<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
SSE TELECOM, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
SSE TELECOM, INC.
47823 Westinghouse Drive
Fremont, California 94539
================================================================================
April 15, 1997
Dear Shareholder,
I cordially invite you to attend our Company's 1997 Annual Meeting of
Shareholders on June 2, 1997, at 9:30 a.m., local time. The meeting will be held
at the Silicon Valley Capital Club, 50 West San Fernando Street, Suite 1700, San
Jose, California 95113.
Matters to be considered and acted on at the meeting include the election of
directors, the approval of the Company's 1997 Equity Participation Plan, the
approval of the Company's Directors' Stock Option Plan, the approval of an
amendment to the Company's Certificate of Incorporation to increase the number
of authorized shares of the Company's common stock and the ratification of the
appointment of independent auditors. Detailed information concerning these
matters is set forth in the Notice of Annual Meeting of Shareholders and Proxy
Statement.
As a shareholder, your vote is important. I encourage you to execute and return
your proxy promptly whether or not you plan to attend so that we may have as
many shares as possible represented at the meeting. Returning your completed
proxy will not prevent you from voting in person at the meeting if you wish to
withdraw your proxy and vote in person.
Thank you for your cooperation and continued support and interest in SSE
Telecom, Inc.
Sincerely,
/s/ Frederick C. Toombs
Frederick C. Toombs
President
[SSE TELECOM, INC. LOGO]
<PAGE>
SSE TELECOM, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 2, 1997
The Annual Meeting of Shareholders of SSE TELECOM, INC. (the "Company") will be
held at the Silicon Valley Capital Club, 50 West San Fernando Street, Suite
1700, San Jose, California 95113, on June 2, 1997, at 9:30 a.m., local time, for
the following purposes:
1. To elect the Company's Board of Directors.
2. To approve the Company's 1997 Equity Participation Plan.
3. To approve the Company's Directors' Stock Option Plan.
4. To approve an amendment to the Company's Certificate of Incorporation
to increase the number of authorized shares of the Company's common
stock from 10,000,000 to 30,000,000.
5. To ratify the selection of Ernst & Young LLP as independent public
auditors for the Company.
6. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on April 7, 1997 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ G. Donald Markle
G. Donald Markle
Secretary
Fremont, California
April 15, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTPAID ENVELOPE. IF
YOU ARE ABLE TO ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES PERSONALLY, YOU
MAY DO SO AT ANY TIME BEFORE THE PROXY IS EXERCISED.
IF YOUR SHARES ARE HELD IN THE NAME OF BANK, BROKERAGE FIRM OR OTHER NOMINEE,
PLEASE CONTACT THE PARTY RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT IT TO VOTE YOUR
SHARES ON THE ENCLOSED CARD.
<PAGE>
SSE TELECOM, INC.
47823 Westinghouse Drive
Fremont, California 94539
-------------------------
PROXY STATEMENT
for
Annual Meeting of Shareholders To Be Held June 2, 1997
-------------------------
GENERAL INFORMATION
This Proxy Statement is solicited on behalf of the Board of Directors (the
"Board of Directors" or the "Board") of SSE TELECOM, INC., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Shareholders to be
held on June 2, 1997, at 9:30 a.m., local time (the "Annual Meeting"), or at any
adjournment thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting. The Annual Meeting will be held at the Silicon Valley
Capital Club, 50 West San Fernando Street, Suite 1700, San Jose, California
95113.
A copy of the Annual Report of the Company for its fiscal year ended September
28, 1996, which contains financial statements and related schedules for the
Company's latest fiscal year and certain other information regarding the
Company, is included. The approximate date on which this proxy statement, the
accompanying proxy, and the annual report are being sent to shareholders is
April 15, 1997.
Voting Rights and Votes Required
Only shareholders of record on April 7, 1997 ("Record Date"), will be entitled
to notice of and to vote at the Annual Meeting. At the close of business on
that date, the Company had outstanding and entitled to vote 5,767,678 shares of
common stock, $.01 par value per share ("Common Stock").
A majority of the outstanding shares of Common Stock on the Record Date must be
represented in person or by proxy at the Annual Meeting in order to constitute a
quorum for the transaction of business. The record holder of each share of
Common Stock entitled to vote at the Annual Meeting will have one (1) vote for
each share so held.
Directors are elected by a plurality of the votes cast. The eight candidates
receiving the highest number of votes will be elected. In tabulating the votes,
abstentions and broker nonvotes will be disregarded and have no effect on the
outcome of the vote.
The affirmative vote of the holders of the majority of the shares of Common
Stock represented at the Annual Meeting in person or by proxy and entitled to
vote thereat will be required to approve the Company's Directors' Stock Option
Plan and the Company's 1997 Equity Participation Plan. The affirmative vote of a
majority of the outstanding shares of Common Stock entitled to vote is required
to approve the amendment to the Company's Certificate of Incorporation
increasing the number of authorized shares of the Company's common stock from
10,000,000 to 30,000,000. In determining whether a proposal has received the
requisite number of affirmative votes, abstentions will have the effect of a
negative vote and broker nonvotes will be disregarded and have no effect on the
outcome of the vote.
<PAGE>
Voting of Proxies
Shares represented by all properly executed proxies will be voted at the Annual
Meeting in accordance with the instructions specified thereon. If no
instructions are specified, the shares represented by any properly executed
proxy will be voted FOR the election to the Board of the nominees listed below,
FOR approval of the Company's Directors' Stock Option Plan, FOR approval of the
Company's 1997 Equity Participation Plan, and FOR approval of the amendment to
the Company's Certificate of Incorporation increasing the number of authorized
shares of the Company's common stock from 10,000,000 to 30,000,000.
The Board of Directors is not aware of any matter that will come before the
Annual Meeting other than as described above. However, if any such matter is
duly presented, in the absence of instructions to the contrary, such proxies
will be voted in accordance with the judgment of the proxy holders with respect
to such matter properly coming before the Annual Meeting.
Revocation of Proxies
Any person giving a proxy pursuant to the solicitation has the power to revoke
it at any time before it is voted. It may be revoked by filing with American
Stock Transfer & Trust Company, 6201 15th Avenue, Brooklyn, New York 11219 or
the Secretary of the Company, G. Donald Markle at 47823 Westinghouse Drive,
Fremont, California 94539, a written notice of revocation or duly executed proxy
bearing a later date, or it may be revoked by attending the meeting and voting
in person. Attendance at the meeting will not, by itself, revoke a proxy.
Solicitation of Proxies
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly and mailing of this proxy statement, the proxy and any
additional information furnished to shareholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding shares of the Company's Common Stock in their names which are
beneficially owned by others to forward the solicitation materials to such
beneficial owners. The Company may reimburse persons representing beneficial
owners for their costs of forwarding the solicitation material to such
beneficial owners. Original solicitation of proxies by mail may be supplemented
by telephone, telegram or personal solicitation by directors, officers or other
regular employees of the Company. No additional compensation will be paid to
directors, officers or other regular employees for such services.
ITEM 1 - ELECTION OF DIRECTORS
At the Annual Meeting, shareholders of the Company will elect eight Directors.
Each Director shall hold office until the next Annual Meeting or until their
respective successors shall be duly elected and qualified. The election of each
nominee for director requires the affirmative vote of the holders of a plurality
of the shares cast in the election of directors. Each of the nominees is
presently a member of the Board, other than Mr. Roberts. Mr. Trumbower, a
current director, has requested that he not be included as a nominee for
election to the Board, although he will remain a director until the Annual
Meeting. If, prior to the Annual Meeting, any nominee for election to the Board
of Directors should become unavailable for election, an event which is not now
anticipated by the Board of Directors, the proxies will be voted for the
election of such substitute nominee or nominees, if any, or for a lesser number
of persons, as the Board of Directors may propose.
The Board of Directors currently consists of eight persons. The by-laws
authorize a Board of Directors of one to nine members; the number is currently
fixed at eight. No nominee or executive officer has any family relationship
with any other nominee or executive officer.
Nominees for Election as Directors
The following table set forth the nominees' names and ages, their current
principal occupations, the positions and offices, if any, held by each with the
Company in addition to the position as a director, and the period during which
each has served as a director of the Company.
2
<PAGE>
<TABLE>
<CAPTION>
Name Age Position Director Since
- ---- --- -------- --------------
<S> <C> <C> <C>
Jerome de Vitry 35 Deputy General Manager of Alcatel Telspace, S.A. Nov 1996 - Present
Charles W. Ergen 43 Chairman, Chief Executive Officer, President and Mar 1995 - Present
Director of EchoStar Communications Corporation
Daniel E. Moore 43 Executive Vice President and Chief Financial Apr 1989 - Present
Officer of the Company
Joseph T. Pisula 55 Chairman and CEO of Network Storage Solutions, Mar 1995 - Present
Inc.
Lawrence W. Roberts 57 President of Technology Strategies & Alliances N/A
Frederick C. Toombs 50 President of the Company and President of SSE Oct 1989 - Present
Technologies, Inc. and SSE Datacom, Inc.,
subsidiaries of the Company
Erik H. van der Kaay 56 President and Chief Executive Officer of May 1993 - Present
Allen Telecom Group, Inc.
Olin L. Wethington 48 Partner in the law firm of Steptoe & Johnson LLP Feb 1994 - Present
</TABLE>
Jerome de Vitry was named a Director of the Company on November 18, 1996. He is
Deputy General Manager of Alcatel Telspace S.A. and Vice President for radio
communications of the Alcatel Telecom Radio, Space & Defence Division. During
the last five years he has held positions at Alcatel as Director of the
Microwave Department, and product line manager for audio-video transmission
products. Mr. de Vitry received his engineering degree from Ecole Nationale des
Ponts at Chaussees in Paris, and Master Degree in Business Administration from
INSEAD, in Fontainebleau, France.
Charles W. Ergen has served as a Director of the Company since March 1995. He
is Chairman of the Board of Directors and Chief Executive Officer of Echostar
Communications Corporation, which he founded in 1980. Echostar Communications
Corporation became a leading supplier of back yard satellite antennas and it
entered the business of being a direct broadcast satellite (DBS) programming
service provider in 1993. In December 1995, Echostar launched its first high
power DBS satellite and is now one of the three companies offering DBS service
and programming in the United States using an 18" satellite dish antenna.
During the past five years, Mr. Ergen has held positions including President,
Chief Executive Officer, and Director of Echostar Communications Corporation.
Daniel E. Moore has served as a Director of the Company since April 1989. He is
a member of the Audit Committee of the Board of Directors. Mr. Moore served as
acting Chief Financial Officer from August 1992 to December 1993 and joined the
Company in February 1994 as Executive Vice President and Chief Financial
Officer. Mr. Moore is a founder and principal of Venture America, a private
venture capital firm that invested in the Company in 1989. Mr. Moore also
serves on the Board of Directors of Media4, Inc. Previously, Mr. Moore was a
senior manager with Arthur Andersen & Co. Mr. Moore received his Master's Degree
in Business Administration from the University of Pittsburgh, and his Bachelor's
Degree from Lafayette College.
