither the Company nor any of its Subsidiaries is in breach or
violation of, or in default under, any Law or Order applicable to it, the effect
of which, individually or in the aggregate with other such breaches, violations
and defaults, would have a material adverse effect on the Business. The Company
and its Subsidiaries have obtained and are in compliance with all Licenses
required to be obtained by them in connection with the operation of the
Business.
SECTION 3.14 Employee Benefits.
-----------------
(a) Compliance. Each Benefit Plan (and each related trust or
----------
insurance contract) complies in form and in operation in all material
respects with its respective governing documents and the applicable
requirements of ERISA and the Code. The Company and each of its
Subsidiaries have performed all material obligations required to be
performed by them under, and are not in material default under or in
material violation of any term, provision, or condition of, any Benefit
Plan.
(b) Filings. All required reports and descriptions (including
-------
without limitation Form 5500 Annual Reports, Summary Annual Reports, PBGC-
1's, and Summary Plan Descriptions) have been filed or distributed in a
timely manner with respect to each Benefit Plan.
(c) Contributions. All contributions (including all employer
-------------
contributions and employee salary reduction contributions) which are due
have been paid to each Benefit Plan and all contributions for any period
ending on or before the Closing Date which are not yet due have been paid
to each Benefit Plan or accrued in accordance with the past custom and
practice of the Company and its Subsidiaries. All premiums or other
payments for all periods ending on or before the date hereof have been paid
with respect to each Welfare Benefit Plan (as defined in ERISA Section
3(1)).
(d) Determination Letters. Each Pension Benefit Plan which is
---------------------
required to comply with Code Section 401(a) satisfies the requirements of
Code Section 401(a) and has received a favorable determination letter from
the IRS regarding such status and has not, since receipt of the most recent
favorable determination letter, been amended or operated in a way which
would adversely affect such qualified status.
(e) Asset Valuation. The market value of assets under each Pension
---------------
Benefit Plan (other than any Multiemployer Plan) equals or exceeds the
present value of accrued benefits thereunder through the date hereof
(determined on a plan termination basis). No Pension Benefit Plan (other
than any Multiemployer Plan) has been completely or partially terminated or
been the subject of a reportable event as to
-17-
<PAGE>
which notices would be required to be filed with the PBGC. No proceeding by
the PBGC to terminate any Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or, to the Knowledge of the
Company, threatened.
(f) No Prohibited Transactions. To the Knowledge of the Company,
--------------------------
there has been no Prohibited Transaction (as defined in ERISA Section 406
and Code Section 4975) with respect to any Benefit Plan.
(g) Claims. There are no actions, suits, arbitrations, or claims
------
pending (other than routine claims for benefits) or, to the Knowledge of
the Company, threatened against any Benefit Plan, its administrators,
trustees, or other fiduciaries, or against the Company or any of its
Subsidiaries, or against the assets of such Plan. To the Knowledge of the
Company, no fiduciary with respect to any Benefit Plan has any material
Liability for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the assets of
any Benefit Plan.
(h) Miscellaneous. Neither the Company nor any of its Subsidiaries
-------------
is, and neither has ever been, a member of a controlled group of
corporations that contributes to, ever has contributed to, or ever has been
required to contribute to any multiemployer plan (as defined in Section
4001(a)(3) of ERISA) (a "Multiemployer Plan") and neither has any Liability
------------------
(including withdrawal Liability) under any Multiemployer Plan. Neither the
Company nor any of its Subsidiaries has incurred, and neither has any
reason to expect that it will incur, any Liability to the PBGC (other than
PBGC premium payments) or otherwise under Title IV of ERISA (including any
withdrawal Liability) or under the Code with respect to any Pension Benefit
Plan that it, or any controlled group of corporations which includes it,
maintain or have ever maintained or to which any of them contributes, has
ever contributed, or has ever been required to contribute. No Benefit Plan
provides post-retirement welfare benefits other than continuation coverage
provided pursuant to Part 6 of Title I of ERISA and Section 4980A of the
Code. No Benefit Plan is under audit or, to the Knowledge of the Company,
investigation by any Governmental Authority. Each Benefit Plan which is a
"group health plan" (as such term is defined in Section 4980B(g)(2) of the
Code or ERISA Section 607(1)) has been operated in material compliance with
the provisions of Part 6 of Title I of ERISA and Sections 4980A and 4980B
of the Code at all times.
SECTION 3.16 Insurance. The Company and its Subsidiaries maintain, with
---------
respect to the Business, insurance in such amounts and covering such risks as is
customary in the industry in which the Business operates. Each such policy of
insurance is in full force and effect, and all premiums thereunder or self-
insurance funding amounts required thereby, as the case may be, have been paid
or funded. Neither the Company nor any of its Subsidiaries has received any
notice of termination with respect to any such insurance policy and is not in
default thereunder in any material respect. No insurance carrier has threatened
to terminate any such insurance policy or to increase any premiums in respect
thereof, and neither the Company nor any of its Subsidiaries has failed to
comply with any material conditions contained in any such policy.
-18-
<PAGE>
SECTION 3.17 Environmental Matters.
---------------------
(a) Compliance. Each of the Company and its Subsidiaries has
----------
obtained, and complied with all the terms and conditions of, all Licenses
required by any Environmental Law in connection with the Business except
where the failure to obtain or comply with any such License would not have,
individually or in the aggregate with other such failures, a material
adverse effect on the Business. Each such License is in full force and
effect. Each of the Company and its Subsidiaries is in compliance with all
Environmental Laws except where a failure to comply, individually or in the
aggregate with all such other failures, would not have a material adverse
effect on the Business.
(b) Listings. Except as disclosed in Schedule 3.17(b), to the
-------- ----------------
Knowledge of the Company, none of the real property owned or leased by the
Company or any of its Subsidiaries is listed on the NPL, CERCLIS or any
similar state or local list of sites requiring investigation or clean-up.
(c) No Notice. No written notice or, to the Knowledge of the
---------
Company, any other communication from any Governmental Authority of any
alleged violation of any Environmental Law has been received by the Company
or any of its Subsidiaries, except for notices or communications that have
been complied with in all respects.
(d) No Hazardous Substances. Neither the Company nor any of its
-----------------------
Subsidiaries utilizes any Hazardous Substances in the course of its
Business operations and there has been no release of Hazardous Substances
by the Company or any of its Subsidiaries or, to the knowledge of the
Company, any other Person, on any property, owned or occupied by the
Company or any of its Subsidiaries.
SECTION 3.18 Offer or Sale of Shares and Warrant. Neither the Company nor
-----------------------------------
anyone acting on its behalf has offered the Stock or Warrant to any entity other
than the Purchaser or has taken any other action that would subject the issuance
and sale of the Stock or Warrant (or the issuance of the Common Stock upon
exercise of the Warrant) to the registration requirements of the Securities Act
or any state securities Laws.
SECTION 3.19 Brokers. No broker or other representative has acted on
-------
behalf of the Company or any of its Subsidiaries in connection with the
transactions contemplated hereby in such manner as to give rise to any valid
claim by any Person against the Purchaser for a finder's fee, brokerage
commission or similar payment .
SECTION 3.20 Transactions With Directors, Officers, Employees and
----------------------------------------------------
Affiliates. Except as set forth in Schedule 3.20 there have been no transactions
- ---------- -------------
between the Company or any of its Subsidiaries and any director, officer,
employee or affiliate (as defined in Rule 405 promulgated by the SEC) of the
Company or any of its Subsidiaries, except on an arm's length basis in
accordance with normal business practices, and none of the officers, directors,
employees or affiliates of the Company or any of its Subsidiaries, or any member
of the immediate family of any such Persons, is a director or officer of, or has
a material interest
-19-
<PAGE>
in, any Person which is a material supplier, customer or sales agent of the
Company or any of its Subsidiaries or has competed to a material extent with the
Company or any of its Subsidiaries. Except as set forth in Schedule 3.20, no
-------------
Affiliate of the Company or any of its Subsidiaries provides or supplies assets,
services or facilities which are individually or in the aggregate material to
the Business, and neither the Company nor any of its Subsidiaries provides or
supplies any assets, services or facilities to any Affiliate of the Company or
any of its Subsidiaries which are individually or in the aggregate material to
the Business. Except as disclosed on Schedule 3.20, each of the transactions
-------------
listed in Schedule 3.20 is engaged in on an arm's-length basis.
-------------
SECTION 3.21 Echostar Investment. The Company owns the shares of the
-------------------
issued and outstanding common stock described on Schedule 3.4 (the "Echostar
------------ --------
Stock") of Echostar Communications Corporation ("Echostar"), a corporation whose
- ----- --------
common stock is publicly traded on the NASDAQ Exchange. The Company has issued
to Echostar those certain 6 1/2 Percent Convertible Subordinated Debentures in
the aggregate original principal amount of US $8,750,000.00 (collectively, the
"Echostar Debenture") which have a current unpaid aggregate principal balance of
------------------
US $8,750,000.00 and which are convertible by Echostar into Common Stock upon
the terms set forth therein. The Company entered into that certain letter
agreement (the "Echostar Letter") regarding the Echostar Debenture which is
---------------
attached hereto as Schedule 3.21.
-------------
SECTION 3.22 Disclosure. The representations and warranties of the Company
----------
contained in this Agreement and in any schedule, certificate, or agreement
furnished by the Company to the Purchaser pursuant to this Agreement do not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading. The Company
acknowledges that the Purchaser is also relying on the representations and
warranties of the Company herein in connection with the purchase by the
Purchaser of shares of Common Stock from the Selling Stockholders pursuant to
the Selling Stockholder Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser hereby represents and warrants to the Company that:
SECTION 4.1 Organization and Authority of the Purchaser. The Purchaser is
-------------------------------------------
a societe anonyme duly organized, validity existing and in good standing under
the laws of France. The Purchaser has full corporate power and authority to
enter into this Agreement and the Transaction Documents and to consummate the
transactions contemplated herein and therein.
SECTION 4.2 Due Authorization, Execution and Delivery. The execution,
-----------------------------------------
delivery and performance of this Agreement and the Transaction Documents by the
Purchaser and the consummation by the Purchaser of the transactions contemplated
herein and therein have
-20-
<PAGE>
been duly authorized by all necessary corporate action on the part of the
Purchaser, and this Agreement has been, and at Closing the Transaction Documents
will be, duly executed and delivered by the Purchaser. This Agreement
constitutes, and the Transaction Documents and all other instruments and
documents to be executed and delivered by the Purchaser hereunder will, when
executed and delivered, constitute, the legal valid and binding obligations of
the Purchaser enforceable against the Purchaser in accordance with their
respective terms, except that such enforcement (i) may be limited by bankruptcy,
insolvency, moratorium or similar laws affecting creditors' rights generally,
and (ii) is subject to the availability of equitable remedies, as determined in
the discretion of the court before which such a proceeding may be brought.
SECTION 4.3 Consents; No Conflict. The Purchaser is not required to
---------------------
obtain the consent, authorization or approval of any Person, or any License from
any Governmental Authority, as a condition to the consummation of this Agreement
or the Transaction Documents by the Purchaser. The execution and delivery of
this Agreement and the Transaction Documents by the Purchaser and the
consummation of the transactions contemplated hereby and thereby will not
conflict with, result in the termination of, contravene or constitute a default
under, or be an event which with the giving of notice or passage of time or both
will become a default under, or give to others any rights of termination or
cancellation of, or accelerate the performance required by or maturity of, or
result in the creation of any material Lien or loss of any rights with respect
to the Purchaser pursuant to any of the terms, conditions or provisions of or
under, any applicable Law, the certificate of incorporation or by-laws (or other
organizational documents) of the Purchaser, or any Contract to which the
Purchaser is a party or which is otherwise binding upon the Purchaser or to
which the Assets of the Purchaser are subject.
SECTION 4.4 Brokers. No broker or other representative has acted on
-------
behalf of the Purchaser in connection with the transactions contemplated hereby
in such manner as to give rise to any valid claim by any Person against the
Company for a finder's fee, brokerage commission or similar payment.
SECTION 4.5 Purchase Entirely for Own Account. The Purchaser will acquire
---------------------------------
the Stock and the Warrant for investment for its own account, not as a nominee
or agent, and not with a view to the resale or distribution of any part thereof,
and the Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the Stock or the Warrant. The
Purchaser does not presently have any Contract, undertaking or arrangement with
any Person to sell, transfer or grant participations to such Person or to any
third Person with respect to the Stock or the Warrant.
