<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or 240.14a-12
</TABLE>
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:
------------------------------------------------------------------------
<PAGE> 2
SSE TELECOM, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 20, 1998
The Annual Meeting of Shareholders of SSE TELECOM, INC. (the "Company")
will be held at the Tower Club, 8000 Towers Crescent Drive, Suite 1700, Vienna,
Virginia 22182, on March 20, 1998, 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 Employee Stock Purchase Plan.
3. To amend the 1997 Equity Participation Plan to increase by 175,000
shares the number of shares issuable thereunder.
4. To ratify the selection of Ernst & Young LLP as independent public
auditors for the Company.
5. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on January 26, 1998
are entitled to notice of and to vote at the meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
G. Donald Markle
Secretary
Fremont, California
February 9, 1998
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 A 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> 3
SSE TELECOM, INC.
47823 WESTINGHOUSE DRIVE
FREMONT, CALIFORNIA 94539
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MARCH 20, 1998
------------------------
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 March 20, 1998, 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
Tower Club, 8000 Towers Crescent Drive, Suite 1700, Vienna, Virginia 22182.
A copy of the Annual Report of the Company for its fiscal year ended
September 27, 1997, 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
February 9, 1998.
VOTING RIGHTS AND VOTES REQUIRED
Only shareholders of record on January 26, 1998 ("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
5,730,919 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 seven
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 a majority of the shares of Common
Stock represented at the Annual Meeting in person or by proxy and entitled to
vote will be required to approve the Company's Employee Stock Purchase Plan and
to approve the amendment to the 1997 Equity Participation Plan to increase the
total number of shares issuable thereunder. 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.
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 the ratification of Ernst & Young LLP as independent public auditors for the
Company, FOR approval of the Company's Employee Stock Purchase Plan, and FOR the
amendment to the 1997 Equity Participation Plan.
<PAGE> 4
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 seven
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. 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 seven persons. The by-laws
authorize a Board of Directors of one to nine members. No nominee or executive
officer has any family relationship with any other nominee or executive officer.
At the Annual Meeting of Shareholders held on June 2, 1997, the Board of
Directors consisting of eight members was elected. Effective December 29, 1997,
Frederick C. Toombs, resigned as a director. The seven nominees set forth below
are all of the nominees that are being proposed for election as directors.
2
<PAGE> 5
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.
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
- ----------------------- --- ---------------------------------------- --------------------
<S> <C> <C> <C>
Jerome de Vitry........ 37 Deputy General Manager of Alcatel Nov 1996 -- Present
Telspace, S.A.
Charles W. Ergen....... 45 Chief Executive Officer and Director of Mar 1995 -- Present
Echostar Communications Corporation
Daniel E. Moore........ 44 Chief Executive Officer of the Company Apr 1989 -- Present
and President of SSE Technologies, Inc.
and SSE Datacom, Inc., subsidiaries of
the Company.
Joseph T. Pisula....... 57 Chief Executive Officer of Network Mar 1995 -- Present
Storage Solutions, Inc.
Lawrence W. Roberts.... 58 Managing Partner of Technology June 1997 -- Present
Strategies & Alliances
Erik H. van der Kaay... 58 Executive Vice President of Allen May 1993 -- Present
Telecom Group, Inc.
Olin L. Wethington..... 49 Partner in the law firm of Steptoe & Feb 1994 -- Present
Johnson LLP
</TABLE>
Jerome de Vitry has served as a Director of the Company since November
1996. He is Deputy General Manager of Alcatel Telspace S.A. and Vice President
for radio communications of the Alcatel Telecom Radio, Space & Defense 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 is a leading Direct To Home (DTH) provider with over one million
subscribers in the continental United States. The Company has three high power
DBS satellites 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.
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. In May of 1997, Mr. Moore became Chief Executive
Officer of the Company and President of SSE Technologies Inc. and of SSE
Datacom, Inc., two subsidiaries of the Company. 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.