3
<PAGE>
Joseph T. Pisula has served as a Director of the Company since March 1995. He
is a member of the Audit and Executive Committees of the Board of Directors. He
is Chairman and Chief Executive Officer of Network Storage Solutions, Inc., a
network-attached storage device manufacturer. From February 1995 to May 1996,
he was President of Network Imaging Corporation, an enterprise client-server
software company. From April 1993 until September 1994, Mr. Pisula was Chairman
and Chief Executive Officer of Digital Transmission System Inc., a
telecommunications equipment manufacturer. From 1988 to 1993, Mr. Pisula was
President and Chief Executive Officer of Teleos Communications, Inc., a video
conference network equipment manufacturer. Mr. Pisula received his Master's
Degree in Business Administration from the University of Rochester and his
Bachelor of Science in Electrical Engineering from the University of Pittsburgh.
Lawrence W. Roberts is President and a Director of Technology Strategies &
Alliances ("TS&A"), a strategic investment banking firm specializing in the
technology industry. Mr. Roberts was a founder of TS&A and has been with the
company since 1985. Mr. Roberts serves on the Board of Directors of Quantegy
Acquisition Corporation and Illgen Simulation Technologies, Inc. He received
his Master's in Business Administration from the Harvard Graduate School of
Business Administration, a Master's Degree in International Relations from
American University and a Bachelor of Arts Degree from the University of
Louisville.
Frederick C. Toombs has served as a Director of the Company since April 1989.
Mr. Toombs is President of the Company and President of SSE Technologies Inc.
and of SSE Datacom, Inc., two subsidiaries of the Company. Mr. Toombs joined
the Company in 1988 following the acquisition by the Company of the satellite
product line of Avantek, Inc. He has over twenty-three years of experience in
finance and operations in a high-tech manufacturing environment. Mr. Toombs
earned a Master's in Business Administration from the University of Santa Clara
and a Bachelor of Science Degree in Accounting from Long Beach State University.
Erik H. van der Kaay has served as a Director of the Company since May 1993. He
is a member and the Chairman of the Compensation and Executive Committees of the
Board of Directors of SSE Telecom. Mr. van der Kaay is President of the Allen
Telecom Group, a manufacturer of components and systems for the mobile
communications market. Previously, he was President and Chief Executive Officer
of Millitech Corporation, a manufacturer of millimeterwave components and
systems. From 1984 to 1988, he was Senior Vice President and Telecommunications
Group Executive of Avantek, Inc. Mr. van der Kaay is a graduate of Sir George
Williams University and Concordia University.
Olin L. Wethington has served as a Director of the Company since February 1994.
He serves as Chairman of the Audit Committee. Mr. Wethington is a partner in
the law firm of Steptoe & Johnson LLP, and has been associated with that firm
since 1985 to the present, with the exception of the period from January 1990 to
January 1993, during which he served as Special Assistant to the President and
Assistant Secretary of International Affairs at the U.S. Department of
Treasury. Prior to that, he served as special assistant to the President and
Executive Secretary to the Economic Policy Council at the White House during
1990 and 1991. His law practice is focused on international corporate and
finance transactions, particularly related to emerging markets. Mr. Wethington
is a graduate of the University of Pennsylvania and Harvard Law School.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" EACH NAMED NOMINEE
Information about the Board of Directors and Its Committees
The Board of Directors maintains standing Audit, Executive, and Compensation
Committees. The Board has not established a standing nominating committee.
The Audit Committee consists of Daniel E. Moore, Joseph T. Pisula and Olin L.
Wethington. The Audit Committee reviews and consults with the independent
auditors concerning the Company's financial statements, accounting and financial
policies, internal controls, and reviews the scope of the independent auditors'
activities and the fees. One of the primary functions of the Audit Committee is
to maintain good communications on accounting matters among the Committee, the
Company's independent auditors, and the Company's management. The Audit
Committee met two times during fiscal 1996.
4
<PAGE>
The Compensation Committee consists of Frank S. Trumbower and Erik H. van der
Kaay; Daniel E. Moore resigned from the Compensation Committee in November 1996.
The Compensation Committee reviews the Company's compensation philosophy,
recommends to the Board of Directors the total compensation to be paid to the
president and the executive vice presidents of SSE Technologies Inc., SSE
Datacom, Inc. and SSE Telecom, Inc., approves the form and terms of all
incentive and stock option plans, and prepares the Compensation Committee
Report. The Compensation Committee met 5 times during fiscal 1996.
The Executive Committee consists of Joseph T. Pisula and Erik H. van der Kaay.
The Executive Committee was formed in November 1996 and meets with the principal
executive officers of the Company on matters involving the ongoing business of
the Company.
The Board of Directors met four times in regularly scheduled and special
meetings during fiscal 1996. Each incumbent director attended at least seventy-
five percent (75%) of the aggregate of the total number of meetings of the Board
of Directors (held during the period for which he has been a director), other
than Mr. Ergen, who attended fifty percent (50%) of the aggregate of the total
number of meetings of the Board of Directors. Each incumbent director attended
at least seventy-five percent (75%) of the total number of meetings held by all
committees of the Board on which such member served (held during the period for
which he has been a director).
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires the Company's officers and directors,
and persons who own more than ten percent (10%) of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and with the National
Association of Security Dealers, Inc. Officers, directors and greater than ten
percent (10%) shareholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that Form 5 was not
required for those persons, the Company believes that, during the period
October 1, 1995 through September 28, 1996, all filing requirements applicable
to its officers, directors and greater than ten percent (10%) beneficial owners
were complied with.
Certain Relationships and Related Transactions
In June 1995, the Company and Alcatel Telspace S.A. ("Alcatel Telspace"), a
unit of Alcatel Telecom of France, invested equally in Media4, Inc. ("Media4"),
a privately held developer of products for distribution of multimedia
information over wireless networks to personal computers. Including the initial
investment and as of April 15, 1997, the Company has invested approximately
$970,000 in Media4 common stock and $175,000 in Media4 convertible 7%
debentures. The convertible debt is due in three years. Daniel E. Moore, an
officer and a director of the Company, is also a member of the Board of
Directors of Media4.
In September 1996, Alcatel Telspace purchased from the Company 525,000 shares of
the Company's common stock at $12.86 per share. In addition Alcatel Telspace
received a three year warrant to purchase up to another 300,000 shares of the
Company's common stock at the market price at the time of exercise but not less
than $11.00 per share. The Company received aggregate proceeds of $6,751,500.
Alcatel Telspace also purchased an additional 100,000 shares of common stock
from two members of the Company's senior management for $10.75 per share, the
market value of the Company's common stock at that time. Frederick C. Toombs
and Daniel E. Moore each sold 50,000 shares of Common Stock to Alcatel Telspace.
As a result, Alcatel Telspace owns approximately 10% of the Company's
outstanding common stock. Jerome de Vitry, Deputy General Manager of Alcatel
Telspace, was named a Director of SSE Telecom on November 18, 1996.
5
<PAGE>
Alcatel Telspace and the Company also entered into an agreement outlined in a
Joint Product Policy to identify certain satellite telecommunications products
which may be jointly developed and marketed by each party. The intent of the
Joint Product Policy is to add additional products to each company's product or
systems offerings thereby potentially increasing market share. The two
companies have collaborated in the development of certain satellite
communications equipment in the past. The Company had shipments to Alcatel
Telspace of $1.3 million and purchases from Alcatel Telspace of $1.5 million,
during fiscal 1996. As of September 28, 1996 the Company had trade receivables
and payables with Alcatel Telspace of $80,000 and $420,000, respectively.
Alcatel Telspace is currently a primary supplier of a key component in the
Company's STAR satellite transceiver products.
Charles W. Ergen, who has served as a Director of SSE Telecom since March 1995,
is Chairman of the Board of Directors, Chief Executive Officer and President of
Echostar Communications Corporation ("Echostar"). At September 28, 1996, the
Company had an outstanding balance of $4,750,000 in its 6 1/2% convertible
subordinated debentures due March 1, 2001, payable to Echostar. The debentures
are convertible at the option of the holder into the Company's common stock at a
conversion price of $12.00 per share at any time prior to maturity. In the
fourth quarter of 1996 the Company incurred a non-cash charge of $208,000
related to the issuance to Echostar of warrants to purchase 60,000 shares of the
Company's common stock. The warrants were issued pursuant to an agreement
between Echostar and the Company under which Echostar waived its right of
conversion into the Company's common stock on any principal payments made by the
Company on debentures through December 31, 1996. The Company repaid $4.0
million of the debenture principal and $1.2 million of debenture interest prior
to fiscal year end, with proceeds from the Alcatel Telspace investment and sale
of Echostar shares. As part of this agreement the Company and Echostar agreed
that the Company could sell up to 250,000 shares of Echostar common stock (of
which 15,000 were sold prior to year end) and apply 60% of the proceeds to
retire a portion of the accrued interest and principal on the outstanding
debentures.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 7, 1997,
regarding securities ownership, by (i) each person who is known by the Company
to own beneficially more than 5% of the Company's outstanding common stock,
(ii) each executive officer named in the Summary Compensation Table below,
(iii) the directors and nominees individually, and (iv) all executive officers
and directors as a group.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Name and Address of Beneficial Owner ** Number Percent
- --------------------------------------- ------ -------
<S> <C> <C>
Frederick C. Toombs, President and 147,737 2.6
Director (1)
Daniel E. Moore, Executive Vice President and 282,327 4.9
Director (2)
Jerome de Vitry 0 n/a
Charles W. Ergen, Director (3) 10,000 *
Joseph T. Pisula, Director (4) 15,000 *
Lawrence W. Roberts, nominee for Director 0 n/a
Frank S. Trumbower (5) 595,013 10.3
Erik H. van der Kaay, Director (6) 18,250 *
Olin L. Wethington, Director (7) 26,250 *
Frank J. Peternell, Vice President (8) 112,121 1.9
Claudio S. Mariotta, Vice President (9) 8,500 *
Alcatel Telspace, S.A.(10) 925,000 16.0
Kennedy Capital Management, Inc. 467,495 8.1
Directors and Executive Officers 1,215,198 21.1
as a Group (10 persons) (11)
- ---------------------------------------------------------------------------------------------
</TABLE>
* Represents less than 1% of the outstanding shares.
** The address for each Director, nominee for Director, and Officer named
in the table is c/o of the Company at Suite 710, 8230 Leesburg Pike,
Vienna, Virginia 22182; the address for Frank S. Trumbower is 1430
Springhill Road, Suite 200, McLean, Virginia 22102; the address for
Alcatel Telspace, S.A. is 5 Rue Noel Pons, 92734 Nanterre Cedex, France;
and the address for Kennedy Capital Management is 10829 Olive Blvd., St.
Louis, Missouri 63141.
Notes:
- -----
1. The number of shares includes exercisable options for 10,000 shares.
2. The number of shares includes exercisable options for 25,000 shares and
2,200 shares owned by Venture America Management Limited Partnership and
124,169 shares owned by Venture America Services Limited Partnership.
These Limited Partnerships are commonly managed by a general partnership
of which Mr. Moore is one of the two general partners.
3. The number of shares represents exercisable options for 10,000 shares.
Does not include $4,075,000 of debentures owned by Echostar
Communications Corporation which are convertible into shares at $12 per
share and warrants for 70,125 shares issued to Echostar Communications
Corporation.