SECTION 4.6 Investment Experience. The Purchaser understands that the
---------------------
Stock and the Warrant have not been, and will not be, registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of the Purchaser's
representations as expressed herein. The Purchaser has not been formed for the
specific purpose of acquiring the Stock or the Warrant.
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<PAGE>
SECTION 4.7 Restricted Securities. The Purchaser understands that the
---------------------
Stock and the Warrant are characterized as "restricted securities" under the
federal securities Laws inasmuch as they are being acquired in a transaction not
involving a public offering and that under such Laws, the Stock and the Warrant
may be resold without registration under the Securities Act only in certain
limited circumstances. In this respect, the Purchaser represents that it is
familiar with Rule 144 promulgated under the Securities Act ("Rule 144"), as
--------
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act.
SECTION 4.8 Disclosure. The representations and warranties of the
----------
Purchaser contained in this Agreement and in any schedule, certificate or
agreement furnished by the Purchaser to the Company pursuant to this Agreement
do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading.
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
SECTION 5.1 Limitations on Disposition of Stock. Without in any way
-----------------------------------
limiting the representations set forth in Article IV hereof, the Purchaser
agrees not to dispose of all or any portion of the Stock unless and until: (i)
there is then in effect a registration statement under the Securities Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or (ii) (A) the Purchaser shall have notified
the Company of the proposed disposition and shall have furnished the Company
with a detailed statement of the circumstances surrounding the proposed
disposition, and (B) if reasonably requested by the Company, the Purchaser shall
have furnished the Company with an opinion of counsel, reasonably satisfactory
to the Company, that such disposition will not require registration under the
Act, provided that no opinion of counsel will be required for transactions made
pursuant to Rule 144.
SECTION 5.2 Legends. It is understood that any certificate(s) evidencing
-------
the Stock, and any securities issued in respect thereof or exchange therefor,
may bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
(b) Any legend required by the laws of the State of Delaware.
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<PAGE>
(c) Any legend required by the Blue Sky laws of any other state to the
extent such laws are applicable to the shares represented by the certificate so
legended.
SECTION 5.3 Proceeds of Sale of Stock. The Company shall use all of the
-------------------------
proceeds obtained from the sale of the Stock to the Purchaser, net of the
customary expenses associated therewith, solely to fund the working capital
needs of the Company and its Subsidiaries and/or to make the prepayment on the
Echostar Debenture required by Section 5.4.
SECTION 5.4 Echostar Situation. As a prepayment of the Echostar Debenture,
------------------
at Closing, the Company will pay to Echostar the amount of $3,500,000.00 in
principal plus all accrued interest on the Echostar Debenture via wire transfer
of immediately available funds to the account designated by Echostar. The
Company shall not amend or terminate the Echostar Letter without the prior
written consent of the Purchaser which may be withheld in the sole discretion of
the Purchaser. The Company shall take all action within its power to limit to no
more than 500,000 shares the number of shares of Common Stock which Echostar
would have the right to purchase at any time following Closing pursuant to the
Echostar Debenture or any warrants issued pursuant to the Echostar Letter. In
the event Echostar acquires any Common Stock from the Company, the Company shall
use its best efforts to cause Echostar to execute and deliver to the Company,
the Purchaser and all other parties to the Stockholder Agreement an agreement to
be bound by all provisions thereof binding on the stockholders of the Company
which are parties thereto.
SECTION 5.5 Delivery of Budgets and Other Information. As long as the
-----------------------------------------
Purchaser and its Affiliates, collectively, hold in the aggregate not less than
500,000 shares of Common Stock or shares of Common Stock representing not less
than 8% of the outstanding shares of Common Stock on a fully diluted basis, the
Company shall deliver to the Purchaser (i) as soon as practicable, but in any
event at least thirty (30) days prior to the end of each fiscal year of the
Company, a budget and business plan for the next fiscal year for the Business,
prepared on a monthly basis, including balance sheets and sources and
applications of funds statements for such months and, as soon as prepared, any
other budgets or revised budgets prepared by the Company, (ii) such other
information relating to the financial condition, prospects or affairs of the
Business as the Purchaser may from time to time request, provided, however, that
the Company shall not be obligated to provide information which it deems in good
faith to be proprietary, and (iii) a copy of any Schedule 13D filing made by any
Person pursuant to Section 13(d) of the Exchange Act immediately following the
receipt thereof by the Company.
SECTION 5.6 Access to Business. Following the Closing, the Company shall
------------------
permit the Purchaser and its representatives at the Purchaser's expense, as long
as the Purchaser and its Affiliates, collectively, hold in the aggregate not
less than 500,000 shares of Common Stock or shares of Common Stock representing
not less than 8% of the outstanding shares of Common Stock on a fully diluted
basis, to visit and inspect the properties and Assets of the Company and its
Subsidiaries, to examine the books of account and records of the Company and its
Subsidiaries and to discuss the affairs, finances and accounts of the Company
and its Subsidiaries with the officers thereof, all at such reasonable times as
may be requested by the Purchaser, provided that the Purchaser acknowledges that
the access by the Purchaser to
-23-
<PAGE>
certain information relating to Contracts which the Company has entered into
with United States Governmental Authorities may be restricted pursuant to
certain Laws due to the status of the Purchaser as a foreign corporation.
SECTION 5.7 Right of First Offer. Subject to the terms and conditions in
--------------------
this Section 5.7, the Company hereby grants to the Purchaser the following
rights of first offer with respect to future sales by the Company of its New
Securities:
(a) Notice to Purchaser. In the event the Company proposes to issue New
-------------------
Securities, the Company shall give the Purchaser written notice (the "First
-----
Offer Notice") of its intention stating (i) a description of the New Securities
- ------------
which the Company proposes to issue and the identity of the Person or group of
Persons to whom the New Securities would be issued, (ii) the number of shares of
New Securities which the Company proposes to issue, (iii) the price per share at
which, and other terms on which, the Company proposes to issue such New
Securities, and (iv) the number of shares of such New Securities that the
Purchaser has the right to purchase under this Section 5.7, based on the
Purchaser Percentage.
(b) Exercise Right. Within thirty (30) days after the First Offer Notice
--------------
is given to the Purchaser, the Purchaser may elect to purchase, at the price
specified in the First Offer Notice, the number of shares of the New Securities
proposed to be issued by the Company multiplied by the Purchaser Percentage.
The Purchaser may exercise such purchase right in whole or in part. An election
to purchase shall be made in writing and must be given to the Company within
such thirty (30) day period. The closing of the sale of New Securities by the
Company to the Purchaser upon exercise of its rights under this Section 5.7
shall take place simultaneously with the closing of the sale of New Securities
to third parties.
(c) Lapse of Right. The Company shall have sixty (60) days after the last
--------------
date on which the Purchaser's right of first offer lapses to enter into a
Contract (pursuant to which the sale of New Securities covered thereby shall be
closed, if at all, within sixty (60) days from the execution thereof) to sell
the New Securities which the Purchaser did not elect to purchase under this
Section 5.7, provided that such sale must be at or above the price specified in
the First Offer Notice and upon terms not materially more favorable to the
purchaser of such securities than the terms specified in the First Offer Notice.
In the event the Company does not enter into a Contract to sell the New
Securities within such sixty (60) day period (or does not sell and issue New
Securities in accordance with any such Contract within sixty (60) days from the
date thereof), the Company shall not thereafter issue or sell any New Securities
without first offering such New Securities to the Purchaser in the manner
provided in this Section 5.7.
(d) Termination of Right of First Offer. This Section 5.7 shall terminate
-----------------------------------
upon the first to occur of the following:
(i) The date on which the Purchaser and its Affiliates,
collectively, hold in the aggregate less than 500,000 shares of Common
Stock, provided that on such date such shares so held represent less than
8% of the outstanding shares of Common Stock on a fully diluted basis.
-24-
<PAGE>
(ii) The failure of the Purchaser to elect to purchase all shares
of New Securities which the Purchaser is entitled to purchase pursuant to
Section 5.7(b) at any such time as the Purchaser may elect to make such
purchase.
SECTION 5.8 Special Purchase Rights.
-----------------------
(a) Grant of Rights. Notwithstanding any other provision of this
---------------
Agreement, if the Company proposes to issue or sell any Voting Stock to a
Restricted Investor, or if any underwriter in connection with a registered
public offering proposes to issue or sell any Voting Stock to a Restricted
Investor, the Purchaser shall have a right of first offer to purchase all
shares of such Voting Stock to be issued to such Restricted Investor on the
terms pursuant to which the Company or such underwriter proposes to issue
or sell such Voting Stock to such Restricted Investor, provided that the
underwriters of a registered public offering of Voting Stock by the Company
shall not be deemed to propose to issue or sell any Voting Stock to a
Restricted Investor unless the Company solicits or arranges for the
solicitation of orders to purchase Voting Stock by a Restricted Investor
from such underwriters in anticipation of or in connection with a
registered public offering and, provided further, that the execution and
performance of an underwriting agreement by the Company in connection with
a registered public offering and the participation by officers of the
Company in the normal and customary selling activities undertaken by the
underwriters shall not, in and of themselves, be considered soliciting or
arranging for the solicitation of orders to purchase Voting Stock.
(b) Notice to Purchaser. In the event the Company or such underwriter
-------------------
proposes to issue or sell Voting Stock to a Restricted Investor, which
would be subject to the foregoing right of first offer, the Company shall
give the Purchaser written notice (the "Voting Stock Notice") of its or
-------------------
such underwriter's intentions stating (i) a description of the Voting Stock
proposed to be issued or sold and the identity of the Restricted Investor,
(ii) the total number of shares of Voting Stock proposed to be issued or
sold, and (iii) the price per share at which, and the other terms on which,
such Voting Stock is proposed to be issued or sold.
(c) Exercise by Purchaser. Within thirty (30) days after the Voting
---------------------
Stock Notice is given to the Purchaser, the Purchaser may elect to
purchase, at the price and on the terms specified in the Voting Stock
Notice, all shares of Voting Stock proposed to be issued and sold to the
Restricted Investor. An election to purchase shall be made by the
Purchaser in writing and must be given to the Company within such thirty
(30) day period. The election described herein shall constitute an
irrevocable, legally binding obligation of the Purchaser to purchase the
Voting Stock on the terms set forth in the Voting Stock Notice. The
closing of the sale of the Voting Stock by the Company to the Purchaser
upon the exercise of its rights under this Section 5.8 shall take place
within thirty (30) days following the date on which such election to
purchase is made.
(d) Termination of Special Purchase Rights. This Section 5.8 shall
--------------------------------------
terminate upon the first to occur of the following:
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<PAGE>
(i) The date on which the Purchaser and its Affiliates,
collectively, hold less than 500,000 shares of Common Stock, provided that
on such date such shares so held represent less than 8% of the outstanding
shares of Common Stock on a fully diluted basis.
(ii) The failure of the Purchaser to elect to purchase all shares
of Voting Stock which the Purchaser is entitled to purchase pursuant to
Section 5.8(c) at any such time as the Purchaser may elect to make such
purchase.
SECTION 5.9 Subsidiary Stock. The Company shall not permit any Subsidiary
----------------
of the Company to issue or sell any capital stock of such Subsidiary to any
Person other than the Company without granting to the Purchaser rights to
purchase such capital stock which are substantially the same as the rights of
the Purchaser pursuant to Sections 5.7 and 5.8 hereof. For purposes of this
Section 5.9, any transfer of capital stock of any Subsidiary of the Company by
the Company shall be deemed to be an issuance of such stock by such Subsidiary
to such transferee and shall be subject to this Section 5.9.
SECTION 5.10 Confidential Treatment. The Company will use its best efforts
----------------------
to obtain confidential treatment of the Commercial Agreement (and all Schedules
thereto) in all public filings that include such document including, without
limitation, all filings made by the Company with the SEC.
SECTION 5.11 Advice of Changes. The Company will promptly advise the
-----------------
Purchaser in writing of (i) any event occurring subsequent to the date of this
Agreement which would render any representation or warranty of the Company
contained in this Agreement, if made on or as of the date of such event, untrue,
inaccurate or incomplete in any material respect, and (ii) any material adverse
change in the working capital, financial condition, assets, liabilities (whether
absolute, accrued contingent or otherwise), operating profits, business or
prospects of the Company and its Subsidiaries as a whole.