Joseph T. Pisula has served as a Director of the Company since March 1995.
He is a member of the Audit Committee 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
3
<PAGE> 6
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 has served as Director of the Company since June 1997.
He is a member of the Compensation Committee of the Board of Directors. He 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.
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 Committee of the Board
of Directors. 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 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 1997.
The Compensation Committee consists of Lawrence W. Roberts and Erik H. van
der Kaay. 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 Telecom, Inc.,
approves the form and terms of all incentive and stock option plans, and
prepares the Compensation Committee Report. The Compensation Committee met two
times during fiscal 1997.
The Executive Committee consists of Joseph T. Pisula and Erik H. van der
Kaay. The Executive Committee, as a sub-committee of the Board, meets with the
principal executive officers of the Company on matters involving the ongoing
business of the Company as appropriate from time-to-time, as determined by the
Board.
4
<PAGE> 7
The Board of Directors met six times in regularly scheduled and special
meetings during fiscal 1997. 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 one meeting. Each incumbent
director attended all 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
September 29, 1996, through September 27, 1997, 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. In November of 1997,
the Company purchased Alcatel's Media4 convertible debenture for $175,000 plus
accrued interest. Including the initial investment and as of January 7, 1998,
the Company has invested approximately $965,000 in Media4 common stock and
$350,000 in Media4 convertible 7% debentures. The convertible debt is due in
four 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, has served as a Director of SSE Telecom since November 1996.
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 $2.2
million and purchases from Alcatel Telspace of $3.5 million, during fiscal 1997.
As of September 27, 1997 the Company had trade receivables and payables with
Alcatel Telspace of $795,000 and $2,237,000, 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 27,
1997, the Company had an outstanding balance of $4,075,000 in its 6 1/2%
convertible subordinated debentures due March 1, 2001, payable to Echostar. The
debentures are convertible
5
<PAGE> 8
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. The Company repaid
$675,000 of the debenture principal and $130,000 of debenture interest prior to
fiscal year end.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of January 26, 1998,
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, Director(1).................................. 131,237 2.4
Daniel E. Moore, Chief Executive Officer and Director(2).......... 295,817 5.1
Jerome de Vitry, Director......................................... 0 n/a
Charles W. Ergen, Director(3)..................................... 10,000 *
Joseph T. Pisula, Director(4)..................................... 15,000 *
Lawrence W. Roberts, Director..................................... 0 n/a
Frank S. Trumbower(5)............................................. 406,720 7.1
Erik H. van der Kaay, Director(6)................................. 14,500 *
Olin L. Wethington, Director(7)................................... 22,500 *
James D. Bletas, Vice President................................... 0 n/a
Claudio S. Mariotta, Vice President(8)............................ 10,000 *
Alcatel Telspace, S.A.(9)......................................... 925,000 16.1
Kennedy Capital Management, Inc................................... 515,640 9.0
Directors and Executive Officers
as a Group (9 persons)(10)...................................... 499,054 8.71
</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.
(1) The number of shares includes exercisable options for 20,000 shares. Mr.
Toombs resigned as a Director of the Company effective December 29, 1997.
(2) The number of shares includes exercisable options for 37,500 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 $2,740,000 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 10,000 shares.
(5) The number of shares includes exercisable options for 10,000 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.
6
<PAGE> 9
(6) The number of shares includes exercisable warrants for 5,000 shares and
exercisable options for 7,500 shares, and 2,000 shares owned by Mr. van der
Kaay's spouse.
(7) The number of shares includes exercisable warrants for 5,000 shares and
exercisable options for 12,500 shares.
(8) The number of shares includes exercisable options for 7,500 shares.
(9) The number of shares includes exercisable warrants for 300,000 shares.