4. The number of shares represents exercisable options for 15,000 shares.
7
<PAGE>
5. The number of shares includes exercisable options for 15,000 shares held
by Mr. Trumbower, and 192,827 shares that are owned by Mr. Trumbower's
spouse, as to which Mr. Trumbower disclaims beneficial ownership.
Additionally, includes 16,667 shares owned by Prescap Limited
Partnership of which Mr. Trumbower is a general partner, 26,803 shares
owned by Avenel Capital Management Corporation, a company controlled by
Mr. Trumbower, and 115,000 shares owned by Prinz Corporation, a company
controlled by Mr. Trumbower.
6. The number of shares includes exercisable warrants for 5,000 shares and
exercisable options for 11,250 shares. The number of shares also
includes 2,000 shares that are owned by Mr. van der Kaay's spouse, as to
which Mr. van der Kaay disclaims beneficial ownership.
7. The number of shares includes exercisable warrants for 5,000 shares and
exercisable options for 16,250 shares.
8. The number of shares includes exercisable options for 3,000 shares.
9. The number of shares includes exercisable options for 7,500 shares.
10. The number of shares includes exercisable warrants for 300,000 shares.
11. Includes the Directors and Officers named in the table.
EXECUTIVE COMPENSATION
Compensation Tables
The following table shows, as to the Chief Executive Officer and each of the
other most highly compensated executive officers whose salary plus bonus
exceeded $100,000 during the last fiscal year, information concerning
compensation paid for services to the Company in all capacities during the
fiscal year ended September 28, 1996, as well as total compensation paid to each
such individual for the Company's previous two fiscal years.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
All Other
Salary Bonus Options Compensation
Name and Principal Position Year ($) ($) (#) ($)
- --------------------------- ---- ------- ------- --------- ------------
<S> <C> <C> <C> <C> <C>
Frederick C. Toombs 1996 174,636 -- -- 12,908(1)
Pres., SSE Telecom, Inc. 1995 171,539 21,750(4) -- 9,729(1)
Pres., SSE Technologies Inc. 1994 140,913 38,775 40,000 9,729(1)
Pres., SSE Datacom, Inc.
Daniel E. Moore 1996 150,958 -- -- 10,408(1)
Exec. VP and CFO SSE Telecom 1995 133,532 16,380(4) -- 17,590(3)
Exec. VP SSE Technologies Inc., 1994 90,000(2) -- 50,000 --
and SSE Datacom, Inc.
Frank J. Peternell (6) 1996 143,123 -- -- 28,593(1)(5)
SSE Technologies Inc. 1995 128,766 14,012(4) -- 11,156(1)
1994 112,008 8,271 6,000 11,276
Claudio S. Mariotta 1996 100,000(2) -- 30,000 --
Chief Operating Officer and
Vice President of Engineering
SSE Technologies Inc.
</TABLE>
- -------------------------
(1) Includes car allowance and employee insurance benefits.
(2) Employed for less than a full year.
(3) Includes car allowance reimbursement for two years, fiscal 1994 and
1995.
(4) Bonus payments relate to fiscal year 1994.
(5) Includes accrued vacation payout.
(6) Mr. Peternell was Executive Vice President and a full-time employee of
the Company until July 1, 1996; he remains in the employment of the
Company as a part time employee.
8
<PAGE>
Employment Arrangements
The Company has employment agreements with Mr. Toombs, Mr. Peternell, and Mr.
Moore. The Company is negotiating an employment agreement with Jacques Couet,
Executive Vice President of Products and Strategy for the Company. Mr. Couet
joined the Company effective January 1, 1997. The agreements for Messrs. Toombs
and Moore provide, among other things, for payment of an amount equal to their
then current annual base salary in the event the Company terminates employment
associated with the sale of the Company. Payment equal to half of their then
current annual salary will be provided in the event the Company terminates
employment other than for just cause and not associated with the sale of the
Company. The severance would be in monthly installments and benefits would be
continued during the payment period. In addition, the employment agreement of
Mr. Toombs provides for a bonus of up to $300,000, and Mr. Moore's employment
agreement provides for a bonus of up to one times his then current annual
salary, in the event that the Company is sold at a certain stock price.
Stock Options
The following table shows, as to individuals named in the Summary Compensation
table above, information concerning stock options granted during the fiscal year
ended September 28, 1996.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Values at Assumed
Annual Rates of Stock
% of Price Appreciation
Total Options for Option Term
Granted to Exercise (5 Years)
Options Employees in Price Expiration ---------------------
Name Granted Fiscal Year Per Share Date 5% ($) 10% ($)
- ---- ------- ----------- --------- ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Frederick C. Toombs -- -- -- -- -- --
Daniel E. Moore -- -- -- -- -- --
Frank J. Peternell -- -- -- -- -- --
Claudio S. Mariotta 30,000 10.5% $8.38 3/1/01 150,629 255,911
</TABLE>
The following table shows, as to individuals named in the Summary Compensation
table above, information concerning stock options exercised during the fiscal
year ended September 28, 1996.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised in-the-Money Options
Options at Fiscal Year End at Fiscal Year End ($) (2)
Shares
Acquired
on Value
Exercise Realized
Name (#) ($) (1) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Frederick C. Toombs -- -- 30,000 20,000 $125,100 $62,600
Daniel E. Moore 50,000 $393,500 25,000 25,000 $ 78,250 $78,250
Frank J. Peternell -- -- 3,000 3,000 $ 9,390 $ 9,390
Claudio S. Mariotta -- -- -- 30,000 -- $22,500
</TABLE>
(1) Market value of underlying securities based on the closing price of the
Company's Common Stock on the date of exercise minus the exercise price.
9
<PAGE>
(2) Market value of underlying securities based on the closing price of the
Company's Common Stock on September 27, 1996, (the last trading day prior
to September 28, 1996) on the NASDAQ National Market System of $9.125 minus
the exercise price.
Director Compensation
The Board of Directors fixes the compensation of directors. During fiscal 1996,
Directors that are not employees of the Company received cash compensation for
(i) each meeting of the board attended in person or by teleconference, which
extends for more than four hours, at the rate of $750 for each meeting, and (ii)
any other board meeting over two hours in length, at the rate of $250 for each
meeting. Directors are reimbursed for expenses incurred in attending meetings.
In addition, Messrs. Pisula, Trumbower, van der Kaay, and Wethington each
received an option to acquire 5,000 shares of the Company's Common Stock.
For the current year, directors' fees for non-employee directors is fixed at
$2,000 annually. In addition, directors are paid for each meeting of the Board
at the rate of $500 for each meeting, and for attendance at meetings of
committees of the Board held on a date other than a regular Board meeting date,
$250. As described below, at the Annual Meeting, the shareholders are being
asked to approve the adoption of the Directors' Stock Option Plan, which
provides, among other things, that after election or reelection as a member of
the Board of Directors at each annual meeting of shareholders of the Company,
each non-employee director shall automatically receive an option for 2,500
shares of the Company's Common Stock.
Report of the Compensation Committee On Executive Compensation
The Compensation Committee (the "Committee") of the Board of Directors is
composed of three directors, two outside directors, Messrs. Trumbower and van
der Kaay, and Daniel E. Moore, Executive Vice President of the Company.
Effective November 1996, the Committee consists of Messrs. Trumbower and van der
Kaay. The Committee administers the Company's Executive Compensation Program.
Participants in the Executive Compensation Program in 1996 were Frederick
Toombs, Frank Peternell, and Daniel Moore. The Committee is responsible for
developing and making recommendations to the Board with respect to the Company's
executive compensation policies including the amounts and forms of compensation.
In addition, the Committee is responsible for making annual recommendations to
the Board for the compensation to be paid to the President and/or Chief
Executive Officer as well as each executive officer of the Company.
The objectives of the Company's Executive Compensation Program are to provide
the following:
. Levels of compensation that are competitive with those provided in the
industry and market in which the Company competes for its executive
resources;
. Annual incentive compensation that varies with the financial performance of
the company, and rewards corporate and individual performance; and
. Long-term incentives which align the interests of management with those of
the shareholders.
Executive Officer Compensation Program
The Company's Executive Compensation program is composed of base salary, annual
cash incentive compensation, long-term incentive compensation principally in the
form of stock options, and various other customary benefits. To align pay with
performance, a portion of compensation is contingent upon the overall financial
performance of the company as well as individual achievement of objectives that
positively impact the financial performance of the Company.
Base Salary
Officers' base salaries are reviewed annually by the Committee based on the
results achieved by each officer relative to that officer's assigned goals and
with regard to competitive salary practices of other similar employers. In
general, the Committee believes that base salaries should approximate to those
in the upper quarter range of competitive base salaries.
10
<PAGE>
Annual Incentive Compensation
The purpose of the Company's incentive compensation plan is to provide a direct
financial incentive in the form of an annual cash bonus to executives to achieve
the Company's annual profit and operational goals. These objectives are
developed in conjunction with management and approved by the Committee near the
beginning of each year and are based upon financial plans and budget approved by
the Board. For the last three fiscal years, corporate earnings per share ("EPS")
and the operating income of SSE Technologies Inc. and SSE Datacom, Inc. were the
primary measures of performance.
Stock Option Plan
The stock option plan is the Company's principal long-term incentive plan for
executive officers and key managers. The objectives of the program are to align
executive and shareholder long-term interests by creating a strong and direct
link between executive compensation and shareholder return, and to enable
executives to develop and maintain a significant, long-term ownership position
of the Company's common stock. The Company believes that stock options, better
than other long-term incentives, create a mutuality of interest between the
management and shareholders because stock options provide value to the optionee
only if the stock price increases.
Stock options are granted at an option price equal to the fair market value of
the Company's common stock on the date of grant, and have a five (5) year term
and generally vest ratably over a four-year period. Options are granted at the
market value of common shares on the date of grant so as to provide a reward
only for future stock appreciation. This long-term program encourages equity
ownership through stock options and aligns the interests of management with
those of shareholders.
Benefits
The Company provides benefits to the executive officers that are generally
available to all management employees. The amount of perquisites, as determined
in accordance with the rules of the Securities and Exchange Commission relating
to executive compensation, did not exceed 10% of total salary and bonus for
fiscal 1996 for any executive officer.
Report Summary
The Committee has reviewed the total compensation of the President of the
Company, Frederick C. Toombs, and the other highest paid executive officers in
fiscal 1996, Daniel E. Moore, Frank J. Peternell, and Claudio S. Mariotta. The
Committee has concluded that their compensation is reasonable and consistent
with the Company's compensation philosophy and industry practice.
COMPENSATION COMMITTEE
Frank S. Trumbower
Erik H. van der Kaay
11
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total returns as
illustrated by the price of the Company's common stock, the NASDAQ Market Index
and a peer group index that includes the securities of companies such as
California Microwave, Inc., Datron Systems Inc., and Scientific-Atlanta, Inc. in
the radio and TV communication equipment SIC code number 3663, each of which
assumes reinvestment of dividends.