SECTION 5.12 Further Assurances. Each party agrees to cooperate fully with
------------------
the other parties hereto and their respective authorized representatives and to
execute and deliver or cause to be executed and delivered at all reasonable
times and places such additional instruments and documents as the other party or
parties may reasonably request for the purpose of carrying out this Agreement.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
------------------------------------------
The obligations of the Purchaser to consummate the transactions provided
for herein on the Closing Date are subject to the fulfillment on or before the
Closing Date of each of the following conditions, except to the extent that
Purchaser may, in its absolute discretion, waive one or more thereof in writing
in whole or in part:
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<PAGE>
SECTION 6.1 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of the Company contained herein shall be true in all material
respects on and as of the Closing Date with the same force and effect as if made
on and as of such date.
SECTION 6.2 Performance of Agreements. The Company shall have performed in
-------------------------
all material respects all obligations and agreements, and complied in all
material respects with all covenants, contained in this Agreement to be
performed and complied with by the Company at or prior to the Closing Date.
SECTION 6.3 Bring-Down Certificate. The Company shall have furnished the
-----------------------
Purchaser with a certificate in the form of Exhibit F executed by a duly
---------
authorized officer of the Company, dated the Closing Date, to the effect that
the Company has fulfilled the conditions specified in Sections 6.1 and 6.2
hereof.
SECTION 6.4 Corporate Documents . The Company shall have delivered to the
-------------------
Purchaser the following documents which, except any such documents the form of
which is attached as an Exhibit hereto, shall be reasonably satisfactory in form
and content to the Purchaser and its counsel:
(a) Good Standing Certificate. A good standing certificate with respect to
-------------------------
the Company and each of its Subsidiaries issued as of the date of Closing by the
appropriate official of the state of incorporation of each such corporation.
(b) Certificate of Incorporation and Bylaws. The certificate of
---------------------------------------
incorporation and bylaws or other governing instruments of the Company and each
of its Subsidiaries together with a certificate of a duly authorized officer of
each such corporation in the form of Exhibit G dated the Closing Date and
---------
certifying as to the accuracy and completeness of such corporate documents.
(c) Corporate Resolutions. Copies of resolutions of the Board of Directors
---------------------
of the Company, duly certified by the Secretary of the Company in the form of
the certificate attached as Exhibit H, authorizing the execution, delivery and
---------
performance of this Agreement, the Warrant, the Transaction Documents, and all
other documents, instruments, and certificates contemplated hereby to which the
Company is a party.
(d) Incumbency Certificates. An incumbency certificate of the President or
-----------------------
any duly authorized Vice President of the Company who will be executing this
Agreement, the Warrant, the Transaction Documents or any other document,
instrument or certificate to be delivered pursuant to the terms hereof
(including the name, title and signature of each such officer) in the form of
Exhibit I.
- ---------
SECTION 6.5 Opinion of Company Counsel. The Purchaser shall have received
--------------------------
from Surovell, Jackson, Colten & Dugan, P.C., counsel for the Company, an
opinion, dated as of the Closing Date, in the form of Exhibit J.
---------
SECTION 6.6 No Material Adverse Change. There shall have been no material
--------------------------
adverse change in the business, operations, properties or financial condition of
the Company
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<PAGE>
and its Subsidiaries taken as a whole whether or not arising in the Ordinary
Course of Business, except for changes relating to general economic events or
trends.
SECTION 6.7 No Adverse Proceedings. No action, suit or proceeding before
----------------------
any Governmental Authority shall have been commenced, no investigation by any
Governmental Authority shall have been commenced, and no action, suit or
proceeding by any Governmental Authority shall have been threatened, against any
of the parties to this Agreement, or any Subsidiary of the Company, wherein an
unfavorable Order would (i) prevent the consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation, or (iii) adversely
affect the right of the Purchaser to own the Stock or the Warrant following
Closing (and no such Order shall be in effect.)
SECTION 6.8 Other Assurances. The Company shall have delivered to the
----------------
Purchaser such other and further certificates, assurances and documents as the
Purchaser may reasonably request in order to evidence the accuracy of the
representations and warranties of the Company, the performance of the covenants
and agreements to be performed by the Company pursuant hereto at or prior to the
Closing and the fulfillment of the conditions to the obligations of the
Purchaser.
SECTION 6.8 Consents and Approvals. All consents, waivers, authorizations
----------------------
and approvals of any Governmental Authority, domestic or foreign, and of any
other Person required in connection with the execution, delivery and performance
of this Agreement, shall have been obtained and shall be in full force and
effect on the Closing Date.
SECTION 6.10 Closing Under Selling Stockholder Agreement. The closing of
-------------------------------------------
the transactions contemplated by the Selling Stockholder Agreement shall have
been consummated pursuant to the terms thereof.
SECTION 6.11 Execution of Transaction Documents and Warrant. All
----------------------------------------------
Transaction Documents and the Warrant shall have been executed and delivered by
the parties thereto.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
----------------------------------------
The obligations of the Company to consummate the transactions provided for
herein on the Closing Date are subject to the fulfillment on or before the
Closing Date of each of the following conditions, except to the extent that the
Company may, in its absolute discretion, waive one or more thereof in writing in
whole or in part:
SECTION 7.1 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of the Purchaser contained herein shall be true in all material
respects on and as of the Closing Date with the same force and effect as if made
on and as of such date.
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<PAGE>
SECTON 7.2 Performance of Agreements. The Purchaser shall have performed in
-------------------------
all material respects all obligations and agreements, and complied in all
material respects with all covenants, contained in this Agreement to be
performed and complied with by the Purchaser at or prior to the Closing Date.
SECTION 7.3 Bring-Down Certificate. The Purchaser shall have furnished the
----------------------
Company with a certificate in the form of Exhibit K executed on its behalf by
---------
its duly authorized executive officer or attorney-in-fact, dated the Closing
Date, to the effect that the Purchaser has fulfilled the conditions specified in
Sections 7.1 and 7.2 hereof.
SECTION 7.4 Purchaser's Documents. The Purchaser shall have delivered to
---------------------
the Company the following documents which, except any such documents the form of
which is attached as an Exhibit hereto, shall be reasonably satisfactory in form
and content to the Company and its counsel:
(a) Good Standing Certificate. A registration certificate or other
-------------------------
evidence from the Commercial Register or the Commercial and Corporate Registry
or such other document reasonably required to evidence the valid existence and
good standing of the Purchaser issued within sixty (60) days prior to the
Closing Date by the appropriate official of the jurisdiction of incorporation of
the Purchaser.
(b) Certificate of Incorporation and Bylaws. The certificate of
---------------------------------------
incorporation and bylaws or other governing instruments of the Purchaser,
together with a certificate of a duly authorized officer or attorney-in-fact of
the Purchaser in the form of Exhibit L dated the Closing Date and certifying as
---------
to the accuracy and completeness of such corporate documents.
(c) Incumbency Certificates. An incumbency certificate of the President of
-----------------------
the Purchaser, any duly authorized Vice President of the Purchaser or any
attorney-in-fact of the Purchaser who will be executing this Agreement, all
Transaction Documents or any other document, instrument or certificate to be
delivered pursuant to the terms hereof (including the name, title and signature
of each such individual) in the form of Exhibit M.
---------
SECTION 7.5 No Adverse Proceedings. No action, suit or proceeding before
----------------------
any Governmental Authority shall have been commenced, no investigation by any
Governmental Authority shall have been commenced, and no action, suit or
proceeding by any Governmental Authority shall have been threatened, against any
of the parties to this Agreement, or any Subsidiary of the Company, wherein an
unfavorable Order would (i) prevent the consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation, or (iii) adversely
affect the right of the Purchaser to own the Stock or the Warrant following
Closing (and no such Order shall be in effect.)
SECTION 7.6 Other Assurances. The Purchaser shall have delivered to the
----------------
Company such other and further certificates, assurances and documents as the
Company may reasonably request in order to evidence the accuracy of the
representations and warranties of the Purchaser, the performance of the
covenants and agreements to be performed by the
-29-
<PAGE>
Purchaser pursuant hereto at or prior to the Closing and the fulfillment of the
conditions to the obligations of the Company.
SECTION 7.7 Consents and Approvals. All consents, waivers, authorizations
----------------------
and approvals of any Governmental Authority, domestic or foreign, and of any
other Person required in connection with the execution, delivery and performance
of this Agreement, shall have been obtained and shall be in full force and
effect on the Closing Date.
ARTICLE VIII
INDEMNIFICATION
---------------
SECTION 8.1 Survival. Subject to Section 8.8 hereof, the parties hereto
--------
agree that their respective representations, warranties, covenants and
agreements contained in this Agreement shall survive the Closing.
SECTION 8.2 Indemnification by the Company. Subject to the other provisions
------------------------------
of this Article VIII, the Company shall indemnify and hold harmless the
Purchaser from and against any and all Losses suffered or incurred by the
Purchaser after the date hereof as a result of or arising out of:
(a) the falsity or incorrectness of or breach of any representation or
warranty of the Company in this Agreement or in any schedule or certificate
furnished to the Purchaser by the Company pursuant to this Agreement; or
(b) the failure by the Company to perform any covenant or agreement of the
Company under this Agreement or under any schedule or certificate furnished to
the Purchaser by the Company pursuant to this Agreement; or
(c) any claim, action, suit or demand by or on behalf of any past, current
or future stockholder of the Company based upon or relating to the consummation
of the transactions contemplated by this Agreement, any Transaction Document or
the Selling Stockholder Agreement.
SECTION 8.3 Indemnification by the Purchaser. Subject to the other
--------------------------------
provisions of this Article VIII, the Purchaser shall indemnify and hold harmless
the Company from and against any and all Losses suffered or incurred by the
Company after the date hereof as a result of or arising out of:
(a) the falsity or incorrectness of or breach of any representation or
warranty of the Purchaser in this Agreement or in any schedule or certificate
furnished to the Company by the Purchaser pursuant to this Agreement; or
(b) the failure by the Purchaser to perform any covenant or agreement of
Purchaser under this Agreement or under any schedule or certificate furnished to
the Company by the Purchaser pursuant to this Agreement.
-30-
<PAGE>
SECTION 8.4 Method of Asserting Claims. All claims for indemnification by
--------------------------
any Indemnified Party under this Article VIII shall be asserted and resolved as
follows:
(a) Third Party Claims. If any claim or demand in respect of which an
------------------
Indemnified Party might seek indemnity under this Article VIII is asserted
against such Indemnified Party by a Person other than the Company or the
Purchaser (a "Third Party Claim"), the Indemnified Party shall give written
-----------------
notice and the details thereof including copies of all relevant pleadings,
documents and information (collectively a "Third Party Claim Notice") to the
------------------------
Indemnifying Party within a period of thirty (30) days following the assertion
of the Third Party Claim against the Indemnified Party (the "Third Party Claim
-----------------
Notice Period"). If the Indemnified Party fails to provide the Third Party
- -------------
Claim Notice within the Third Party Claim Notice Period, the Indemnifying Party
will not be obligated to indemnify the Indemnified Party with respect to such
Third Party Claim to the extent that the Indemnifying Party's ability to defend
has been prejudiced by such failure of the Indemnified Party. The Indemnifying
Party will notify the Indemnified Party within a period of thirty (30) days
after the receipt of the Third Party Claim Notice by the Indemnifying Party (the
"Third Party Claim Response Period"):
---------------------------------
(i) whether the Indemnifying Party disputes its liability to the
Indemnified Party under this Article VIII with respect to such Third Party
Claim; and
(ii) whether the Indemnifying Party desires, at its sole cost and
expense, to defend the Indemnified Party against such Third Party Claim.
If the Indemnifying Party notifies the Indemnified Party within the Third
Party Claim Response Period that the Indemnifying Party desires to defend the
Indemnified Party against the Third Party Claim, then the Indemnifying Party at
its sole cost and expense shall defend, with counsel reasonably satisfactory to
the Indemnified Party, such Third Party Claim by all appropriate proceedings,
which proceedings will be diligently prosecuted to a final conclusion or will be
settled at the discretion of the Indemnifying Party (with the consent of the
Indemnified Party which shall not be unreasonably withheld). The Indemnified
Party will cooperate in such defense at the sole cost and expense of the
Indemnifying Party. The Indemnified Party may, at its sole cost and expense, at
any time prior to the Indemnifying Party's delivery of the notice referred to in
the last sentence of the preceding paragraph, file any pleadings or take any
other action that the Indemnified Party reasonably believes to be necessary or
appropriate to protect its interests. The Indemnified Party, at its expense,
may participate in, but not control, any defense or settlement of any Third
Party Claim conducted by the Indemnifying Party pursuant to this Section 8.4(a).