(10) 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 $100,000 during the last fiscal year, information concerning
compensation paid for services to the Company in all capacities during the
fiscal year ended September 27, 1997, as well as total compensation paid to each
such individual for the Company's previous two fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION
------------------ ------------ ALL OTHER
SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
- -------------------------------------- ----- ------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Frederick C. Toombs(9) 1997 185,199 -- -- 99,612(1,7,8)
President of SSE Telecom, Inc., 1996 174,636 -- -- 12,908(1)
SSE Technologies, Inc. and 1995 171,539 21,750(3) -- 9,729(1)
SSE Datacom, Inc.
Daniel E. Moore(10) 1997 172,596 -- 40,000 11,810(1)
Exec. VP and CEO SSE Telecom, 1996 150,958 -- -- 10,408(1)
SSE Technologies Inc., 1995 133,532 16,380(3) -- 17,590(4)
and SSE Datacom, Inc.
Claudio S. Mariotta 1997 136,658 -- 22,000 5,885(1)
Exec. VP, SSE Telecom, Inc.
James D. Bletas 1997 89,645(2) 17,113(6) 45,000 5,270(1)
Exec. VP, SSE Telecom, Inc.
</TABLE>
- ---------------
(1) Includes car allowance and employee insurance and 401k benefits.
(2) Employed for less than a full year.
(3) Bonus payments relate to fiscal year 1994.
(4) Includes car allowance reimbursement for two years, fiscal 1994 and 1995.
(5) Bonus payments relate to fiscal year 1996.
(6) Includes sales commission related to fiscal year 1997.
(7) Includes accrued vacation payout.
(8) Includes gain on difference between exercise and sales price for stock
options.
(9) Effective June 30, 1997, Mr. Toombs resigned from his position as President
of SSE Telecom, Inc., SSE Technologies, Inc., and SSE Datacom, Inc. He now
serves as Special Assistant to the President of SSE Telecom, Inc.
(10) Effective June 3, 1997, Mr. Moore was named Chief Executive Officer and
President of SSE Telecom, Inc.
7
<PAGE> 10
EMPLOYMENT ARRANGEMENTS
The Company has employment agreements with Frederick C. Toombs, Daniel E.
Moore, Claudio Mariotta, and James D. Bletas. The agreements for Mr. Toombs and
Mr. Moore provide, among other things, for a bonus in the event that the Company
is sold at certain stock price. The agreements for Messrs. Moore, Mariotta, and
Bletas provide, among other things, for severance payments in the event the
Company terminates employment other than for just cause, and including
termination associated with the sale of the Company. The severance would be in
monthly installments and benefits would be continued during the payment period.
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 27, 1997.
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>
Daniel E. Moore....... 40,000 9.9% $6.88 6/2/02 75,977 167,890
Claudio S. Mariotta... 15,000 3.72% $7.25 2/20/02 30,045 66,392
7,000 1.74% $6.88 6/2/02 13,296 29,381
James D. Bletas....... 30,000 7.45% $7.38 3/3/02 61,127 135,075
15,000 3.72% $6.88 6/2/02 28,491 62,958
</TABLE>
The following table shows, as to individuals named in the Summary
Compensation table above, information concerning stock options exercised during
the fiscal year ended September 27, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
SHARES VALUE OF UNEXERCISED
ACQUIRED NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ON VALUE OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END($)(2)
EXERCISE REALIZED ----------------------------- -----------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frederick C. Toombs......... 20,000 63,700 20,000 10,000 -- --
Daniel E. Moore............. -- -- 37,500 52,500 -- --
Claudio S. Mariotta......... -- -- 7,500 44,500 -- --
James D. Bletas............. -- -- -- 45,000 -- --
</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.
(2) Market value of underlying securities based on the closing price of the
Company's Common Stock on September 26, 1997. (the last trading day prior to
September 27, 1997) on the NASDAQ National Market System of $5.25 minus the
exercise price.)
8
<PAGE> 11
DIRECTOR COMPENSATION
The Board of Directors fixes the compensation of directors. During fiscal
1997, 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 regular meeting attended, and for attendance at meetings of committees
of the Board held on a date other than a regular Board meeting date, $250.