[GRAPH APPEARS HERE]
- ------------------------------FISCAL YEAR ENDING--------------------------------
<TABLE>
<CAPTION>
COMPANY 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
SSE TELECOM INC 100 67.39 195.65 106.52 145.65 147.83
INDUSTRY INDEX 100 114.15 226.22 243.62 330.76 251.28
BROAD MARKET 100 98.34 127.89 135.34 164.32 191.84
</TABLE>
The information for this chart was provided by Media General Financial Services,
P.O. Box 85333, Richmond, VA. 23293
12
<PAGE>
ITEM 2 - APPROVAL OF 1997 EQUITY PARTICIPATION PLAN
On February 20, 1997, the Board of Directors adopted the Company's 1997 Equity
Participation Plan (the "Plan") and directed that the Plan be submitted to the
shareholders for approval. At the Annual Meeting, the shareholders are being
asked to approve the adoption of the Plan. A brief summary of the Plan follows,
with the full text printed in Exhibit A. Exhibit A contains definitions for
many terms used in this summary.
The purpose of the Plan is to offer incentives and rewards to persons who are
officers, directors, employees, and consultants of the Company, or any its
subsidiaries, in recognition of their contribution to the Company's progress and
to induce such persons who are in a position to contribute materially to the
Company's progress to remain with the Company.
Administration of the Plan. The Plan is administered by the Compensation
Committee (the "Committee") of the Board of Directors, provided that if the
requisite number of members of the Committee are not disinterested persons for
purposes of rule 16b-3 of the Securities Exchange Act of 1934 (the "Act"), the
Plan shall be administered by a committee, all of whom are non-employee
directors appointed by the Board and consisting of two or more directors with
full authority to act in the matter. The term "Committee" shall mean any one of
these two bodies which may administer the Plan, from time to time. The
Committee will from time to time select participants, determine the extent of
participation and make all other necessary decisions and interpretations under
the Plan.
Stock Options. The Plan employs market value as a basis for rewarding
performance through the use of incentive stock options under Section 422 of the
Internal Revenue Code (the "Code") ("Incentive Stock Options") and stock options
which are not Incentive Stock Options ("Nonqualified Stock Options") to acquire
the Company's Common Stock. The option price per share may be no less than 100
percent of fair market value (as defined in the Plan) per share of the Company's
Common Stock at the date of grant. The period of options will be no more than
10 years from the date of grant, but the option will only become exercisable
after specified periods of employment after the grant thereof. The option
price, and any withholding tax, is payable in full at the time of exercise in
cash or in shares of Common Stock of the Company transferable to the Company and
having a fair market value on the transfer date equal to the amount payable to
the Company.
If a participant terminates employment for any reason other than death,
disability or retirement, however, the then-exercisable portion of the option
will only be exercisable for three months following such termination. In the
event of death, disability or retirement, the entire unexercised and vested
portion of the option is exercisable up to three years from the date of such
event, or five years in the event of retirement, or within the remaining period
of the option, whichever is earlier; provided that if a participant retires,
without having exercised the option in full, the remaining portion of the option
may be exercised without regard to the five-year limitation, to the extent
permitted by the Committee upon the grant of the option. The option is not
transferable except in the case of death. Under no circumstances, however, will
an option be exercisable beyond 10 years from the date of the grant thereof or
the expiration of its term, if earlier.
In the event of a "change of control" of the Company, as defined in the Plan,
all outstanding options will become immediately vested and exercisable in
accordance with the terms of the Plan.
The Plan provides the Committee with discretion to allow a participant to
convert an unexercised Nonqualified Stock Option to a cash payment equal to the
difference between the participant's option price and the fair market value of
the Company's Common Stock on the date of conversion if the participant elects
to exercise a stock option for an equivalent number of shares of the Company's
Common Stock on the same date.
Restricted Shares. The Committee may from time to time in its discretion award
restricted shares of Common Stock ("Restricted Shares") to participants in the
Plan. The number of Restricted Shares awarded and the terms and conditions of,
and the amount of payment, if any, to be made by the participant for such
Restricted Shares shall be determined by the Committee. At the time of an award
of Restricted Shares, the Committee shall establish a period of time (the
"Restricted Period") applicable to such award which shall not be less than one
year nor more than ten years. Each award of Restricted Shares may have a
different Restricted Period. At the time an award is made, the Committee may,
in its discretion, prescribe conditions for the incremental lapse of
restrictions during the Restricted Period and for the lapse or termination of
restrictions upon the occurrence of other conditions in
13
<PAGE>
addition to or other than the expiration of the Restricted Period with respect
to all or any portion of the Restricted Shares. Upon an award of Restricted
Shares, a stock certificate representing the number of Restricted Shares awarded
to the participant shall be registered in the participant's name and, at the
discretion of the Committee, will be either delivered to the participant with an
appropriate legend or held in custody by the Company or a bank for the
Participant's account. Upon the expiration or termination of the Restricted
Period and the satisfaction of any other conditions prescribed by the Committee,
the restrictions applicable to the Restricted Shares shall lapse and a stock
certificate for the number of Restricted Shares with respect to which the
restrictions have lapsed shall be delivered, free of all such restrictions.
Shares Subject to the Plan/Individual Limits. The total number of shares of the
Company's Common Stock with respect to which options and Restricted Shares may
be granted is 250,000 (which may be adjusted for stock dividends, stock splits,
or other corporate changes). Shares of Common Stock subject to stock options
which become ineligible for purchase for any reason other than exercise of the
option will again become available under the Plan.
Eligibility and Award Estimates. Eligibility to participate in the Plan is
limited to employees (including officers and directors who also are employees)
and consultants of the Company and its subsidiaries.
Amendment of the Plan. The Committee, in its discretion, may amend the Plan and
any options granted thereunder to allow participants to obtain favorable
treatment under possible future amendments of the federal income tax laws. In
addition, the Committee may amend, suspend, or discontinue the Plan or amend any
or all stock options under the Plan to the extent permitted by law and the rules
of any stock exchange on which the Company's Common Stock is listed; provided
that no action may be taken if it would result in the disallowance of a
deduction to the Company under Code Section 162(m) or the rules and regulations
thereunder. Except as provided in the Plan, no amendment, suspension or
termination of the Plan shall adversely alter any rights or obligations under
any stock option or other rights previously granted a participant under the Plan
without the consent of the participant. However, if an amendment must be
approved by the shareholders pursuant to law or the rules of any stock exchange
on which the Company's Common Stock is listed, any such proposed amendment will
be submitted to the shareholders for approval.
Tax Consequences. Under current Federal tax law, generally, no taxable income
will be realized by a participant in the Plan and the Company will not be
entitled to any deduction upon the grant of a Nonqualified Stock Option,
provided that the Nonqualified Stock Option is not itself traded on a securities
market. Upon exercise of a Nonqualified Stock Option, a participant will
realize ordinary taxable income on the date of exercise. Such taxable income
will equal the difference between the option price and the fair market value of
the option stock on the date of exercise. The Company will be entitled to a
corresponding deduction, subject to the limitation imposed by Section 162(m) of
the Code.
Upon the grant of an Incentive Stock Option, no taxable income will be realized
by a participant and the Company will not be entitled to any deduction. If a
participant exercises the option without having ceased to be an employee of the
Company or any of its subsidiaries at any time during the period from the grant
of the option until three months before its exercise, then generally, no taxable
income will result at the time of the exercise of such option. If no
"disqualifying disposition" of the stock transferred to a participant upon
exercise of the option is made by him or her (i.e., a disposition within the
period that ends on the last to occur of one year after such stock is so
transferred and two years after the grant of the option), any profit (or loss)
realized by a participant from a sale or exchange of such stock will be treated
as long-term capital gain (or capital loss), and no deduction will be allowable
to the Company with respect thereto. When a participant exercises an Incentive
Stock Option, he or she will realize an item of "adjustment" for purposes of the
"alternative minimum tax" equal to the amount by which the fair market value of
the stock at the time of exercise exceeds the option price. If a disqualifying
disposition of such stock is made by a participant, the disposition generally
will result in ordinary income (and a deduction for the Company) at the time of
the disposition in an amount equal to the lesser of (i) the gain on the sale or
(ii) the bargain element. If the gain exceeds the bargain element, the excess
is a short-term or long-term capital gain depending upon how long the shares are
held prior to the sale. If the stock is sold for less than the exercise price,
failure to meet the holding period requirement generally will result in a short-
term or long-term capital loss, again depending upon how long the shares are
held prior to the sale, equal to the difference between the exercise price and
the sale price.
14
<PAGE>
At the Committee's discretion, both Incentive Stock Options and Nonqualified
Stock Options may be exercised by a participant using shares of the Company's
Common Stock which he or she previously owned; in addition, any resulting
withholding tax may be paid with Common Stock acquired pursuant to the exercise
of the options. The use of previously owned Common Stock has no tax
consequences to the Company.
Preemptive Rights. The Company may, in the discretion of the Board of
Directors, purchase shares to be held in the Company's treasury for use in
connection with options under the Plan, but has no present plans to do so. Such
purchased shares, treasury shares now held, or authorized but unissued shares
may be issued upon exercise of options. The shareholders of the Company have no
preemptive rights in any stock which may be issued pursuant to options granted
under the Plan.
Use of Proceeds. The proceeds received by the Company from the sale of stock
under the Plan will be used for general corporate purposes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF
THE EQUITY PARTICIPATION PLAN DESCRIBED HEREIN AND
SET FORTH IN EXHIBIT A HERETO.
ITEM 3 - APPROVAL OF DIRECTORS' STOCK OPTION PLAN
At the Annual Meeting, the shareholders are being asked to approve the adoption
of the Directors' Stock Option Plan (the "Directors' Plan"). A brief summary of
the Directors' Plan follows, with the full text printed in Exhibit B. Exhibit B
contains definitions for many terms used in this summary.
Management believes that the ability to grant stock options to directors that
are not employees of the Company or of any subsidiary of the Company ("Non-
Employee Directors") is important to the Company's ability to attract and retain
qualified Non-Employee Directors, who are essential to the long-term success of
the Company, and to align the interests of Non-Employee Directors with the
interest of shareholders.
Administration. The Plan shall be administered by the Board. The Board shall
have all the powers vested in it by the terms of the Plan, such powers to
include authority (within the limitations described here) to prescribe the form
of the agreement embodying awards of nonqualified stock options made under the
Plan ("Options"). The Board shall, subject to the provisions of the Directors'
Plan, grant Options under the Directors' Plan and shall have the power to
construe the Directors' Plan, to determine all questions arising under it, and
to adopt and amend such rules and regulations for the administration of the
Directors' Plan as it may deem desirable.
Options. Awards under the Plan shall include only Options, which are rights to
purchase the Common Stock of the Company. The Option exercise price shall be
the fair market value of the Common Stock subject to such Option on the date the
Option is granted, which shall be the closing price of a share of Common Stock
on the date of grant as reported on the NASDAQ National Market.
Each year, as of the date thirty days after election or reelection as a member
of the Board of Directors at the annual meeting of shareholders of the Company,
each Non-Employee Director shall automatically receive an Option for 2,500
shares of Common Stock. In addition, the Plan permits the grant of additional
or separate Options to directors serving on a committee of the Board.
Shares Subject to Directors' Plan. There may be issued under the Directors'
Plan pursuant to the exercise of Options an aggregate of not more than 50,000
shares, subject to adjustment as provided in the Directors' Plan.