If the Indemnifying Party fails to notify the Indemnified Party within the
Third Party Claim Response Period that the Indemnifying Party desires to defend
the Third Party Claim or if the Indemnifying Party gives such notice but fails
to prosecute diligently or settle the Third Party Claim, then the Indemnified
Party shall defend, at the sole cost and expense of the Indemnifying Party, the
Third Party Claim by all appropriate proceedings, which proceedings will be
prosecuted by the Indemnified Party in a reasonable manner and in good faith or
will be settled at the discretion of the Indemnified Party (with the consent of
the
-31-
<PAGE>
Indemnifying Party which shall not be unreasonably withheld). The Indemnifying
Party will, at its sole cost and expense, cooperate in such defense.
Notwithstanding the foregoing provisions of this Section 8.4(a), if the
Indemnifying Party is determined not to be liable for such Third Party Claim
pursuant to the last paragraph of this Section 8.4(a) and Section 8.4(c), the
Indemnifying Party will not be required to bear the costs and expenses of the
Indemnified Party's defense of the Third Party Claim or the Indemnifying Party's
participation therein pursuant to this Section 8.4(a), and the Indemnified Party
will reimburse the Indemnifying Party in full for all reasonable costs and
expenses incurred by the Indemnifying Party in connection with such defense.
If the Indemnifying Party notifies the Indemnified Party that it does not
dispute its liability to the Indemnified Party with respect to the Third Party
Claim under this Article VIII or fails to notify the Indemnified Party within
the Third Party Claim Response Period whether the Indemnifying Party disputes
its liability to the Indemnified Party with respect to such Third Party Claim,
the Losses resulting from such Third Party Claim as finally determined will be
conclusively deemed to be a liability of the Indemnifying Party under this
Article VIII, and the Indemnifying Party shall pay the amount of such Losses to
the Indemnified Party on demand. If the Indemnifying Party notifies the
Indemnified Party within the Third Party Claim Response Period that the
Indemnifying Party disputes its liability to the Indemnified Party with respect
to such claim, the Indemnifying Party and the Indemnified Party will proceed in
good faith to negotiate a resolution of such dispute, and if not resolved
through negotiations within a period of thirty (30) days from the date of such
notice, such dispute shall be resolved by arbitration in accordance with Section
8.4(c) hereof.
(b) Other Claims. In the event any Indemnified Party should have a claim
------------
under this Article VIII against any Indemnifying Party that does not involve a
Third Party Claim, the Indemnified Party shall promptly give written notice and
the details thereof, including copies of all relevant information and documents
(collectively, an "Indemnity Notice"), to the Indemnifying Party within a period
----------------
of thirty (30) days following the discovery of the claim by the Indemnified
Party (the "Claim Notice Period"). The failure by any Indemnified Party to give
-------------------
the Indemnity Notice within the Claim Notice Period shall not impair the
Indemnified Party's rights hereunder except to the extent that an Indemnifying
Party demonstrates that it has been prejudiced thereby. The Indemnifying Party
will notify the Indemnified Party within a period of thirty (30) days after the
receipt of the Indemnify Notice by the Indemnifying Party (the "Indemnity
---------
Response Period") whether the Indemnifying Party disputes its liability to the
- ---------------
Indemnified Party under this Article VIII with respect to such claim. If the
Indemnifying Party notifies the Indemnified Party that it does not dispute the
claim described in such Indemnity Notice or fails to notify the Indemnified
Party within the Indemnity Response Period whether the Indemnifying Party
disputes the claim described in such Indemnity Notice, the Losses resulting from
such claim as finally determined will be conclusively deemed to be a liability
of the Indemnifying Party under this Article VIII and the Indemnifying Party
shall pay the amount of such Losses to the Indemnified Party on demand. If the
Indemnifying Party notifies the Indemnified Party within the Indemnity Response
Period that the Indemnifying Party disputes its liability with respect to such
claim, the Indemnifying Party and the Indemnified Party will proceed in good
faith to negotiate a resolution of such dispute, and if not resolved through
negotiations within a period of thirty
-32-
<PAGE>
(30) days from the date of such notice, such dispute shall be resolved by
arbitration in accordance with Section 8.4(c) hereof.
(c) Resolution of Disputes. Any dispute required to be submitted to
----------------------
arbitration pursuant to this Section 8.4 shall be finally and conclusively
determined in accordance with the Rules of Arbitration of the International
Chamber of Commerce (the "Rules of Arbitration") then in effect by the decision
--------------------
of three (3) arbitrators selected in accordance with the Rules of Arbitration
unless the Company and the Purchaser shall agree on a single arbitrator (the
"Board of Arbitration"). The Board of Arbitration shall meet in New York, New
- ---------------------
York and shall render a decision in writing (concurred in by a majority of the
members of the Board of Arbitration if more than one) with respect to and
stating the amount, if any, which the Indemnifying Party is required to pay to
the Indemnified Party in respect of the claim made by the Indemnified Party. To
the extent practical, the decision of the Board of Arbitration shall be rendered
no more than thirty (30) days following commencement of proceedings with respect
thereto. The Board of Arbitration shall cause its written decision to be
delivered to the Indemnified Party and the Indemnifying Party. Any decision
made by the Board of Arbitration (either prior to or after the expiration of
such thirty (30) day period) shall be final, binding and conclusive on the
Indemnified Party and the Indemnifying Party and entitled to be enforced to the
fullest extent permitted by Law and entered in any court of competent
jurisdiction.
The Company and the Purchaser hereby consent to the jurisdiction of the
foregoing Board of Arbitration and to the jurisdiction of any state or federal
court located in the States of New York or Delaware and any national court
located in France for the purpose of enforcing the decision or award of the
Board of Arbitration. The Company and the Purchaser agree that service of
process may be made on any such party by personal delivery or by registered or
certified mail addressed to the appropriate party at the address for such party
specified in Section 10.1 hereof. The submission to the jurisdiction of the
courts referred to above for the purpose of enforcing the decision or award of
the Board of Arbitration shall not (and shall not be construed so as to) limit
the right of either the Company or the Purchaser to file or commence proceedings
against the other in any other court of competent jurisdiction for the purpose
of enforcing the decision or award of the Board of Arbitration nor shall the
filing or commencement of proceedings in any one or more jurisdictions for such
purpose preclude the filing or taking of proceedings in any other jurisdiction
for such purpose (whether concurrently or not) if and to the extent permitted by
applicable Law.
Each and every arbitration proceeding commenced pursuant to this Section
8.4(c) shall be consolidated with any arbitration proceeding then pending under
this Section 8.4(c).
SECTION 8.5 Continued Liability for Indemnity Claims. The liability of any
----------------------------------------
Indemnifying Party hereunder with respect to claims hereunder shall continue for
so long as any claims for indemnification may be made hereunder pursuant to
Section 8.8 hereof and, with respect to any such indemnification claims duly and
timely made, thereafter until the Indemnifying Party's liability therefor is
finally determined and satisfied.
-33-
<PAGE>
SECTION 8.6 Limitations on Indemnification.
------------------------------
(a) Certain Types of Damages. Neither the Company nor the Purchaser
------------------------
shall be required to provide indemnification hereunder for Losses which are
indirect or speculative.
(b) Threshold Amount - Claim by Purchaser. No amount of indemnity
-------------------------------------
shall be payable in the case of a claim by the Purchaser under Section
8.2(a) unless, until and only to the extent that the Purchaser has suffered
or incurred Losses aggregating in excess of US $100,000 as a result of or
arising out of the matters described in Section 8.2(a).
(c) Threshold Amount - Claim by Company. No amount of indemnity shall
-----------------------------------
be payable in the case of a claim by the Company under Section 8.3(a)
unless, until and only to the extent that the Company has suffered or
incurred Losses aggregating in excess of US $100,000 as a result of or
arising out of the matters described in Section 8.3(a).
SECTION 8.7 Exclusive Remedies. The sole and exclusive remedies for any
------------------
party hereto with respect to any claim relating to this Agreement or the
transactions contemplated hereby and the facts and circumstances relating and
pertaining hereto shall be governed by this Agreement (whether any such claim
shall be made in contract, breach of warranty, tort or otherwise).
SECTION 8.8 Time Limits on Claims. A claim by any Indemnified Party under
---------------------
this Article VIII may be made only:
(a) if with respect to the violation of a representation or warranty,
within two (2) years following the Closing Date, with the exception of
Sections 3.3, 3.8, 3.15 and 3.17 with respect to which such representations
and warranties shall survive, and claims thereon may be made, until four
(4) years following the Closing Date; and
(b) if with respect to the violation of a covenant or agreement, or
pursuant to Section 8.2(c), until the expiration of the applicable statute
of limitations relating thereto.
Notwithstanding anything in this Agreement to the contrary, any claim not
made within the foregoing relevant time period shall expire and be forever
barred thereafter.
ARTICLE IX
TERMINATION
-----------
SECTION 9.1 Grounds for Termination. Except as set forth in this Article
-----------------------
IX, this Agreement may not be terminated at any time prior to Closing by either
the Company or the Purchaser, provided that the Company or the Purchaser may
terminate this Agreement by
-34-
<PAGE>
written notice to other party to this Agreement if the Closing shall not have
occurred prior to September 30, 1996, or such later date as may be approved by
the Company and the Purchaser in writing. This Agreement may also be terminated
at any time by an agreement in writing signed by the Company and the Purchaser.
SECTION 9.2 Effect of Termination. If this Agreement is terminated pursuant
---------------------
to Section 9.1, such termination shall be without liability of any party, or any
stockholder, director, officer, employee, agent, consultant or representative of
such party, to any other party to this Agreement, provided that if such
termination shall result from the breach by a party of the representations,
warranties or covenants of such party contained in this Agreement, such party
shall be liable for any and all Losses sustained or incurred by the other party
to this Agreement.
SECTION 9.3 Termination for Breach. Nothing in this Article IX shall affect
----------------------
the rights which either party hereto might otherwise have to terminate this
Agreement as a result of a breach thereof by the other party hereto.
ARTICLE X
MISCELLANEOUS
-------------
SECTION 10.1 Notices. All notices, requests and other communications
-------
hereunder shall be in writing and will be deemed to have been duly given (i)
when personally delivered, (ii) when sent by telefax to a party at the number
listed below for such party, (iii) three (3) Business Days after the day on
which the same has been delivered prepaid to an international courier service or
(iv) ten (10) Business Days after the deposit in the United States mail,
registered or certified, return receipt requested, postage prepaid, in each case
addressed to the party to whom such notice is to be given at the following
address for such party:
If to Purchaser: Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attn: Jacques Couet
Telefax No.: 331-46524596
With copies to: Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attn: Martine Funston, Esq.
Legal Counsel
Telefax No.: 331-46524595
-35-
<PAGE>
If to the Company: SSE Telecom, Inc.
8230 Leesburg Pike, Suite 710
Vienna, VA 22182
Attn: Daniel E. Moore
Telefax No.: (703) 442-4507
With copies to: Surovell, Jackson, Colten & Dugan, P.C.
4010 University Drive, Suite 200
Fairfax, VA 22030
Attn: G. Donald Markle, Esq.
Telefax No.: (703) 591-2149
Either party from time to time may change its address, telefax number or other
information for the purpose of notices to that party by giving notice specifying
such change to the other party hereto.
SECTION 10.2 Fees and Expenses. The Company and the Purchaser shall each
-----------------
bear its own expenses in connection with the negotiation and preparation of
this Agreement, all documents and instruments contemplated hereby, and the
consummation of the transactions contemplated hereby, including without
limitation the fees and expenses of their respective counsel, accountants,
investment bankers and consultants.
SECTION 10.3 Public Announcements. Except as otherwise required by Law,
--------------------
neither the Company nor the Purchaser shall issue any press release or make any
other public announcement with respect to the transactions contemplated hereby
without the approval of the other party, which approval shall not be
unreasonably withheld or delayed.
SECTON 10.4 Entire Agreement. This Agreement supersedes all prior
----------------
discussions and agreements among the parties with respect to the subject matter
hereof and contains the sole and entire agreement among the parties hereto with
respect to the subject matter hereof.
SECTION 10.5 Waiver. Any term or condition of this Agreement may be waived
------
at any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by either
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion.
SECTION 10.6 Amendment. This Agreement may be amended, supplemented or
---------
modified only by a written instrument duly executed by or on behalf of each
party hereto.
SECTION 10.7 Benefits and Binding Effect. Neither this Agreement nor any
---------------------------
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void, provided that the Purchaser may assign any or all rights or
obligations of the Purchaser hereunder to any Affiliate of the Purchaser.