Messrs. Pisula, van der Kaay, and Wethington each received options to
purchase 5,000 shares of the Company's common stock in connection with their
service as directors for the prior fiscal year. Effective June 2, 1997, the
shareholders of the Company approved the Directors' Stock Option Plan for
non-employee directors, under which Messrs. de Vitry, Ergen, Pisula, van der
Kaay, and Wethington were granted options to purchase 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 two outside directors, Messrs. Roberts and van der Kaay. The
Committee administers the Company's Executive Compensation Program. Participants
in the Executive Compensation Program in 1997 were Claudio S. Mariotta, James D.
Bletas, Jacques Couet, Daniel E. Moore, and Frederick C. Toombs (through June
30, 1997). 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 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.
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.
9
<PAGE> 12
STOCK OPTION PLAN
The stock option plans are the Company's principal long-term incentive
plans for executive officers and key employees. 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 employees 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 employees 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 1997 for any executive officer.
REPORT SUMMARY
The Committee has reviewed the total compensation of the Chief Executive
Officer of the Company, Daniel E. Moore, and the other highest paid executive
officers of the Company in fiscal 1997, Claudio S. Mariotta, Frederick C. Toombs
and James Bletas. The Committee has concluded that their compensation is
reasonable and consistent with the Company's compensation philosophy and
industry practice.
COMPENSATION COMMITTEE
Erik H. van der Kaay
Lawrence W. Roberts
10
<PAGE> 13
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.
<TABLE>
<CAPTION>
Measurement Period 'SSE TELECOM,
(Fiscal Year Covered) INC.' INDUSTRY INDEX BROAD MARKET
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 290.32 198.18 130.05
1994 158.06 213.43 137.62
1995 216.13 289.77 167.10
1996 219.35 220.14 195.08
1997 158.06 293.62 265.16
</TABLE>
The information for this chart was provided by Media General Financial
Services, P.O. Box 85333, Richmond, VA. 23293
ITEM 2 -- APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN
At a meeting of the Board of Directors of the Company on January 21, 1998,
the Board of Directors unanimously approved and recommended to the shareholders
the adoption of the Employee Stock Purchase Plan for employees of the Company
and its subsidiaries (the "Stock Purchase Plan"). The Stock Purchase Plan was
established pursuant to the provisions of Section 423 of the Code, and the
principal features of the Plan are summarized below. All statements made in the
following summary of the Stock Purchase Plan are qualified by reference to the
full text of the Stock Purchase Plan attached to this Proxy Statement as Exhibit
A.
PURPOSE
The purpose of the Stock Purchase Plan is to provide a method whereby all
eligible employees of the Company may acquire a proprietary interest in the
Company through the purchase of Common Stock. Under the Stock Purchase Plan,
payroll deductions are used to purchase the Company's Common Stock.
RESERVATION OF SHARES
An aggregate of 150,000 shares of Common Stock of the Company will be
reserved for issuance under the Stock Purchase Plan. In the event of corporate
changes affecting the Company's Common Stock, such as reorganizations, share
splits, share dividends, mergers, consolidations or otherwise, the Company will
make appropriate adjustments in the number of shares reserved under the Stock
Purchase Plan. The Board of
11
<PAGE> 14
Directors believes that the Stock Purchase Plan will serve as an incentive for
the Company to retain employees of training, experience and ability, to
encourage the sense of proprietorship of such persons and to stimulate the
active interest of such persons in the development and financial success of the
Company.
ADMINISTRATION
The Plan is administered by the Company's Chief Financial Officer, Director
of Human Resources, and another member of senior management (the "Committee").
All determinations by the Committee are final and conclusive.