Eligibility. Only a Non-Employee Director shall be eligible to receive an
Option in accordance with the terms of the Directors' Plan. A Non-Employee
Director to whom an Option is granted (and any person succeeding to such a Non-
Employee Director's rights pursuant to the Directors' Plan) shall have no rights
as a shareholder with respect to any shares of Common Stock issuable pursuant
to any such Option until the date of the issuance of a stock certificate to him
for such shares. Except as provided in the Directors' Plan, no adjustment shall
be made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property) for which the
record date is prior to the date such stock certificate is issued.
15
<PAGE>
Restrictions on Exercise. No Option shall be exercisable:
(i) Before the expiration of one year from the date it is granted and after the
expiration of ten years from the date it is granted; and may be exercised during
such period as follows: one-third (33 1/3%) of the total number of shares
covered by the Option shall become exercisable each year beginning with the
first anniversary of the date it is granted, provided that an Option shall
automatically become immediately exercisable in full when the Non-Employee
Director ceases to be a Non-Employee Director for any reason other than death;
(ii) Unless payment in full is made for the Common Stock being acquired under it
at the time of exercise. Such payment shall be made
(a) in United States dollars by cash or check, or
(b) in lieu of that, by tendering to the Company shares of Common Stock
owned by the person exercising the Option and having a fair market
value equal to the cash exercise price applicable to such Option, such
fair market value to be the closing price of a share of Common Stock
on the date of exercise as reported by the NASDAQ National Market, or
(c) by a combination of United States dollars and Common Stock as stated
above; and
(iii) Unless the person exercising the Option has been, at all times during the
period beginning with the date of grant of the Option and ending on the date of
such exercise, a Non-Employee Director of the Company, except that
(a) if such person shall cease to be such a Non-Employee Director for
reasons other than death, while holding an Option that has not expired
and has not been fully exercised, such person, at any time within
three years of the date he ceased to be such a Non-Employee Director
(but in no event after the Option has expired under the provisions of
the Directors' Plan), may exercise the Option with respect to any
Common Stock as to which he has not exercised the Option on the date
he ceased to be such a Non-Employee Director; or
(b) if any person to whom an Option has been granted shall die holding an
Option that has not been fully exercised, his executors,
administrators, heirs or distributees, as the case may be, may, at any
time within one year after the date of such death (but in no event
after the Option has expired under the provisions of the Directors'
Plan), exercise the Option with respect to any shares as to which the
decedent could have exercised the Option at the time of his death.
Use of Proceeds. The proceeds received by the Company from the sale of stock
under the Directors' Plan will be used for general corporate purposes.
Dilution. In the event of any change in the outstanding Common Stock of the
Company by reason of any stock split, stock dividend, recapitalization, merger,
consolidation, reorganization, combination or exchange of shares or other
similar event, the number or kind of shares that may be issued under the
Directors' Plan, and the number or kind of shares subject to, or the Option
price per share under, any outstanding Option shall be automatically adjusted so
that the proportionate interest of the participant shall be maintained as before
the occurrence of such event; such adjustment in outstanding Options shall be
made without change in the total Option exercise price applicable to the
unexercised portion of such Options and with a corresponding adjustment in the
Option exercise price per share, and such adjustment shall be conclusive and
binding for all purposes of the Director's Plan.
Amendment or Discontinuance. The Directors' Plan may be amended at any time and
from time to time by the Board as the Board shall deem advisable, provided,
however, that except as provided in the Directors' Plan, the Board may not,
without further approval by the shareholders of the Company in accordance with
the Directors' Plan, increase the maximum number of shares of Common Stock as to
which Options may be granted under the Directors' Plan, reduce the minimum
Option exercise price, extend the period during which Options may be granted or
exercised under the Directors' Plan, or change the class of persons eligible to
receive Options under the Directors' Plan. No amendment of the Directors' Plan
shall materially and adversely affect any right of any participant with respect
to any Option theretofore granted without such participant's written consent.
16
<PAGE>
Termination. The Directors' Plan shall terminate upon the earlier of the
following dates or events to occur:
(i) upon the adoption of a resolution of the Board terminating the Directors'
Plan; or
(ii) five years from the date the Directors' Plan is initially approved and
adopted by the shareholders of the Company in accordance with provisions
of the Directors' Plan.
Tax Consequences. Under current Federal tax law, generally, no taxable income
will be realized by a participant in the Directors' Plan and the Company will
not be entitled to any deduction upon the grant of a Nonqualified Stock Option,
provided that the Nonqualified Stock Option is not itself traded on a securities
market. Upon exercise of a Nonqualified Stock Option, a participant will
realize ordinary taxable income on the date of exercise. Such taxable income
will equal the difference between the option price and the fair market value of
the option stock on the date of exercise.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF
THE DIRECTOR'S STOCK OPTION PLAN DESCRIBED HEREIN.
ITEM 4 - APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
At the Annual Meeting, the shareholders of the Company will be asked to consider
and vote upon an amendment to the Company's Certificate of Incorporation (the
"Charter Amendment") which would increase the number of authorized shares of
Common Stock from 10,000,000 to 30,000,000. At the close of business on the
Record Date, there were 5,767,678 shares of Common Stock outstanding and 886,183
shares of Common Stock reserved for future issuance under options and warrants.
Although there are no present plans or commitments for their use, such shares
would be available for issuance without further action by shareholders, except
as required by law or applicable stock exchange requirements. The current rules
of the NASDAQ Stock Market would require shareholder approval of a transaction
if the number of shares of the Company's Common Stock to be issued in connection
with the acquisition of the stock or assets of another company would equal or
exceed twenty percent (20%) of the number of shares of the Company's Common
Stock outstanding immediately prior to such issuance, or if such issuance will
result in a change in control of the Company.
The Board believes it is desirable to authorize additional shares of Common
Stock so that there will be sufficient shares available for issuance for
purposes that the Board may hereafter determine to be in the best interests of
the Company and its shareholders. Such purposes could include the offer of
shares for cash, the declaration of stock splits and stock dividends, mergers
and acquisitions and other general corporate purposes. In many situations,
prompt action may be required which would not permit seeking shareholder
approval to authorize additional shares for the specific transaction on a timely
basis. The Board believes it should have the flexibility to act promptly in the
best interests of shareholders. The terms of any future issuance of shares of
the Company's Common Stock will be dependent largely on market and financial
conditions and other factors existing at the time of issuance.
If the Charter Amendment is approved, the Fourth Article of the Certificate of
Incorporation of the Company would, as amended, read in its entirety as follows:
4. Capital Stock. The aggregate number of shares which the corporation
-------------
shall have the authority to issue shall be Thirty Million (30,000,000),
which shall consist of one class only known as common shares, with a
par value of One Cent ($.01) per share, which shares shall have
unlimited voting rights and shall be entitled to receive the net assets
of the corporation upon dissolution.
(END OF CHARTER AMENDMENT)
17
<PAGE>
Approval of the Charter Amendment will require the affirmative vote of a
majority of the outstanding shares of Common Stock entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF
THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION DESCRIBED HEREIN.
ITEM 5 - RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditor for the fiscal year ending September 27, 1997, and has
further directed that the selection of independent auditors be submitted for
ratification by the shareholders at the Annual Meeting. Ernst & Young LLP has
audited the Company's financial statements since 1989.
Shareholder ratification of the selection of Ernst & Young LLP as the Company's
independent auditor is not required by the Company's by-laws or otherwise.
However, the Board of Directors is submitting the selection of Ernst & Young LLP
to the shareholders for ratification as a matter of good corporate practice. If
the shareholders fail to ratify the selection, the Board of Directors will
reconsider whether or not to retain that firm. Even if the selection is
ratified, the Board of Directors in its discretion may direct the appointment of
a different independent auditors at any time during the year if the Board of
Directors determines that such a change would be in the best interests of the
Company and its shareholders.
The affirmative vote of the holders of a majority of the shares represented and
voting at the meeting will be required to ratify the selection of Ernst & Young
LLP. A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting, to be available to answer appropriate questions and to make a
statement if desired.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF
THE SELECTION OF THE AUDITORS DESCRIBED HEREIN.
SHAREHOLDER PROPOSALS FOR THE
1998 ANNUAL MEETING OF SHAREHOLDERS
Proposals of Shareholders that are intended to be presented at the Company's
1998 Annual Meeting of Shareholders (the "1998 Annual Meeting") must be received
by the Company no later than December 13, 1997, in order to be included in the
proxy statement and proxy relating to the 1998 Annual Meeting.
18
<PAGE>
OTHER BUSINESS
The Board of Directors knows of no other business that will be presented for
consideration at the Annual Meeting. If other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
BY ORDER OF THE DIRECTORS
G. DONALD MARKLE
SECRETARY
April 15, 1997
19
<PAGE>
EXHIBIT A
SSE TELECOM, INC.
1997 EQUITY PARTICIPATION PLAN
1. Purpose. The purpose of the SSE Telecom, Inc. 1997 Equity
Participation Plan (the "Plan") is to offer incentives and rewards to persons
who are officers, directors, employees, and consultants of SSE Telecom, Inc.
(the "Company"), or any of its subsidiaries, in recognition of their
contribution to the Company's progress and to induce such persons who are in a
position to contribute materially to the company's progress to remain with the
Company.
2. Effective Date. The Plan is effective as of the date of its adoption
by the Board, February 20, 1997, subject to approval by the shareholders of the
Company at the Company's 1997 Annual Meeting of shareholders.
3. Definitions.
"Affiliate" means any company in which the Company owns 20% or more
---------
of the equity interest (collectively, the "Affiliates").
"Board" means the Board of Directors of the Company.
-----
"Change of Control" shall be deemed to have taken place if (i) a
-----------------
third person, including a "group" as defined in Section 13(d)(3) of the Exchange
Act acquires shares of the Company having 15% or more of the total number of
votes that may be cast for the election of Directors of the Company; or (ii) as
the result of any cash tender or exchange offer, merger or other business
combination, sale of assets or contested election or any combination of the
foregoing transactions (a "Transaction"), the persons who were directors of the
Company before the Transaction shall cease to constitute a majority of the Board
of the Company or any successor to the Company.
"Code" means the Internal Revenue Code of 1986, as amended, and the
----
regulations thereunder, as amended from time to time.
"Committee" means the Compensation Committee of the Board, provided
---------
that if the requisite number of members of the Compensation Committee are not
Disinterested Persons, the Plan shall be administered by a committee, all of
whom are Disinterested Persons, appointed by the Board and consisting of two or
more directors with full authority to act in the matter. The term "Committee"
shall mean the Compensation Committee or the committee appointed by the Board,
as the case may be.
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"Common Stock" means the common stock, par value $0.01 per share, of
------------
the Company and shall include both treasury shares and authorized but unissued
shares and shall also include any security of the Company issued in
substitution, in exchange for, or in lieu of the common stock.
"Disinterested Person" means a person who is so defined for purposes
--------------------
of rule 16b-3 under the Exchange Act, or any successor provision, and who is
also defined as an "outside director" for purposes of section 162(m) of the Code
or any successor section.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations thereunder, as amended from time to time.