Subject to the preceding sentence, this Agreement is binding
-36-
<PAGE>
upon, inures to the benefit of and is enforceable by the parties hereto and
their respective successors and assigns.
SECTION 10.8 Captions. The captions used in this Agreement have been
--------
inserted for convenience of reference only and do not define or limit the
provisions hereof.
SECTION 10.9 Exhibits and Schedules . All exhibits and schedules referred
----------------------
to in this Agreement, all attachments to exhibits or schedules, and any other
attachment to this Agreement are hereby incorporated by reference into this
Agreement and are hereby made a part of this Agreement as if set out in full
herein.
SECTION 10.10 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the Laws of the State of Delaware applicable to a
contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
SECTION 10.11 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
SECTION 10.12 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.13 No Third Party Beneficiary. This Agreement shall not confer
-----------------------
any rights or remedies upon any Person other than the parties hereto and their
respective successors and permitted assigns.
-37-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
COMPANY:
-------
SSE TELECOM, INC., a
Delaware corporation
By: /s/ Frederick C. Toombs
-----------------------
Name: Frederick C. Toombs
-------------------
Title: President
---------
PURCHASER:
---------
ALCATEL TELSPACE, a French
societe anonyme
By: /s/ Jerome de Vitry
--------------------
Name: Jerome de Vitry
---------------
Title: Director of R&D and Product Management
---------------------------------------
Attorney-in-Fact
-38-
<PAGE>
LIST OF EXHIBITS
----------------
Exhibit A Commercial Agreement
Exhibit B Registration Rights Agreement
Exhibit C Stockholder Agreement
Exhibit D Voting Agreement
Exhibit E Warrant
Exhibit F Company Bring-Down Certificate
Exhibit G Certificate of Company and Subsidiary Regarding
Formation Documents
Exhibit H Secretary Certificate of Company
Exhibit I Incumbency Certificate for Company
Exhibit J Form Opinion of Counsel of Company
Exhibit K Purchaser Bring-Down Certificate
Exhibit L Purchaser Certificate Regarding Formation
Documents
Exhibit M Incumbency Certificate
- 39 -
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered
---------
into as of the 6th day of September, 1996 by and between SSE TELECOM, INC., a
Delaware corporation (the "Company"), and ALCATEL TELSPACE, a societe anonyme
-------
organized under the laws of France (the "Purchaser").
---------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, simultaneously with the execution of this Agreement, (i)
the Purchaser will purchase 525,000 shares of the common stock of the Company
from the Company pursuant to the terms of that certain Stock Purchase and
Investment Agreement dated as of September 6, 1996 (the "Investment
----------
Agreement"), and (ii) the Purchaser will purchase 100,000 shares of the
- ---------
common stock of the Company from certain stockholders of the Company pursuant
to the terms of that certain Stock Purchase Agreement dated as of September
6, 1996 (the "Selling Stockholder Agreement"); and
-----------------------------
WHEREAS, the execution of this Agreement by the parties hereto is a
condition precedent to the obligation of the Purchaser to consummate the
transactions contemplated by the Investment Agreement and the Selling
Stockholder Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties contained herein and of the mutual benefits to
be derived herefrom, and intending to be legally bound, the parties hereto
agree as follows:
SECTION 1. Demand Registrations.
--------------------
(a) Requests for Registration. At any time during the
-------------------------
Registration Period, the holders of at least fifty percent (50%) of
the Registrable Securities may request the Company to effect a
registration under the Securities Act of all or part of their
Registrable Securities. Each request for a Demand Registration
shall specify the number of Registrable Securities requested to be
registered. Within ten (10) days after receipt of any such request,
the Company will give written notice of such requested registration
to all other holders of Registrable Securities and will include in
such registration, subject to Section 1(c) hereof, all Registrable
Securities with respect to which the Company has received written
requests for inclusion therein within thirty (30) days after the
receipt of the Company's notice.
(b) Number of Demand Registrations. The holders of
------------------------------
Registrable Securities, as a group and not individually, will be
entitled to require only one Demand Registration pursuant to this
Section 1, provided, however , that in the event all of the holders
-------- -------
of the Registrable Securities irrevocably decide to sell all of the
Registrable Securities then owned by such holders as soon as is
practical and so notify the Company in writing, then the limitation
otherwise imposed by this Section 1(b) shall not apply (whether or
not a registration has been previously made pursuant to
<PAGE>
Section 1(a)) and such holders shall be entitled to, and do hereby
irrevocably agree that they will in fact continue to, exercise their
rights set forth in Section 1(a), promptly and to the maximum extent
permitted by the managing underwriter with respect to any particular
registration, until such time as such holders have disposed of all the
Registrable Securities owned by them. A registration will not be
considered to be a Demand Registration unless and until:
(i) it has remained effective for three hundred sixty-
five (365) consecutive days or such shorter period as shall be
required to sell all of the securities registered pursuant
thereto (but not terminating before the expiration of the
applicable prospectus delivery period); and
(ii) all Registrable Securities requested to be included
therein are effectively included therein and saleable
thereunder.
(c) Priority on Registration. The Company may include in any
------------------------
Demand Registration any securities which are not Registrable Securities
but which are of the same class as the Registrable Securities and which
are held by holders who have piggyback registration rights with respect
to the demand registration rights provided under this Agreement. If a
Demand Registration is an underwritten offering and the managing
underwriters advise the Company in writing that in their opinion the
number of Registrable Securities and, if permitted hereunder, other
securities requested to be included in such offering exceeds the number
of Registrable Securities and other securities, if any, which can be
sold in an orderly manner in such offering within a price range
acceptable to the holders of a majority of the Registrable Securities,
then the Company will include in such registration, prior to the
inclusion of any securities which are not Registrable Securities, the
number of Registrable Securities requested to be included pro rata
among the respective holders thereof on the basis of the amount of
Registrable Securities requested by such holders to be included in such
registration, so that no securities other than Registrable Securities
will be included in such registration if the inclusion of such
securities would result in a limitation on the number of Registrable
Securities to be included therein.
(d) Restrictions on Demand Registration. The Company may
-----------------------------------
postpone for up to three (3) months the filing or the effectiveness of
a registration statement for a Demand Registration if (i) the Company,
in the good faith judgment of its Board of Directors, determines that
such Demand Registration would reasonably be expected to have an
adverse effect on any proposal or plan by the Company or any of its
Subsidiaries to engage in any acquisition (other than in the ordinary
course of business) or any merger, recapitalization, consolidation,
reorganization, tender offer or similar transaction or negotiations,
discussions or pending proposals with respect thereto or would require
the Company to make premature public disclosure of information, the
premature disclosure of which would have a material adverse effect on
the business or prospects of the Company, or would otherwise be
seriously detrimental to the Company or its stockholders, and (ii) the
Company provides the holders of the Registrable Securities with a
written certificate signed by the president of the Company stating the
reasons of the Board of Directors for such delay,
- 2 -
<PAGE>
provided, however, that the Company may not utilize this right more
-------- -------
than once in any twelve (12) month period, and provided further, that,
-------- -------
in such event, the holders of Registrable Securities initially
requesting such Demand Registration will be entitled to withdraw such
request and, if such request is withdrawn, such Demand Registration
will not be considered to be a Demand Registration hereunder, and the
Company will pay all Registration Expenses in connection with such
registration.
(e) Selection of Underwriters. If any Demand Registration is in
-------------------------
the form of an underwritten offering, the Company will select and
retain the investment banker or investment bankers and manager or
managers that administer the offering; provided, however, that such
-------- -------
selection will be subject to the approval of the holders of a majority
of the Registrable Securities participating in such registration, which
shall not be unreasonably withheld. The Company shall (together with
all holders proposing to distribute their securities through such
underwriting) enter into and perform its (their) obligations under an
underwriting agreement in customary form with the managing underwriter
selected for such underwriting. If any holder of Registrable Securities
disapproves of the terms of the underwriting, such holder may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter. The Registrable Securities so withdrawn shall also be
withdrawn from registration .
SECTION 2. Piggyback Registrations.
-----------------------
(a) Right to Piggyback. Whenever the Company
------------------
proposes to register any of its securities under the Securities Act
(including securities registered for selling stockholders with demand
registration rights, subject to the limitations set forth in Section
2(d) below) and the registration form to be used may be used for the
registration of Registrable Securities, the Company will give prompt
written notice to all holders of Registrable Securities, and to the
holders of any other securities of the Company having registration
rights compatible with the proposed registration form, of its intention
to effect such a registration and will include in such registration all
Registrable Securities with respect to which the Company has received
written requests for inclusion therein within fifteen (15) days after
the receipt of the Company's notice (a "Piggyback Registration "). If
----------------------
the Company gives notice of such a proposed registration, the total
number of Registrable Securities which shall be included in such
registration shall be limited to such number, if any, as in the
reasonable opinion of the manager of such offering would not adversely
affect the marketability or offering price of all of the securities
proposed to be offered by the Company in such offering; provided,
--------
however, if the holders of Registrable Securities having registration
-------
rights upon a Piggyback Registration are not permitted to include all
of such Registrable Securities by reason of such determination by the
manager of the offering, the Registrable Securities to be included in
the offering shall be determined in accordance with Sections 2(c) and
2(d) below. Notwithstanding the foregoing, the Company may, in its sole
discretion and without the consent of any holder of Registrable
Securities, withdraw such registration statement and abandon such
proposed public offering.
- 3 -
<PAGE>
(b) Piggyback Expenses. The Registration Expenses of
------------------
the holders of the Registrable Securities will be paid by the Company
in all Piggyback Registrations, including proposed Piggyback
Registrations which are abandoned.
(c) Priority on Primary Registrations. If a Piggyback
---------------------------------
Registration is a primary registration initiated by or on behalf of the
Company and the managing underwriters advise the Company in writing
that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in an orderly
manner in such offering within a price range acceptable to the Company,
then the Company will include in such registration (i) first, the
securities the Company proposes to sell, and (ii) second, securities of
the holders requesting such registration, pro rata among the holders
requesting inclusion in the registration on the basis of the number of
such securities requested to be included in such registration by each
such holder.
(d) Priority on Secondary Registrations. If a Piggyback
-----------------------------------
Registration is an underwritten secondary registration initiated by or
on behalf of holders of the Company's securities exercising demand
registration rights and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be
included in such registration exceeds the number which can be sold in
an orderly manner in such offering within a price range acceptable to
the holders initially requesting such registration, then the Company
will include in such registration (i) first, the securities requested
to be included therein by the holders exercising demand registration
rights, and (ii) second, the Registrable Securities and other
securities requested to be included in such registration by Persons
holding piggyback registration rights, pro rata among the holders of
such securities on the basis of the number of such securities requested
to be included in such registration by each such holder.
SECTION 3. Form S-3 Registrations.
----------------------
(a) Requests for Registration. At any time during the
-------------------------
Registration Period, a holder of Registrable Securities may request
that the Company effect a registration on Form S-3 and any related
qualification or compliance under the Securities Act with respect to
all or part of its Registrable Securities. Each request for a Form S-3
Registration shall specify the appropriate number of Registrable
Securities requested to be registered. Within ten (10) days after
receipt of any such request, the Company will give written notice of
such requested registration to all other holders of Registrable
Securities and will include in such registration, subject to Section
3(c), all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within thirty (30) days
after the receipt of the Company's notice.
(b) Restrictions on Form S-3 Registrations. Each
--------------------------------------
holder of Registrable Securities will be entitled to require unlimited
Form S-3 Registrations pursuant to this Section 3, provided, however,
that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 3 if
(i) Form S-
- 4 -
<PAGE>
3 is not available for such offering by the holders of Registrable
Securities, (ii) such holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if
any) aggregating less than 100,000 shares or at an aggregate price to
the public of less than $1,000,000, provided that this clause (ii)
shall not apply with respect to the exercise by the holders of
Registrable Securities of their rights under Section 1 hereof following
the giving of the notice permitted by Section 1(b) hereof, (iii) the
Company shall furnish to the holders a written certificate signed by
the president of the Company stating that, in the good faith judgment
of the Board of Directors of the Company, it would reasonably be
expected to have an adverse effect on any proposal or plan by the
Company or any of its Subsidiaries to engage in any acquisition (other
than in the ordinary course of business) or any merger,
recapitalization, consolidation, reorganization, tender offer or
similar transaction or negotiations, discussions or pending proposals
with respect thereto or would require the Company to make premature
public disclosure of information, the premature disclosure of which
would have a material adverse effect on the business or prospects of
the Company, or would otherwise be seriously detrimental to the Company
or its stockholders, for such Form S-3 registration to be effected at
such time, in which event the Company shall have the right to defer the
filing of the Form S-3 registration statement for a period of not more
than ninety (90) days after receipt of the request of the holder under
this Section 3, provided, however, that the Company shall not utilize
-----------------
this right more than once in any twelve month (12) period, provided
--------
further, that, in such event, the holders of Registrable Securities
-------
initially requesting such Form S-3 Registration will be entitled to
withdraw such request, (iv) the Company has, within the twelve (12)
month period preceding the date of such request, already effected two
registrations on Form S-3 for the holders of Registrable Securities
pursuant to this Section 3, provided, however, that this clause (iv)
-------- -------
shall not apply with respect to the exercise by the holders of
Registrable Securities of their rights under Section 1 hereof following
the giving of the notice permitted by Section 1(b) hereof, or (v) in
effecting such registration, qualification or compliance, the Company
would be required to qualify to do business or to execute a general
consent to service of process in any jurisdiction in which the Company
was not already so qualified or had not already executed such consent.