ELIGIBILITY
All employees (including officers of the Company) as of the commencement of
any offering period under the Stock Purchase Plan are eligible to participate in
the Stock Purchase Plan. The employee must enroll in the Plan prior to the
commencement of any such offering periods by authorizing payroll deductions of
any whole percentage from one percent (1%) to ten percent (10%) of such
participant's compensation (as defined to include, without limitation, overtime,
shift premium and bonuses) to be applied toward the purchase of the Company's
Common Stock. No employee shall be eligible to enroll under the Stock Purchase
Plan who, at the time of enrollment, owns stock possessing 5% or more of the
total combined voting power of the Company. The Company estimates that
approximately 208 employees are eligible to participate in the Stock Purchase
Plan. All executive officers and eligible employees of the Company are entitled
to participate in the Stock Purchase Plan.
PURCHASE TERMS
An employee electing to participate in the Stock Purchase Plan must
authorize a whole percentage (not less than 1% nor more than 10%) of the
employee's compensation to be deducted by the Company from the employee's pay
during each pay period included within the offering periods (the "Offering
Periods"). Unless otherwise determined by the Committee, the semi-annual
Offering Periods commence on the first day of May and on the first day of the
following November, and terminate on the 31st day of October and on the 30th day
of April, respectively, with the last Offering Period commencing on May 1, 1999
(except that the first Offering Period is expected to be for a period from
November 1, 1997, to April 30, 1998). On the first business day of each of the
Offering Periods, the Company will grant to each participant an option to
purchase shares of Common Stock of the Company. On the last day of each of the
Offering Periods, the employee will be deemed to have exercised this option, at
the option price, to the extent of such employee's accumulated payroll
deductions. In no event, however, may the employee purchase Common Stock having
a fair market value (measured at the commencement of the Offering) in excess of
$25,000. The option price under the Stock Purchase Plan is equal to 85% of the
fair market value of the Common Stock on either the first business day or last
business day of the applicable Offering Period, whichever is lower. No interest
will be paid on amounts deducted from an employee's pay and used to purchase
Common Stock under the Stock Purchase Plan. The maximum number of shares of
Common Stock to be issued in each Offering Period shall be 37,500, plus unissued
shares from any prior Offering Periods, whether offered or not.
A participant may voluntarily withdraw from the Stock Purchase Plan at any
time by giving at least 5 days notice to the Company prior to the end of the
Offering Period and shall receive on withdrawal the cash balance (without
interest) then held in the participant's account. Upon termination of employment
for any reason, including resignation, discharge, disability or retirement, or
upon the death of a participant, the balance of the participant's account
(without interest) shall be paid to the participant or his or her designated
beneficiary. However, in the event of the participant's death, the participant's
beneficiary may elect to exercise the participant's option to purchase such
number of full shares which such participant's accumulated payroll deductions
will purchase at the applicable purchase price. Amendment or Termination
The Board of Directors may at any time amend, suspend or discontinue the
Stock Purchase Plan provided no such suspension or discontinuance may adversely
affect any outstanding options. The Stock Purchase Plan provides that, without
shareholder approval, no amendment may (i) increase materially the maximum
12
<PAGE> 15
number of shares issuable under the Stock Purchase Plan (except for adjustments
as a result of corporate changes affecting the Company's Common Stock
specifically authorized in the Stock Purchase Plan), (ii) increase materially
the benefits accruing to participants under the Stock Purchase Plan or (iii)
modify materially the requirements as to eligibility for participation in the
Plan. The Stock Purchase Plan will terminate by its own terms on October 31,
1999.
MISCELLANEOUS
The proceeds received by the Company from the sale of Common Stock pursuant
to the Stock Purchase Plan will be used for general corporate purposes. The
Company is not obligated to hold the accrued payroll deductions in a segregated
account. The Stock Purchase Plan will be effective as of the date on which each
of the following shall have occurred: (i) this Stock Purchase Plan shall have
been approved by the shareholders of the Company and (ii) a registration
statement for the Stock Purchase Plan shall have become effective under the
Securities Act of 1933, as amended.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following general description of federal tax consequences is based on
current statutes, regulations and interpretations, and does not include possible
state or local income tax consequences. The Stock Purchase Plan is intended to
qualify as an "Employee Stock Purchase Plan" within the meaning of Section 423
of the Code with the following principal tax consequences.