"Fair Market Value" means the closing price of the Common Stock, on
-----------------
the relevant date as reported on the NASDAQ National Market, or if no such
trading in the common stock shall have taken place on that day, on the last
preceding day on which there was such trading in the common stock.
"Incentive Stock Option" means an Option which is so defined for
----------------------
purposes of section 422 of the Code or any successor section.
"Insider" has the meaning set forth in subsection 14(g) of this Plan.
-------
"Nonqualified Stock Option" means any Option which is not an
-------------------------
Incentive Stock Option.
"Option" means a right to purchase a specified number of shares of
------
Common Stock at a fixed option price equal to no less than 100% of the Fair
Market Value of the Common Stock on the date the Option is granted pursuant to
an Option Agreement.
"Option Agreement" means a written agreement entered into between the
----------------
Company and a Participant setting forth the terms and conditions applicable to
the Option granted to the Participant.
"Option Price" has the meaning set forth in subsection 6(b) of this
------------
Plan.
"Participant" means an employee (including officers and directors who
-----------
also are employees) or a consultant of the Company or an Affiliate who the
Committee selects to participate in and receive Options or Restricted Shares
under this Plan (collectively, the "Participants").
"Restricted Shares" means shares of Common Stock that are restricted
-----------------
as provided in section 7 of this Plan.
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"Retirement" and "Retire" means the termination of employment on or
---------- ------
after the date the Participant is entitled to receive immediate payments under a
qualified retirement plan of the Company or an Affiliate; provided, however, if
the Participant is not eligible to participate under a qualified retirement plan
of the Company or its Affiliates then such Participant shall be deemed to have
retired if his termination of employment is on or after the date such
Participant has attained age 55.
"SAR" has the meaning set forth in subsection 6(k) of this Plan.
---
"Securities Act" means the Securities Exchange Act of 1933, as
--------------
amended.
"Total and Permanent Disability" means totally and permanently
------------------------------
disabled, as determined by the Committee.
4. Administration. All determinations under this Plan concerning the
selection of persons eligible to receive awards under the Plan and with respect
to the timing, pricing and amount of an award under the Plan shall be made by
the Committee. With respect to persons subject to Section 16 of the Exchange
Act, transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the
extent that any provision of the Plan or action by the Committee fails to so
comply, it shall be deemed to be null and void, to the extent permitted by law
and deemed advisable by the Committee.
5. Eligibility. The Committee shall from time to time select the Plan
Participants from those directors, officers, employees and consultants whom the
Committee determines either to be in a position to contribute materially to the
success of the Company or an Affiliate or to have in the past so contributed.
Only employees (including officers and directors who are employees) and
consultants of the Company and its Affiliates are eligible to participate in the
Plan. No Incentive Stock Option may be granted to an employee of an Affiliate
unless such Affiliate is a company which the Company owns at least 50% of the
equity interest.
6. Option Terms. The Committee shall determine and designate from time
to time those Participants to whom Options are to be granted and the number of
shares of Common Stock to be optioned to each. Such Options may be in the form
of Incentive Stock Options or in the form of Nonqualified Stock Options. After
granting an Option to a Participant, the Committee shall cause to be delivered
the Participant an Option Agreement evidencing the granting of the Option. The
Option Agreement shall be in such form as the Committee shall from time to time
approve. The terms and conditions of all Options granted under the Plan need not
be the same, but all Options must meet the applicable terms and conditions
specified in subsections 6(a) through 6(h).
(a) Period of Option. The period of each Option shall be no more than 10
years from the date it is granted.
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<PAGE>
(b) Option Price. The Option price shall be determined by the Committee,
but shall not in any instance be less than the Fair Market Value of the Common
Stock at the time that the Option is granted (the "Option Price").
(c) Vesting. The Committee shall have the power to set the time or times
within which the Option shall be exercisable, and to at any time accelerate the
time or times of exercise (notwithstanding the terms of the Option). Unless a
stock option agreement executed by the Participant expressly otherwise provides,
the Option shall become exercisable on a cumulative basis as to twenty-five
percent (25%) of the total number of shares covered thereby on each of the
first, second, third, and fourth anniversary dates of the date of grant of the
Option. However, in no event shall an Option become exercisable at a rate of
less than twenty percent (20%) of the total number of shares covered thereby per
year. Notwithstanding the foregoing, in the event of a Change of Control the
remaining portion of the Option shall become immediately vested and exercisable
in full.
(d) Exercise upon Termination. If the Participant's employment with the
Company or an Affiliate is terminated for any reason other than death,
Retirement or Total and Permanent Disability, the Option shall be exercisable
only for three months following such termination (or the expiration of the
option term, if earlier) and only for the number of shares of Common Stock which
were exercisable on the date of such termination. A termination of employment
with the Company or an Affiliate to accept immediate reemployment with the
Company or an Affiliate shall not be deemed to be a termination of employment
for purposes of the Plan.
(e) Exercise after Death, Retirement and Disability. If a Participant dies
or becomes Totally and Permanently Disabled, without having exercised the Option
in full, the remaining portion of such Option may be exercised, without regard
to the limitations in subsection 6(c), within a period not to exceed (i) three
years from the date of any such death or Total and Permanent Disability or (ii)
the remaining period of the Option. whichever is earlier. Upon a Participant's
death, the Option may be exercised by the person or persons to whom such
Participant's rights under the Option shall pass by will or by applicable law
or, if no such person has such rights, by his executor or administrator. If a
Participant Retires without having exercised the Option in full, the remaining
portion of such Option may be exercised, without regard to the limitations in
subsection 6(c), within a period not to exceed (i) five years (or such longer
period established by the Committee on the date the Option is granted) from the
date of such event or (ii) the remaining period of the Option, whichever is
earlier.
(f) Non-transferability. During the Participant's lifetime, Options shall
be exercisable only by such Participant. Options shall not be transferable other
than by will or the laws of descent and distribution upon the Participant's
death. Notwithstanding anything in this subsection 6(f) to the contrary, at the
same time as Nonqualified Stock Options are granted the Committee may also grant
to designated Participants the right to transfer such Options, to the extent
allowed under rule 16b-3 of the Exchange Act, subject to terms and conditions of
the Committee Rules on the date of grant.
A-4
<PAGE>
(g) Exercise; Notice Thereof. Options shall be exercised by delivering to
the Company, at the office of the Treasurer, written notice of the number of
shares with respect to which Option rights are being exercised and by paying in
full the Option Price of the shares at the time being acquired. Payment may be
made in cash, a check payable to the Company or in shares of Common Stock
transferable to the Company and having a Fair Market Value on the transfer date
equal to the amount payable to the Company. The date of exercise shall be
deemed to be the date the Company receives the written notice and payment for
the shares being purchased. A Participant shall have none of the rights of a
shareholder with respect to shares covered by such Option until the Participant
becomes the record holder of such shares.
(h) Purchase for Investment. It is contemplated that the Company will
register shares sold to Participants pursuant to the Plan under the Securities
Act. In the absence of an effective registration, however, a participant
exercising an Option hereunder may be required to give a representation that
he/she is acquiring such shares as an investment and not with a view to
distribution thereof.
(i) Limitations on Incentive Stock Option Grants.
(i) An Incentive Stock Option shall be granted only to an individual
who, at the time the Option is granted, does not own stock possessing
more than 10 percent of the total combined voting power of all
classes of stock of the Company or Affiliates.
(ii) The aggregate Fair Market Value of all shares with respect to
which Incentive Stock Options are exercisable for the first time by a
Participant during any calendar year shall not exceed $100,000. The
aggregate Fair Market Value of such shares shall be determined at the
time the Option is granted.
(j) Options for Nonresident Aliens. In the case of any Option awarded to a
Participant who is not a resident of the United States or who is employed by an
Affiliate other than an Affiliate that is incorporated, or whose place of
business is, in a state of the United States, the Committee may (i) waive or
alter the conditions set forth in subsections 6(a) through 6(h) to the extent
that such action is necessary to conform such Option to applicable foreign law,
or (ii) take any action, either before or after the award of such Option, which
it deems advisable to obtain approval of such Option by an appropriate
governmental entity; provided, however, that no action may be taken hereunder if
such action would (1) materially increase any benefits accruing to any
Participants under the Plan, (2) materially increase the number of securities
which may be issued under the Plan, (3) modify the requirements for eligibility
to participate in the Plan, (4) result in a failure to comply with applicable
provisions of the Securities Act, the Exchange Act or the Code or (5) result in
the disallowance of a deduction to the Company under section 162(m) of the Code
or any successor section.
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<PAGE>
(k) Election to Receive Cash Rather than Stock.
(i) At the same time as Nonqualified Stock Options are granted, the
Committee may also grant to designated Participants the right to
convert a specified number of shares of Common Stock covered by such
Nonqualified Stock Options to cash, subject to terms and conditions
of this subsection 6(k). For each such Option so converted, the
Participant shall be entitled to receive cash equal to the difference
between the Participant's Option Price and the Fair Market Value of
the Common Stock on the date of conversion. Such a right shall be
referred to herein as a Stock Appreciation Right ("SAR").
Participants to whom an SAR has been granted shall be notified of
such grant and of the Options to which such SAR pertains. An SAR may
be revoked by the Committee, in its sole discretion, at any time,
provided, however, that no such revocation may be taken hereunder if
such action would result in the disallowance of a deduction to the
Company under section 162(m) of the Code or any successor section.
(ii) A person who has been granted an SAR and who is an insider for
purposes of section 16 of the Exchange Act may exercise such SAR
during such periods as provided for in the rules promulgated under
section 16 of the Exchange Act. The SAR shall expire when the period
of the subject Option expires.
(iii) At the time a Participant pursuant to an SAR converts one or
more shares of Common Stock covered by an Option to cash, such
Participant must exercise one or more Nonqualified Stock Options,
which were granted at the same time as the Option subject to such
SAR, for an equal or greater number of shares of Common Stock. In the
event that the number of shares and the Option Price per share of all
shares of Common Stock subject to outstanding Options is adjusted as
provided Section 10 hereof, the above SARs shall automatically be
adjusted in the same ratio which reflects the adjustment to the
number of shares and the Option Price per share of all shares of
Common Stock subject to outstanding Options.
7. Restricted Shares.
(a) Awards. The Committee may from time to time in its discretion
award Restricted Shares to Participants and may determine the number of
Restricted Shares awarded and the terms and conditions of, and the amount
of payment, if any, to be made by the Participant for, such Restricted
Shares. Each award of Restricted Shares will be evidenced by a written
agreement executed on behalf of the Company by one or more members of the
Committee and containing terms and conditions not inconsistent with the
Plan as the Committee shall determine to be appropriate in its sole
discretion.