Any Form S-3 Registration effected pursuant to this Section 3 shall not
be considered to be a Demand Registration pursuant to Section 1 of this
Agreement.
(c) Priority on Registration. The Company may include in any
------------------------
Form S-3 Registration any securities which are not Registrable
Securities but which are of the same class as the Registrable
Securities and which are held by holders who have piggyback
registration rights with respect to the Form S-3 registration rights
provided under this Agreement. If a Form S-3 Registration is an
underwritten offering and the managing underwriters advise the Company
in writing that in their opinion the number of Registrable Securities
and, if permitted hereunder, other securities requested to be included
in such offering exceeds the number of Registrable Securities and other
securities, if any, which can be sold in an orderly manner in such
offering within a price range acceptable to the holders of a majority
of the Registrable Securities, then the Company will include in such
registration, prior to the inclusion
- 5 -
<PAGE>
of any securities which are not Registrable Securities, the number of
Registrable Securities requested to be included pro rata among the
respective holders thereof on the basis of the amount of Registrable
Securities requested by such holders to be included in such
registration, so that no securities other than Registrable Securities
will be included in such registration if the inclusion of such
securities would result in a limitation on the number of Registrable
Securities to be included therein.
(d) Undertakings by the Company. In addition to any other
---------------------------
obligations of the Company set forth herein with respect to the use of
a Form S-3 Registration by the holders of Registrable Securities to
sell securities of the Company to the public, the Company shall:
(i) take such action as is necessary and may reasonably
be accomplished by the Company to enable the holders of
Registrable Securities to utilize Form S-3 for the sale of their
Registrable Securities, including, but not limited to, the filing
with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange
Act; and
(ii) furnish to any holder, so long as such holder owns
any Registrable Securities, forthwith upon request (i) a written
statement by the Company that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3, (ii) a copy of the
most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing
such holder of any rule or regulation of the SEC that permits the
selling of any such securities pursuant to Form S-3 or similar
form.
(e) Selection of Underwriters. If any Form S-3 Registration is
-------------------------
in the form of an underwritten offering, the Company will select and
retain the investment banker or investment bankers and manager or
managers that administer the offering, provided, however, that such
selection will be subject to the approval of the holders of a majority
of the Registrable Securities participating in such registration, which
shall not be unreasonably withheld. The Company shall (together with
all holders proposing to distribute their securities through such
underwriting) enter into and perform its (and their) obligations under
an underwriting agreement in customary form with the managing
underwriter selected for such underwriting. If any holder of
Registrable Securities disapproves of the terms of the underwriting,
such holder may elect to withdraw therefrom by written notice to the
Company and the managing underwriter. The Registrable Securities so
withdrawn shall also be withdrawn from registration.
SECTION 4. Resales Pursuant to Rule 144. In order to make available
----------------------------
to the holders of Registrable Securities the benefits of Rule 144 and any other
rule or regulation of the SEC that may at any time permit a holder of
Registrable Securities to sell securities of the Company to the public without
registration, the Company shall:
- 6 -
<PAGE>
(a) make and keep adequate current public information available
at all times as required by Rule 144; and
(b) take such action as is necessary to enable the holders of
Registrable Securities to utilize Rule 144 for the sale of their Registrable
Securities, including, but not limited to, the filing with the SEC in a timely
manner all reports and other documents required of the Company under the
Exchange Act; and
(c) furnish to any holder, so long as such holder owns
any Registrable Securities, forthwith upon request (i) a written statement by
the Company that it has complied with the reporting requirements of Rule 144,
the Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company, and (iii) such other information as may be reasonably requested
by such holder to permit the holder to use any rule or regulation of the SEC
that permits the selling of any such securities without registration.
SECTION 5. Holdback Agreements
-------------------
(a) By Holders. Each holder of Registrable Securities agrees
----------
not to effect any pubic sale or distribution (including sales pursuant
to Rule 144) of any Registrable Securities, within seven (7) days prior
to, and during the 120-day period beginning on, the date specified in
writing by the Company to such holder as the effective date of any
underwritten Demand Registration or any underwritten Piggyback
Registration in which Registrable Securities of such holder are
included (except as part of such underwritten registration), unless the
underwriters managing the registered public offering otherwise agree,
provided that officers and directors of the Company enter into similar
agreements.
(b) By the Company. The Company agrees not to effect any
--------------
public sale or distribution of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities,
within seven (7) days prior to, and during the 120-day period beginning
on, the effective date of any underwritten Demand Registration or any
underwritten Piggyback Registration (except as part of such
underwritten registration or pursuant to registrations on Form S-4 or
Form S-8 or any successor form), unless the underwriters managing the
registered public offering otherwise agree.
SECTION 6. Registration Procedures. Whenever the holders of
-----------------------
Registrable Securities have requested that any Registrable Securities be
registered pursuant to Sections 1, 2 or 3 of this Agreement, the Company will
use its best efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof, and
pursuant thereto the Company will as expeditiously as possible:
(a) Prepare and file with the SEC a registration statement on
the appropriate form with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective within
ninety (90) days of the date that the Company received a request for the
registration of such Registrable Securities from the
- 7 -
<PAGE>
holders in accordance with the terms of Sections 1(a), 2(a) or 3(a) above, as
the case may be; and
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period of not less than one hundred twenty (120) consecutive days (three
hundred sixty-five (365) consecutive days with respect to a Demand Registration
under Section 1 hereof) or such shorter period which will terminate when
Registrable Securities covered by such registration statement have been sold
(but not before the expiration of the applicable prospectus delivery period) and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement; and
(c) Furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller; and
(d) Use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions within the United States as the sellers shall request and do any
and all other acts and things which may be reasonably necessary or advisable to
enable such sellers to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such sellers (provided that the Company will not
be required to qualify generally to do business or file any general consent to
service of process in any jurisdiction where it would not otherwise be required
to qualify or file but for this subparagraph); and
(e) Notify each seller of such Registrable Securities at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event as a result of which the prospectus
included in such registration statement contains an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing, and at the request of any such seller, the Company
will prepare and file promptly with the SEC, and promptly notify each holder of
Registrable Securities of the filing of, a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which they were made; and
(f) Make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records (reasonably
requested), pertinent corporate documents and contracts of the Company as shall
be reasonably necessary to enable them to exercise their
- 8 -
<PAGE>
due diligence responsibility, and cause the Company's officers, directors,
employees and independent accountants to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement, provided, however, that each
-------- -------
seller of Registrable Securities agrees that information obtained by it as a
result of such inspections which is deemed confidential shall not be used by
it as the basis for any market transaction in securities of the Company
unless and until such information is made generally available to the public
and each such seller shall cause any attorney, accountant or agent retained
by such seller to keep confidential any such information; and
(g) In the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company will use reasonable efforts promptly to obtain the
withdrawal of such order; and
(h) If the offering is to be underwritten, enter into any
necessary agreements in connection therewith (including an underwriting
agreement containing customary representations, warranties and agreements); and
(i) Take all such other reasonable actions in connection
therewith in order to expedite or facilitate the disposition of such Registrable
Securities and in such connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration, make such representations and warranties to the holders of such
Registrable Securities and the underwriters, if any, in such form, substance and
scope as are customarily made by issuers to underwriters in primary underwritten
offerings, obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions, in form, scope and substance, shall be reasonably
satisfactory to the managing underwriters, if any, and the sellers), and obtain
"cold comfort" letters and updates thereof from the Company's independent
certified public accountants addressed to the sellers and the underwriters, if
any, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters to underwriters in connection with
primary underwritten offerings.
SECTION 7. Registration Expenses.
---------------------
(a) Company Expenses. All expenses (herein called
----------------
"Registration Expenses") incident to the Company's performance of or
---------------------
compliance with this Agreement, including, without limitation, all
registration and filing fees, fees and expenses of compliance with
securities and blue sky laws, printing expenses, messenger and delivery
expenses, fees and disbursements of counsel for the Company, and fees
and disbursements of all the Company's certified public accountants,
underwriters (excluding discounts and commissions) and any Persons
retained by the Company, will be paid by the Company.
(b) Holder Expenses. Except as otherwise paid by the Company
---------------
pursuant to Section 7(a) above, each holder of Registrable Securities
shall bear all
- 9 -
<PAGE>
expenses incurred by such holder in connection with the negotiation
and preparation of any registration statement, underwriting
agreement and all other documents and instruments contemplated
hereby to which any such holder is a party, including, without
limitation, the fees and expenses, if any, of its legal counsel,
provided, however, that if such holder learns of a material adverse
-------- -------
change in the condition, business, or prospects of the Company after
such holder has decided to participate, and has notified the Company
of its decision to participate, in a registration pursuant to the
terms of this Agreement, then such holder shall be free to withdraw
from such registration and the Company shall pay all expenses,
including, but not limited to, expenses incurred by such holder in
connection with such registration, provided further, however, that
-------- ------- -------
if such holder initiated a Demand Registration but such registration
is not considered to be a Demand Registration in accordance with the
terms of Section 1(b) hereof, then the Company shall pay all
expenses,
including, but not limited to, expenses incurred by such holder, in
connection with such registration.
SECTION 8. Undertakings of the Holders of Registrable Securities.
-----------------------------------------------------
(a) Suspension of Sales. If any Registrable Securities are
-------------------
included in a registration statement pursuant to the terms of this
Agreement, the holder thereof will not (until further notice) effect
sales thereof after receipt of written notice from the Company to
suspend sales to permit the Company to correct or update a registration
statement or prospectus, provided that the obligations of the Company
-------- ----
with respect to maintaining any registration statement current and
effective shall be extended by a period of days equal to the period
said suspension is in effect.
(b) Compliance. If any Registrable Securities are being
----------
registered in any registration pursuant to this Agreement, the holder
thereof will comply with all anti-stabilization, manipulation and
similar provisions of Section 10 of the Exchange Act, and any rules
promulgated thereunder by the SEC and, at the request of the Company,
will execute and deliver to the Company and to any underwriter
participating in such offering an appropriate agreement to such effect.
(c) Termination of Effectiveness. At the end of the period
----------------------------
during which the Company is obligated to keep a registration statement
current and effective as described herein, each holder of Registrable
Securities included in the registration statement shall discontinue
sales thereof pursuant to such registration statement, unless such
holder has received written notice from the Company of its intention to
continue the effectiveness of such registration statement with respect
to any of such securities which remain unsold.
SECTION 9. Underwritten Registrations.
--------------------------
(a) Furnish Information. No holder of Registrable Securities
-------------------
may participate in any registration hereunder which is underwritten
unless such holder (i) agrees to sell such holder's securities on the
basis provided in any underwriting arrangements approved by the holder
or holders entitled hereunder to approve such arrangements, and (ii)
completes and executes all customary questionnaires, powers of
- 10 -
<PAGE>
attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting
arrangements, provided that no holder of Registrable Securities
included in any underwritten registration shall be required to make
any representations or warranties to the Company or the underwriters
on account of the registration of shares owned by such holder other
than representations and warranties regarding such holder and such
holder's intended method of distribution.
(b) Right of Approval. The Company shall not include in any
-----------------
registration statement (or attachments or exhibits thereto) filed by
the Company (under this Agreement or otherwise) pursuant to the
Securities Act any information describing or relating to the Purchaser
or any Purchaser Affiliate or the relationship of the Purchaser or any
Purchaser Affiliate with the Company without the advance written
consent of the Purchaser, which consent shall not be unreasonably
withheld or delayed.
(c) Delay of Registration. No holder of Registrable Securities
---------------------
shall have any right to obtain or seek an injunction restraining or
otherwise delaying the preparation of, or declaration of the
effectiveness of, any registration statement initiated in accordance
with the terms of this Agreement if such injunction is the result of
any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
SECTION 10. Assignment of the Purchaser's Registration Rights. The
-------------------------------------------------
rights of a holder of Registrable Securities set forth in this Agreement,
including the right to cause the Company to register Registrable Securities and
pay the Registration Expenses, to the extent set forth herein, incurred in
connection therewith, may be assigned by such holder to a Purchaser Affiliate
which acquires Registrable Securities. All Registrable Securities held or
acquired by a Purchaser Affiliate shall be aggregated with all Registrable
Securities held by the Purchaser for the purpose of determining the availability
to the holders of Registrable Securities of any rights under this Agreement. For
purposes of this Agreement, the term "Purchaser Affiliate" means any Person
-------------------
that, directly or indirectly, controls or is controlled by or is under common
control with the Purchaser. For purposes of this definition, control of a Person
means the power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise and, in
any event and without limiting the foregoing, any Person owing fifty percent
(50%) or more of the voting securities of another Person shall be deemed to
control that Person.
SECTION 11. Other Registration Rights. The Purchaser acknowledges that
-------------------------
it has received copies of (a) that certain Registration Agreement, dated January
28, 1996 (the "Fairchild Agreement"), by and between the Company and Fairchild
-------------------
Data Corporation; (b) that certain agreement, dated as of March 14, 1994 (the
"EchoStar Agreement"), by and between the Company and EchoStar Communications
------------------
Corporation ("EchoStar"), pursuant to which the Company granted certain
--------
registration rights to EchoStar; and (c) that certain letter agreement, dated
August 2, 1996 (the "EchoStar Letter"), from the Company to EchoStar, pursuant
---------------
to which the Company agreed to grant certain additional registration rights to
EchoStar at least as favorable to EchoStar as those set forth in the Fairchild
Agreement in
- 11 -
<PAGE>
the event the Company issues shares of Common Stock to EchoStar in connection
with the exercise of certain warrants that may be issued by the Company after
the date hereof. To the extent the registration rights provided for in the
EchoStar Letter are set forth in a written document after the date hereof,
such document shall be referred to herein as the "New Registration
----------------
Agreement." The Fairchild Agreement, the EchoStar Agreement, the EchoStar
- ---------
Letter and the New Registration Agreement shall collectively be referred to
herein as the "Company Registration Documents").
------------------------------
In the event that (i) a Demand Registration or a Form S-3 Registration,
as the case may be, is requested and the provisions of Section 1(c) or Section
3(c) hereof, as the case may be, cannot be implemented by the Company without
conflicting with its obligations under Section 2(d) of the Fairchild Agreement,
Section 8(c) of the EchoStar Agreement, or the provision contained in the New
Registration Agreement that is substantially similar to Section 2(d) of the
Fairchild Agreement; (ii) a Piggyback Registration is requested and the
provisions of Section 2(c) hereof cannot be implemented by the Company without
conflicting with its obligations under Section 8(b) of the EchoStar Agreement;
or (iii) a Piggyback Registration is requested and the provisions of Section
2(d) hereof cannot be implemented by the Company without conflicting with its
obligations under Section 8(c) of the EchoStar Agreement, then the Company shall
use its best efforts to (x) with respect to subparagraph (i) of this Section 11,
convince all holders of securities of the Company, whose registration rights are
in conflict with Section 1(c) or Section 3(c) hereof, as the case may be,
requesting inclusion in such Demand Registration or Form S-3 Registration, as
the case may be, to execute a waiver of such rights so that such Demand
Registration or Form S-3 Registration, as the case may be, can be completed in a
manner which complies with Section 1(c) or Section 3(c) hereof, as the case may
be; (y) with respect to subparagraph (ii) of this Section 11, convince all
holders of securities of the Company, whose registration rights are in conflict
with Section 2(c) hereof, requesting inclusion in such Piggyback Registration to
execute a waiver of such rights so that such Piggyback Registration can be
completed in a manner which complies with Section 2(c) hereof; and (z) with
respect to subparagraph (iii) of this Section 11, convince all holders of
securities of the Company, whose registration rights are in conflict with
Section 2(d) hereof, requesting inclusion in such Piggyback Registration to
execute a waiver of such rights so that such Piggyback Registration can be
completed in a manner which complies with Section 2(d) hereof. If, despite the
use of its best efforts, the Company is unable to obtain any waiver described
above, then the holders of the Registrable Securities requesting such Demand
Registration or Piggyback Registration, as the case may be, shall cooperate with
the Company to resolve any conflict described above in the Company Registration
Documents.
Other than the New Registration Agreement, from and after the date of
this Agreement, the Company shall not, without the prior written consent of the
holders of a majority of the Registrable Securities, enter into any agreement
with any holder or prospective holder of any securities of the Company that
would allow such holder or prospective holder to make a demand registration that
would adversely affect the rights of any holder of Registrable Securities
hereunder.
- 12 -
<PAGE>
SECTION 12. Indemnification.
(a) Indemnification by the Company. The Company shall indemnify
------------------------------
and hold harmless, with respect to any registration statement filed by
it, to the fullest extent permitted by law, each holder of Registrable
Securities covered by such registration statement, its officers,
directors, employees, agents and general or limited partners (and the
directors, officers, employees and agents thereof) and each other
Person, if any, who controls such holder within the meaning of the
Securities Act (collectively, the "Holder Indemnified Parties")
--------------------------
against all losses, claims, damages, liabilities and expenses joint or
several (including reasonable fees of counsel and any amounts paid in
settlement effected with the Company's consent, which consent shall not
be unreasonably delayed or withheld) to which any such Holder
Indemnified Party may become subject under the Securities Act, the
Exchange Act, any other federal law, any state or common law, any rule
or regulation promulgated thereunder or otherwise, insofar as such
losses, claims, damages liabilities or expenses (or actions or
proceedings, whether commenced or threatened, in respect thereof) are
caused by (i) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement in which such
Registrable Securities were included as contemplated hereby or the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary, final or summary
prospectus, together with the documents incorporated by reference
therein (as amended or supplemented if the Company shall have filed
with the SEC any amendment thereof or supplement thereto), or the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or (iii) any violation by the Company of the Securities
Act, the Exchange Act, any other federal law, any state or common law,
or any rule or regulation promulgated thereunder in connection with any
such registration; and in each such case, the Company shall reimburse
each such Holder Indemnified Party for any reasonable legal or any
other expenses incurred by any of them in connection with investigating
or defending any such loss, claim, damage, liability, expense, action
or proceeding, provided, however, that the Company shall not be liable
-------- -------
to any such Holder Indemnified Party in any such case to the extent
that any such loss, claim, damage, liability or expense (or action or
proceeding, whether commenced or threatened, in respect thereof) arises
out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such registration
statement or amendment thereof or supplement thereto or in any such
preliminary, final or summary prospectus in reliance upon and in strict
conformity with written information furnished to the Company by or on
behalf of any such Holder Indemnified Party relating to such Holder
Indemnified Party for use in the preparation thereof, and provided
--------
further, that the Company shall not be liable to any such Holder
-------
Indemnified Party with respect to any preliminary prospectus to the
extent that any such loss, claim, damage, liability or expense of such
Holder Indemnified Party results from the fact that such Holder
Indemnified Party sold Registrable Securities to a Person to whom there
was not sent or given, at or before the written confirmation of such
sale, a copy of the prospectus
- 13 -
<PAGE>
(excluding documents incorporated by reference) or of the prospectus
as then amended or supplemented (excluding documents incorporated by
reference) if the Company has previously furnished copies thereof to
such Holder Indemnified Party in compliance with this Agreement and
the loss, claim, damage, liability or expense of such Holder
Indemnified Party results from an untrue statement or omission of a
material fact contained in such preliminary prospectus which was
corrected in the prospectus (or the prospectus as amended or
supplemented). Such indemnity and reimbursement of expenses and
obligations shall remain in full force and effect regardless of any
investigation made by or on behalf of the Holder Indemnified Parties
and shall survive the transfer of such securities by such Holder
Indemnified Parties.
(b) Indemnification by Holders. Each holder of Registrable
--------------------------
Securities participating in any registration hereunder shall indemnify
and hold harmless, to the fullest extent permitted by law, the Company,
its directors, officers, employees and agents, and each Person who
controls the Company (within the meaning of the Securities Act)
(collectively, "Company Indemnified Parties") against all losses,
---------------------------
claims, damages, liabilities and expenses, joint or several (including
reasonable fees of counsel and any amounts paid in settlement effected
with such holder's consent, which consent shall not be unreasonably
delayed or withheld) to which any Company Indemnified Parties may
become subject under the Securities Act, the Exchange Act, any other
federal law, any state or common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or
proceedings, whether commenced or threatened, in respect thereof) are
caused by (i) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement in which such
holder's Registrable Securities were included or the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
(ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary, final or summary prospectus,
together with the documents incorporated by reference therein (as
amended or supplemented if the Company shall have filed with the
Commission any amendment thereof or supplement thereto), or the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, and in the cases described in clauses (i) and (ii) of
this Section 12(b), to the extent, but only to the extent, that such
untrue statement or omission is contained in any information furnished
in writing by such holder relating to such holder for use in the
preparation of the documents described in such clauses (i) and (ii) and
the Company does not know, at the time such information is included in
the registration statement, prospectus, preliminary prospectus,
amendment or supplement, that such information is false or misleading,
(iii) any violation by such holder of the Securities Act, the Exchange
Act, any other federal law, any state or common law, or any rule or
regulation promulgated thereunder applicable to such holder and
relating to action of or inaction by such holder in connection with any
such registration, and (iv) with respect to any preliminary prospectus,
the fact that such holder sold Registrable Securities to a Person to
whom there was not sent or given, at or before the written confirmation
of such sale, a copy of the prospectus (excluding the
- 14 -
<PAGE>
documents incorporated by reference) or of the prospectus as then
amended or supplemented (excluding documents incorporated by
reference) if the Company has previously furnished copies thereof to
such holder in compliance with this Agreement and the loss, claim,
damage, liability or expense of such Company Indemnified Party
results from an untrue statement or omission of a material fact
contained in such preliminary prospectus which was corrected in the
prospectus (or the prospectus as amended or supplemented). Such
indemnity obligation shall remain in full force and effect regardless
of any investigation made by or on behalf of the Company Indemnified
Parties (except as provided above) and shall survive the transfer of
such securities by such holder.
(c) Conduct of Indemnification Proceedings. Promptly
--------------------------------------
after receipt by an identified party under Sections 12(a) or 12(b)
above of written notice of the commencement of any action, suit,
proceeding, investigation or threat thereof with respect to which a
claim for indemnification may be made pursuant to this Section, such
indemnified party shall, if a claim in respect thereto is to be made
against an indemnifying party, give written notice to the
indemnifying party of the threat or commencement thereof, provided,
--------
however, that the failure to so notify the indemnifying party shall not
-------
relieve it from any liability which it may have to any indemnified
party except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. If any such claim or action
referred to under Sections 12(a) or 12(b) above is brought against any
indemnified party and it then notifies the indemnifying party of the
threat or commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes,
jointly with any other indemnifying party similarly notified, to assume
the defense thereof with counsel reasonably satisfactory to such
indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party). After notice
from the indemnifying party to such indemnified party of its election
so to assume the defense of any such claim or action, the indemnifying
party shall not be liable to such indemnified party under this Section
12 for any legal expenses of counsel or any other expenses (other than
reasonable costs of investigation) subsequently incurred by such
indemnified party in connection with the defense thereof, unless the
indemnifying party has failed to assume the defense of such claim or
action or to employ counsel reasonably satisfactory to such indemnified
party. Notwithstanding the foregoing, the indemnified party shall have
the right to retain its own counsel, with the fees and expenses to be
paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between
such indemnified party and any other party represented by such counsel
in such action. The indemnifying party shall not be required to
indemnify the indemnified party with respect to any amounts paid in
settlement of any action, proceeding or investigation entered into
without the written consent of the indemnifying party, which consent
shall not be unreasonably delayed or withheld. No indemnifying party
shall consent to the entry of any judgment or enter into any settlement
without the consent of the indemnified party unless (i) such judgment
or settlement does not impose any obligation or liability upon the
indemnified party other than the execution, delivery or approval
thereof, and (ii) such judgment or settlement
- 15 -
<PAGE>
includes as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a full release and
discharge from all liability in respect of such claim and a full
release of all Persons that may be entitled to or obligated to
provide indemnification or contribution under this Section.