(b) Restricted Period; Lapse of Restrictions. At the time an award
of Restricted Shares is made, the Committee shall establish a period of
time (the "Restricted Period") applicable to such award which shall not be
less than one year nor more than ten years. Each
A-6
<PAGE>
award of Restricted Shares may have a different Restricted Period. At the
time an award is made, the Committee may, in its discretion, prescribe
conditions for the incremental lapse of restrictions during the Restricted
Period and for the lapse or termination of restrictions upon the occurrence
of other conditions in addition to or other than the expiration of the
Restricted Period with respect to all or any portion of the Restricted
Shares. Such conditions may include, without limitation, the death or Total
or Permanent Disability of the Participant to whom Restricted Shares are
awarded, Retirement of the Participant, or the occurrence of a Change of
Control. Such conditions may also include performance measures, which, in
the case of any such award of Restricted Shares to an employee who is a
"covered employee" within the meaning of section 162(m) of the Code, shall
be based on one or more of the following criteria: earnings per share,
market value per share, return on invested capital, return on operating
assets and return on equity. The Committee may also, in its discretion,
shorten or terminate the Restricted Period or waive any conditions for the
lapse or termination of restrictions with respect to all or any portion of
the Restricted Shares at any time after the date the award is made.
(c) Rights of Holder; Limitations Thereon. Upon an award of
Restricted Shares, a stock certificate representing the number of
Restricted Shares awarded to the Participant shall be registered in the
Participant's name and, at the discretion of the Committee, will be either
delivered to the Participant with an appropriate legend or held in custody
by the Company or a bank for the Participant's account. The Participant
shall generally have the rights and privileges of a shareholder as to such
Restricted Shares, including the right to vote such Restricted Shares,
except that the following restrictions shall apply: (i) with respect to
each Restricted Share, the Participant shall not be entitled to delivery of
an unlegended certificate until the expiration or termination of the
Restricted Period, and the satisfaction of any other conditions prescribed
by the Committee, relating to such Restricted Share; (ii) with respect to
each Restricted Share, such share may not be sold, transferred, assigned,
pledged, or otherwise encumbered or disposed of until the expiration of the
Restricted Period, and the satisfaction of any other conditions prescribed
by the Committee, relating to such Restricted Share; and (iii) all of the
Restricted Shares as to which restrictions have not at the time lapsed
shall be forfeited and all rights of the Participant to such Restricted
Shares shall terminate without further obligation on the part of the
Company unless the Participant has remained a regular full-time employee of
the Company or any of Affiliates, or a consultant to the Company or an
Affiliate under a post-employment consulting arrangement, until the
expiration or termination of the Restricted Period and the satisfaction of
any other conditions prescribed by the Committee applicable to such
Restricted Shares. Upon the forfeiture of any Restricted Shares, such
forfeited shares shall be transferred to the Company without further action
by the Participant. At the discretion of the Committee, cash and stock
dividends with respect to the Restricted Shares may be either currently
paid or withheld by the Company for the Participant's account, and interest
may be paid on the amount of cash dividends withheld at a rate and subject
to such terms as determined by the Committee. The Participant shall have
the same rights and privileges, and be subject to the same restrictions,
with respect to any shares received pursuant to section 10 hereof.
A-7
<PAGE>
(d) Delivery of Unrestricted Shares. Upon the expiration or
termination of the Restricted Period and the satisfaction of any other
conditions prescribed by the Committee, the restrictions applicable to the
Restricted Shares shall lapse and a stock certificate for the number of
Restricted Shares with respect to which the restrictions have lapsed shall
be delivered, free of all such restrictions, except any that may be imposed
by law, to the Participant or the Participant's beneficiary or estate, as
the case may be. The Company shall not be required to deliver any
fractional share of Common Stock but will pay, in lieu thereof, the Fair
Market Value (determined as of the date the restrictions lapse) of such
fractional share to the Participant or the Participant's beneficiary or
estate, as the case may be.
8. Shares Subject to the Plan. The number of shares of Common Stock
available with respect to Options and Restricted Shares granted under this Plan
shall not exceed 250,000 in the aggregate, subject to the adjustment provision
set forth in section 10 hereof. The shares of Common Stock subject to the Plan
may consist in whole or in part of authorized but unissued shares or of treasury
shares, as the Board may from time to time determine. Shares subject to Options
which become ineligible for purchase will be available for grant under the Plan
to the extent permitted by section 16 of the Exchange Act (or the rules and
regulations promulgated thereunder) and to the extent determined to be
appropriate by the Committee.
9. Cancellation of Option. If an Option which had been granted to a
Participant is canceled, the shares of Common Stock which had been subject to
such canceled Option shall continue to be counted against the maximum number of
shares for which Options may be granted to the Participant. In the event that
the number of Options which may be granted is adjusted as provided in Section 10
hereof, the above limits shall automatically be adjusted in the same ratio.
10. Changes in Capitalization. In the event there are any changes in the
Common Stock or the capitalization of the Company through a corporate
transaction, such as any merger, any acquisition through the issuance of capital
stock of the Company, any consolidation, any separation of the Company
(including a spin-off or other distribution of stock by the Company), any
reorganization of the Company (whether or not such reorganization comes within
the definition of such term in section 368 of the Code), or any partial or
complete liquidation by the Company, recapitalization, stock dividend, stock
split or other change in the corporate structure, appropriate adjustments and
changes shall be made by the Committee, to the extent necessary to preserve the
benefit to the Participants contemplated hereby, to reflect such changes in (a)
the aggregate number of shares subject to the Plan, (b) the maximum number of
shares for which Options may be granted to any Participant, (c) the number of
shares and Option Price per share of all shares of Common Stock subject to
outstanding options, (d) the number of shares available for awards of Restricted
Shares and (e) such other provisions of the Plan as may be necessary and
equitable to carry out the foregoing purposes; provided, however that no such
adjustment or change may be made to the extent that such adjustment or change
will result in the disallowance of a deduction to the Company under section
162(m) of the Code or any successor section.
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11. Effect on Other Plans. All benefits under the Plan shall constitute
special compensation and shall not affect the level of benefits provided to or
received by any Participant (or the Participant's estate or beneficiaries) as
part of any employee benefit plan of the Company or an Affiliate. The Plan shall
not be construed to affect in any way a Participant's rights and obligations
under any other plan maintained by the Company or an Affiliate on behalf of
employees.
12. Term. The Plan shall remain in effect until the tenth anniversary of
the date of its adoption by the Board, unless the Plan is terminated prior
thereto by the Committee. No Option may be granted, and no Restricted Shares
may be awarded, after the termination date of the Plan, but Options theretofore
granted shall continue in force beyond that date pursuant to their terms.
13. Purchase of Restricted Shares. To the extent permitted by the
regulations of the Federal Reserve Board governing margin requirements in effect
at the time of exercise of any Option or purchase of any Restricted Shares
(including any exemption from margin requirements for employee stock option
plans if such exemption is available), the Company may extend credit, or arrange
for the extension of credit, to each Participant who exercises an Option or
purchases Restricted Shares, at the time of such exercise or purchase, to
assist the Participant in the purchase of stock. Such credit will be
collateralized by the stock purchased and will be in an amount not greater than
the lesser of (i) the option or purchase price of the stock or (ii) the amount
of credit permitted by regulations of the Federal Reserve Board. The rate of
interest, terms of repayment and provisions for release of collateral with
respect to each such credit will be as determined by the Committee at the time
the credit is extended, but in any event shall be in accordance with any
applicable regulations of the Federal Reserve Board.
14. General Provisions.
(a) No Right of Continued Employment. Neither the establishment of
the Plan nor the payment of any benefits hereunder nor any action of the
Company, its Affiliates, the Board of Directors of the Company or its
Affiliates, or the Committee shall be held or construed to confer upon any
person any legal right to be continued in the employ of the Company or its
Affiliates, and the Company and its Affiliates expressly reserve the right
to discharge any Participant without liability to the Company, its
Affiliates, the Board of Directors of the Company or its Affiliates, or the
Committee, except as to any rights which may be expressly conferred upon a
Participant under the Plan.
(b) Binding Effect. Any decision made or action taken by the
Company, the Board or by the Committee arising out of or in connection with
the construction, administration, interpretation and effect of the Plan
shall be conclusive and binding upon all persons.
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(c) Inalienability of Benefits and Interest. Except as provided in
subsection 6(e), no benefit payable or interest in the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any such attempted action
shall be void and no such benefit or interest shall be in any manner liable
for or subject to debts, contracts, liabilities, engagements, or torts of
any Participant or beneficiary.
(d) Delaware Law to Govern. All questions pertaining to the
construction~ interpretation, regulation, validity and effect of the
provisions of the Plan shall be determined in accordance with the laws of
the State of Delaware.
(e) Purchase of Common Stock. The Company and its Affiliates may
purchase from time to time shares of Common Stock in such amounts as they
may determine for purposes of the Plan. The Company and its Affiliates
shall have no obligation to retain, and shall have the unlimited right to
sell or otherwise deal with for their own account, any shares of Common
Stock purchased pursuant to this paragraph.
(f) Use of Proceeds. The proceeds received by the Company from the
sale of Common stock pursuant to the exercise of Options shall be used for
general corporate purposes.
(g) Withholding. The Committee shall require the withholding of all
taxes as required by law. A Participant shall pay in cash any amount
required to be withheld under federal, state or local law with respect to
the exercise of an Option or may elect to have any portion of the federal,
state or local income tax withholding required with respect to an exercise
of a Nonqualified Stock Option satisfied by tendering to the Company shares
of Common Stock, which, in the absence of such an election would have been
issued to such Participant in connection with such exercise. In the event
that the value of the shares of Common Stock tendered to satisfy the
withholding tax required with respect to an exercise exceeds the amount of
such tax, the excess of such market value over the amount of such tax shall
be returned to the Participant, to the extent possible, in whole shares of
Common Stock, and the remainder in cash. The value of a share of Common
Stock tendered pursuant to this subsection 14(g) shall be the Fair Market
Value of the Common Stock on the date on which such shares are tendered to
the Company. An election pursuant to this subsection 14(g) shall be made in
writing and signed by the Participant. An election pursuant to this
subsection 14(g) is irrevocable. A Participant who exercises an Option and
who is required to report to the Securities and Exchange Commission under
section 16(a) of the Exchange Act (an "Insider") may satisfy the income tax
withholding due in respect of such exercise pursuant to this subsection
14(g) by withholding shares under the Option only if the Insider also
satisfies an exemption under section 16(a) of the Exchange Act (or the
rules or regulations promulgated thereunder) for such withholding.
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<PAGE>
(h) Amendments. The Committee may at any time amend, suspend, or
discontinue the Plan or alter or amend any or all Options and Option
Agreements under the Plan to the extent (1) permitted by law, (2) permitted
by the rules of any stock exchange on which the Common Stock or any other
security of the Company is listed, (3) permitted under applicable
provisions of the Securities Act and the Exchange Act (including rule 16b-
3) and (4) that such action would not result in the disallowance of a
deduction to the Company under section 162(m) of the Code or any successor
section (including the rules and regulations promulgated thereunder);
provided, however, that if any of the foregoing requires the approval by
shareholders of any such amendment, suspension or discontinuance, then the
Committee may take such action subject to the approval of the shareholders.
Except as provided in subsection 6(j) no such amendment, suspension, or
termination of the Plan shall, without the consent of the Participant,
adversely alter or change any of the rights or obligations under any
Options or other rights previously granted the Participant under the Plan.
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EXHIBIT B
SSE TELECOM, INC.
DIRECTORS' STOCK OPTION PLAN
1. Purpose. The purpose of the SSE Telecom, Inc. Directors' Stock Option
Plan (the "Plan") is to advance the interests of SSE Telecom, Inc. (the
"Company") and its stockholders by encouraging increased share ownership by
members of the Board of Directors (the "Board") of the Company who are not
employees of the Company or any of its subsidiaries, in order to promote long-
term shareholder value through continuing ownership of the Company's common
shares.