(d) Contribution. If the indemnification provided for in this
------------
Section 12 is unavailable to or insufficient to hold harmless an
indemnified party under Sections 12(a) or 12(b), then each indemnifying
party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages,
liabilities or expenses (or actions or proceedings in respect thereof)
referred to in Sections 12(a) or 12(b) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
the one hand and the indemnified party on the other in connection with
the statements, omissions, actions or inactions which resulted in such
losses, claims, damages, liabilities or expenses. The relative fault of
the indemnifying party and the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the
indemnifying party or the indemnified party, any action or inaction by
any such party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement,
omission, action or inaction. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages,
liabilities or expenses (or actions or proceedings in respect thereof)
pursuant to this Section 12(d) shall be deemed to include any
reasonable legal or other expenses incurred by such indemnified party
in connection with investigating or defending any such action or claim
(which shall be limited as provided in Section 12(c) if the
indemnifying party has assumed the defense of any such action in
accordance with the provisions thereof) which is the subject of this
Section 12(d). No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any Person who was not guilty of such fraudulent
misrepresentation. Promptly after receipt by an indemnified party under
this Section 12(d) of written notice of the commencement of any action,
suit, proceeding, investigation or threat thereof with respect to which
a claim for contribution may be made against an indemnifying party
under this Section 12(d), such indemnified party shall, if a claim for
contribution in respect thereto is to be made against an indemnifying
party, give written notice to the indemnifying party of the
commencement thereof (if the notice specified in Section 12(c) has not
been given with respect to such action), provided, however, that the
-------- -------
failure to so notify the indemnifying party shall not relieve it from
any obligation to provide contribution which it may have to any
indemnified party under this Section 12(d), except to the extent that
the indemnifying party is actually prejudiced by the failure to give
notice. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 12(d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
in this Section 12(d).
If indemnification is available under this Section 12, the
indemnifying parties shall indemnify each indemnified party to the
fullest extent provided in Sections 12(a)
- 16 -
<PAGE>
and 12(b) hereof, without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 12(d). The provisions of
this Section 12(d) shall be in addition to any other rights to
indemnification or contribution which any indemnified party may have
pursuant to law or contract, shall remain in full force and effect
regardless of any investigation made by or on behalf of any
indemnified party, and shall survive the transfer of securities by
any such party.
(e) Indemnification and Contribution of Underwriters. In
------------------------------------------------
connection with any underwritten offering contemplated by this
Agreement which includes Registrable Securities, the Company and all
sellers of Registrable Securities included in any registration
statement shall agree to customary provisions for indemnification and
contribution (consistent with the other provisions of this Section 12)
in respect of losses, claims, damages, liabilities and expenses of the
underwriters of such offering.
(f) Aggregate Liability of the Holders of Registrable
-------------------------------------------------
Securities. The aggregate amount which any holder of Registrable
----------
Securities shall be required to pay pursuant to this Section 12,
pursuant to any representation or warranty provided in connection with,
or indemnity, contribution or reimbursement agreements executed in
connection with, any underwritten offering, or pursuant to any other
transactions contemplated hereby or thereby shall be limited to the
amount of proceeds received by such holder upon the sale of the
Registrable Securities and other securities of the Company (after
deducting any underwriting commissions, discounts, transfer taxes and
expenses applicable thereto) pursuant to the registration statement
giving rise to such claim.
SECTION 13. Termination.
-----------
This Agreement shall terminate on the date on which the Purchaser
and the Purchaser Affiliates hold, in the aggregate, Registrable Securities
representing less than two percent (2%) of the total number of outstanding
shares of capital stock of the Company on a fully diluted basis.
SECTION 14. Definitions. Capitalized terms used herein shall have the
-----------
meanings set forth below:
"Common Stock" means the authorized common stock of the Company, par
------------
value $.01 per share, whether or not issued and outstanding.
"Company" has the meaning set forth in the introductory paragraph
-------
hereof.
"Company Indemnified Parties" has the meaning set forth in Section
---------------------------
12(b) hereof.
"Company Registration Documents" has the meaning set forth in
------------------------------
Section 11 hereof.
"Competitor of Alcatel" shall mean any Person having an interest in
---------------------
satellite earth station product lines or businesses which are the same as or
similar to those of the Purchaser.
- 17 -
<PAGE>
"Demand Registration" means any registration requested pursuant to
-------------------
Section 1(a) hereof.
"EchoStar" has the meaning set forth in Section 11 hereof.
--------
"EchoStar Agreement" has the meaning set forth in Section 11 hereof.
------------------
"EchoStar Letter" has the meaning set forth in Section 11 hereof.
---------------
"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
"Fairchild Agreement" has the meaning set forth in Section 11 hereof.
-------------------
"Form S-3" means such form under the Securities Act, as
--------
in effect on the date hereof, or any registration form under the Securities Act
subsequently adopted by the SEC that permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"Form S-3 Registration" means any registration requested pursuant to
---------------------
Section 3(a) hereof.
"Holder Indemnified Parties" has the meaning set forth in Section
--------------------------
12(a) hereof.
"Investment Agreement" has the meaning set forth in the first
--------------------
recital hereof.
"New Registration Agreement" has the meaning set forth in Section 11
--------------------------
hereof.
"Person" means any natural person, corporation, general partnership,
------
limited partnership, proprietorship, limited liability company, joint
venture, other business organization, trust, union, association or
governmental authority.
"Piggyback Registration" has the meaning set forth in Section 2(a)
----------------------
hereof.
"Purchaser" has the meaning set forth in the introductory paragraph
---------
hereof.
"Purchaser Affiliate" has the meaning set forth in Section 10
-------------------
hereof.
"Registrable Securities" means (i) the Common Stock sold by the
----------------------
Company to the Purchaser pursuant to the Investment Agreement, (ii) the
Common Stock sold by certain stockholders of the Company to the Purchaser
pursuant to the Selling Stockholder Agreement, (iii) the Common Stock issued or
issuable by the Company to the Purchaser pursuant to the Warrant, (iv) all
securities of the Company, including Common Stock, issued (or issuable upon the
conversion or exercise of any warrant, right or other security that is issued)
with respect to the Common Stock described in clauses (i), (ii), or (iii),
whether by way of dividend, stock split, recapitalization or otherwise, and (v)
all securities of the Company issued in exchange for or in replacement of any
securities meeting the criteria set forth in clauses (i), (ii), (iii) or (iv) of
this definition.
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<PAGE>
"Registration Expenses" has the meaning set forth in Section 7(a)
---------------------
hereof.
"Registration Period" means the period (i) commencing on the earlier
-------------------
of (A) the date on which a Competitor of Alcatel acquires capital stock of the
Company in excess of ten percent (10%) of all outstanding shares of capital
stock of the Company on a fully diluted basis (or acquires rights to purchase or
acquire such capital stock), and (B) one (1) year after the date of this
Agreement, and (ii) continuing until the termination of this Agreement in
accordance with Section 13 hereof.
"Rule 144" means Rule 144 promulgated under the Securities Act.
--------
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Selling Stockholder Agreement" has the meaning set forth in the
-----------------------------
first recital hereof.
"Subsidiary" of a Person means a Person that is, directly or
----------
indirectly, through one or more intermediates controlled by the first Person.
For purposes of this definition, "controlled by" means the possession,
directly or indirectly, of the power to direct or cause a direction of the
management policies of a Person whether through the ownership of voting
securities, by contract or otherwise and, in any event and without limitation
of the foregoing, any Person fifty percent (50%) or more of whose voting
securities are owned by another Person shall be deemed to be controlled that
Person.
"Warrant" means that certain Warrant dated September 6, 1996 issued
-------
by the Company in favor of the Purchaser.
SECTION 15. Miscellaneous.
-------------
(a) Notices. All notices, requests and other
-------
communications hereunder shall be in writing and will be deemed to have
been duly given and received (i) when personally delivered, (ii) when
sent by telefax to a party at the number listed below for such party,
(iii) three (3) business days after the day on which the same has been
delivered prepaid to an international courier service, or (iv) ten (10)
business days after the deposit in the United States mail, registered
or certified, return receipt requested, postage prepaid, in each case
addressed to the party to whom such notice is to be given at the
following address for such party:
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<PAGE>
If to the Company:
SSE Telecom, Inc.
8230 Leesburg Pike, Suite 710
Vienna, Virginia 22182
U.S.A.
Attn: Daniel E. Moore
Telefax No.: (703) 442-4507
With copies to:
Surovell, Jackson, Colten & Dugan, P.C.
4010 University Drive, Suite 200
Fairfax, Virginia 22020
U.S.A.
Attn: G. Donald Markle, Esq.
Telefax No: (703) 591-2149
If to the Purchaser:
Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attn: Jacques Couet
Telefax No.: 331-46524596
With copies to:
Alcatel Telspace
5 rue Noel PONS
92734 NANTERRE Cedex
FRANCE
Attn: Martine Funston, Esq.
Telefax No.: 331-46524595
Any party hereto from time to time may change its address, telefax
number or other information for the purpose of notices to that party
by giving notice specifying such change to the other parties hereto.
(b) Fees and Expenses. The Company and the Purchaser
-----------------
shall each bear its own expenses in connection with the negotiation
and preparation of this Agreement.
(c) Rights of Holders. Each holder of Registrable
-----------------
Securities shall have the absolute right to exercise or refrain from
exercising any right or rights that such holder may have by reason
of this Agreement, including, without limitation, the right
- 20 -
<PAGE>
to consent to the waiver or modification of any obligation under
this Agreement, and such holder shall not incur any liability to any
other holder of any securities of the Company as a result of
exercising or refraining from exercising any such right or rights.
(d) Assignment. Subject to the provisions of Section
----------
10 hereof, neither this Agreement nor any right, interest or
obligation hereunder may be assigned by any party hereto without the
prior written consent of the other party hereto and any attempt to
do so will be void. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors
and permitted assigns.
(e) Waiver. Any term or condition of this Agreement
------
may be waived at any time by the party that is entitled to the
benefit thereof, but no such waiver shall be effective unless set
forth in a written instrument duly executed by or on behalf of the
party waiving such term or condition. No waiver by either party of
any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the
same or any other term or condition of this Agreement on any future
occasion.
(f) Amendment. This Agreement may be amended, supplemented or
---------
modified only by a written instrument duly executed by or on behalf of
each party hereto.
(g) Remedies. Each party hereto will be entitled to enforce any
--------
right granted to such party by any provision of this Agreement
specifically to recover damages caused by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by
law. The parties hereto agree and acknowledge that money damages may
not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any
court of law or equity of competent jurisdiction (without posting any
bond or other security) for specific performance and for other
injunctive relief in order to enforce or prevent violation of the
provisions of this Agreement.
(h) Public Announcements. Except as otherwise required by law,
--------------------
no party hereto shall issue any press release or make any other public
announcement with respect to the transactions contemplated hereby
without the approval of the other party hereto, which approval shall
not be unreasonably withheld or delayed.
(i) Entire Agreement. This Agreement supersedes all prior
----------------
discussions and agreements among the parties hereto with respect to the
subject matter hereof and contains the sole and entire agreement among
the parties hereto with respect to the subject matter hereof.
(j) Captions. The captions used in this Agreement have been
--------
inserted for convenience of reference only and do not define or limit
the provisions hereof.
- 21 -
<PAGE>
(k) Exhibits and Schedules. All exhibits and schedules, if any,
----------------------
referred to in this Agreement, all attachments to such exhibits or
schedules, and any other attachment to this Agreement are hereby
incorporated by reference into this Agreement and hereby are made a
part of this Agreement as if set out in full herein.
(l) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware
applicable to a contract executed and performed in such State, without
giving effect to the conflicts of laws principles thereof.
(m) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of
which together will constitute one and the same instrument.
(n) Severability. Any provision of this Agreement which is
____________
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
(o) No Third Party Beneficiary. This Agreement shall not
--------------------------
confer any rights or remedies upon any Person other than the parties
hereto and their respective successors and permitted assigns.
- 22 -
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
COMPANY:
SSE TELECOM, INC., a Delaware corporation
By: /s/ Frederick C. Toombs
--------------------------------------
Name: Frederick C. Toombs
------------------------------------
Title: President
-----------------------------------
PURCHASER:
---------
ALCATEL TELSPACE, a French societe
anonyme
By: /s/ Jerome de Vitry
---------------------------------------
Name: Jerome de Vitry
-------------------------------------
Title:Director R & D Product Management
---------------------------------
Attorney-In-Fact
- 23 -