2. Administration. The Plan shall be administered by the Board. The Board
shall have all the powers vested in it by the terms of the Plan, such powers to
include authority (within the limitations described here) to prescribe the form
of the agreement embodying awards of nonqualified stock options made under the
Plan ("Options"). The Board shall, subject to the provisions of the Plan, grant
Options under the Plan and shall have the power to construe the Plan, to
determine all questions arising under it and to adopt and amend such rules and
regulations for the administration of the Plan as it may deem desirable. Any
decision of the Board in the administration of the Plan, as described herein
shall be final and conclusive. The Board may act only by a majority of its
members in office, except that the members of it may authorize any one or more
of their number or the Secretary or any other officer of the Company to execute
and deliver documents on behalf of the Board. No member of the Board shall be
liable for anything done or omitted to be done by him or by any other member of
the Board in connection with the Plan, except for his own willful misconduct or
as expressly provided by statute.
3. Participation. Each member of the Board of the Company who is not an
employee of the Company or any of its subsidiaries (a "Non-Employee Director")
shall be eligible to receive an Option in accordance with Paragraph 5 below. As
used here, the term "subsidiary" means any corporation at least 40% of whose
outstanding voting stock is owned, directly or indirectly, by the Company.
4. Awards Under the Plan.
(a) Type of Awards. Awards under the Plan shall include only Options,
which are rights to purchase common shares of the Company having a par value of
$.01 per share (the "common shares"). Such Options are subject to the terms,
conditions and restrictions specified in Paragraph 5 below.
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(b) Maximum Number of Shares That May Be Issued. There may be issued
under the Plan pursuant to the exercise of Options an aggregate of not more than
50,000 common shares, subject to adjustment as provided in Paragraph 6 below.
(c) Rights With Respect to Shares. A Non-Employee Director to whom an
Option is granted (and any person succeeding to such a Non-Employee Director's
rights pursuant to the Plan) shall have no rights as a shareholder with respect
to any common shares issuable pursuant to any such Option until the date of the
issuance of a stock certificate to him for such shares. Except as provided in
Paragraph 6 below, no adjustment shall be made for dividends, distributions or
other rights (whether ordinary or extraordinary, and whether in cash, securities
or other property) for which the record date is prior to the date such stock
certificate is issued.
5. Nonqualified Stock Option. Each Option granted under the Plan shall be
evidenced by an agreement in such form as the Board shall prescribe from time to
time in accordance with the Plan and shall comply with the following terms and
conditions:
(a) The Option exercise price shall be the fair market value of the
common shares subject to such Option on the date the Option is granted, which
shall be the closing price of a common share on the date of grant as reported by
the NASDAQ National Market or, if the NASDAQ National Market is closed on that
date, on the last preceding date on which the NASDAQ National Market was open
for trading.
(b) Each year, as of the date 30 days after election or re-election as
a member of the Board at the annual meeting of shareholders of the Company, each
Non-Employee Director shall automatically receive an Option for 2,500 common
shares. The Board shall also have the power to grant Options to Non-Employee
Directors serving on a Committee of the Board; the amount of such Option award
will be determined by the Board.
(c) The Option shall not be transferable by the optionee otherwise
than by will or the laws of descent and distribution, and shall be exercisable
during his lifetime only by him.
(d) The Option shall not be exercisable:
(i) before the expiration of one year from the date it is granted
and after the expiration of ten years from the date it is granted, and may be
exercised during such period as follows: one-third (33-1/3%) of the total number
of common shares covered by the Option shall become exercisable each year
beginning with the first anniversary of the date it is granted, provided that an
Option shall automatically become immediately exercisable in full when the Non-
Employee Director ceases to be a Non-Employee Director for any reason other than
death;
(ii) unless payment in full is made for the common shares being
acquired under it at the time of exercise. Such payment shall be made:
(A) in United States dollars by cash or check, or
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(B) in lieu of that, by tendering to the Company common
shares owned by the person exercising the Option and having a fair market value
equal to the cash exercise price applicable to such Option, such fair market
value to be the closing price of a common share on the date of exercise as
reported on the NASDAQ National Market, or, if the NASDAQ National Market is
closed on that date, on the last preceding date on which the NASDAQ National
Market was open for trading, or
(C) by a combination of United States dollars and common
shares as stated above; and
(iii) unless the person exercising the Option has been, at all
times during the period beginning with the date of grant of the Option and
ending on the date of such exercise, a Non-Employee Director of the Company,
except that
(A) if such person shall cease to be such a Non-Employee
Director for reasons other than death, while holding an Option that has not
expired and has not been fully exercised, such person, at any time within three
years of the date he ceased to be such a Non-Employee Director (but in no event
after the Option has expired under the provisions of subparagraph 5(d)(i)
above), may exercise the Option with respect to any common shares as to which he
has not exercised the Option on the date he ceased to be such a Non-Employee
Director; or
(B) if any person to whom an Option has been granted shall
die holding an Option that has not been fully exercised, his executors,
administrators, heirs or distributees, as the case may be, may, at any time
within one year after the date of such death (but in no event after the Option
has expired under the provisions of subparagraph 5(d)(i) above), exercise the
Option with respect to any shares as to which the decedent could have exercised
the Option at the time of death.
6. Dilution and Other Adjustment. In the event of any change in the
outstanding common shares of the Company by reason of any stock split, stock
dividend, recapitalization, merger, consolidation, reorganization, combination
or exchange of shares or other similar event, the number or kind of shares that
may be issued under the Plan pursuant to subparagraph 4(b) above, and the number
or kind of shares subject to, or the Option price per share under, any
outstanding Option shall be automatically adjusted so that the proportionate
interest of the participant shall be maintained as before the occurrence of such
event; such adjustment in outstanding Options shall be made without change in
the total Option exercise price applicable to the unexercised portion of such
Options and with a corresponding adjustment in the Option exercise price per
share, and such adjustment shall be conclusive and binding for all purposes of
the Plan.
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7. Miscellaneous Provisions
(a) Except as expressly provided for in the Plan, no Non-Employee
Director or other person shall have any claim or right to be granted an Option
under the Plan. Neither the Plan nor any action taken under this document shall
be construed as giving any Non-Employee Director any right to be retained in the
service of the Company.
(b) A participant's rights and interest under the Plan may not be
assigned or transferred in whole or in part either directly or by operation of
law or otherwise (except in the event of a participant's death, by will or the
laws of descent and distribution), including, but not by way of limitation,
execution, levy, garnishment, attachment, pledge, bankruptcy or in any other
manner, and no such right or interest of any participant in the Plan shall be
subject to any obligation or liability of such participant.
(c) No common shares shall be issued under this document unless
counsel for the Company shall be satisfied that such issuance will be in
compliance with applicable federal, state and other securities laws.
(d) It shall be a condition to the obligation of the Company to issue
common shares upon exercise of an Option, that the participant (or any
beneficiary or person entitled to act under subparagraph 5(d)(iii)(B) above) pay
to the Company, upon its demand, such amount as may be requested by the Company
for the purpose of satisfying any liability to withhold federal, state, local or
foreign income or other taxes. If the amount requested is not paid, the Company
may refuse to issue common shares.
(e) The expenses of the Plan shall be borne by the Company.
(f) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the issuance of shares upon exercise of any Option under the
Plan and issuance of shares upon exercise of Options shall be subordinate to the
claims of the Company's general creditors.
(g) By accepting any Option or other benefit under the Plan, each
participant and each person claiming under or through him shall be conclusively
deemed to have indicated his acceptance and ratification of, and consent to any
action taken under the Plan by the Company or the Board.
(h) The masculine pronoun means the feminine and the singular means
the plural wherever appropriate.
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(i) The appropriate officers of the Company shall cause to be filed
any reports, returns or other information regarding Options under this document
or any common shares issued pursuant to it as may be required by Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended, or any other
applicable statute, rule or regulation.
8. Amendment or Discontinuance. The Plan may be amended at any time and
from time to time by the Board as the Board shall deem advisable, provided,
however, that except as provided in Paragraph 6 above, the Board may not,
without further approval by the shareholders of the Company in accordance with
Paragraph 10 below, increase the maximum number of common shares as to which
Options may be granted under the Plan, reduce the minimum Option exercise price
described in subparagraph 5(a) above, extend the period during which Options may
be granted or exercised under the Plan or change the class of persons eligible
to receive Options under the Plan. No amendment of the Plan shall materially and
adversely affect any right of any participant with respect to any Option
theretofore granted without such participant's written consent.
9. Termination. This Plan shall terminate upon the earlier of the
following dates or events to occur:
(a) upon the adoption of a resolution of the Board terminating the
Plan; or
(b) five years from the date the Plan is initially approved and
adopted by the shareholders of the Company in accordance with Paragraph 10
below.
No termination of the Plan shall materially and adversely affect any of the
rights or obligations of any person, without his consent, under any Option
theretofore granted under the Plan.
10. Shareholder Adoption. The Plan shall be submitted to the shareholders
of the Company for their approval and adoption on or before September 1, 1997.
The Plan shall not be effective and no Option shall be granted hereunder unless
and until the Plan has been so approved and adopted. The shareholders shall be
deemed to have approved and adopted the Plan only if it is approved and adopted
at a meeting of the shareholders duly held on or before that date by vote taken
in the manner required by the laws of the State of Delaware.
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FORM OF PROXY
(FRONT)
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PROXY SSE TELECOM, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Daniel E. Moore, Frederick C. Toombs and
Eric H. van der Kaay, and each of them, with full power of substitution,
attorneys and proxies to appear and vote, as indicated below, all of the
shares of Common Stock of SSE Telecom, Inc. that the undersigned would be
entitled to vote at the annual meeting of the stockholders of SSE Telecom,
Inc. to be held on June 2, 1997, and at any and all reconvened sessions
thereof. The Board of Directors recommends a vote FOR the following
items:
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
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(BACK)
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Please mark your
votes as in this
X example.
---
FOR ALL OF THE
NOMINEES WITHHOLD
(except as marked to AUTHORITY NOMINEES: JEROME de VITRY
the contrary below) to vote for all CHARLES W. ERGEN
nominees DANIEL E. MOORE
1. ELECTION JOSEPH T. PISULA
OF LAWRENCE W. ROBERTS
DIRECTORS FREDERICK C. TOOMBS
----- ------- ERIK H. van der KAAY
OLIN L. WETHINGTON
FOR AGAINST ABSTAIN
2. APPROVAL OF 1997 EQUITY PARTICIPATION PLAN
------- ------- -------
3. APPROVAL OF 1997 DIRECTORS' STOCK OPTION PLAN
------- ------- -------
4. AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK FROM 10,000,000 TO 30,000,000
------- ------- -------
5. RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS
------- ------- -------
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE
NOMINEES FOR DIRECTOR, "FOR" PROPOSAL 2, "FOR" PROPOSAL 3,
"FOR" PROPOSAL 4, AND "FOR" PROPOSAL 5.S
SIGNATURE DATE
-------------------------------- ---------
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