Amounts deducted from a participant's pay under the Stock Purchase Plan are
included in the participant's compensation subject to federal income and
employment taxes. The Company will withhold taxes on these amounts.
The purchase of shares of Common Stock under the Stock Purchase Plan will
not result in an employee's realization of taxable income, thus permitting
employees to acquire stock in the Company without immediate tax consequences. An
employee who does not dispose of the Common Stock so purchased until at least
two years after the date of enrollment and 12 months after the date of purchase
will also receive long-term capital gain treatment for any appreciation in the
value of such employee's Common Stock over the fair market value at the time
enrollment for the calendar year such purchase is effective. Such capital gain
treatment is not, however, available for the 15% discount at which the Common
Stock is initially purchased, and an employee who meets the holding requirements
above is required to include as ordinary income at the time of such employee's
death or disposition of such employee's Common Stock the lesser of (i) the
excess of its fair market value over the price at the time enrollment is
effective or (ii) the excess of its fair market value at the time of disposition
or death over the amount such employee actually paid for such shares. If an
employee sells such employee's Common Stock under such circumstances for less
than such employee paid for such shares, there is no ordinary income and such
employee will realize a long-term capital loss on that difference. Any ordinary
income realized by an employee will increase the basis of such employee's Common
Stock for purposes of determining the amount of any gain or loss realized upon
its disposition.
With limited exceptions, an employee who fails to retain Common Stock
purchased under the Stock Purchase Plan until at least two years after the
effective date of enrollment and 12 months after the date of purchase is
considered to have made a "disqualifying disposition" and forfeits the special
tax treatment extended under Section 423 of the Code. In general, such an
employee recognizes ordinary income at the time of such disposition equal to the
excess of the fair market value of the Common Stock at the exercise date over
the purchase price paid. Such fair market value as of the exercise date becomes
the tax basis for determining any further gain or loss at the time of
disposition of the Common Stock. In determining whether that gain or loss is
long-term or short-term, the holding period is calculated from the date of
purchase. A capital gain or loss is long-term if the shares have been held for
more than 12 months.
The Company is entitled to a deduction equal to the amount of ordinary
income realized by an employee who makes a disqualifying disposition. Otherwise,
the Company is not entitled to any deduction on account of the purchase of
Common Stock under the Stock Purchase Plan or the subsequent sale by employees
of Common Stock purchased Pursuant to the Stock Purchase Plan.
13
<PAGE> 16
The approval of the adoption of the Stock Purchase Plan requires the
affirmative vote of a majority of the shares of Common Stock present or
represented by properly executed and delivered proxies, and entitled to vote, at
the Meeting. A copy of the Stock Purchase Plan, as proposed for adoption, is
attached to this Proxy Statement as Exhibit A.
The Board of Directors recommends a vote "FOR" the adoption of the Stock
Purchase Plan. Proxies solicited by the Board of Directors will be so voted
unless shareholders specify otherwise.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF
THE EMPLOYEE STOCK PURCHASE PLAN DESCRIBED HEREIN AND
SET FORTH IN EXHIBIT A HERETO.
ITEM 3 -- AMENDMENT TO THE 1997 EQUITY PARTICIPATION PLAN TO INCREASE THE TOTAL
NUMBER OF SHARES ISSUABLE THEREUNDER
Subject to approval by the Company's shareholders, the Board of Directors
amended the 1997 Equity Participation Plan on January 21, 1998 to increase the
number of shares of Common Stock issuable thereunder by 175,000 shares and to
reserve the additional shares for issuance under the 1997 Equity Participation
Plan, bringing the total number of shares of Common Stock subject to the 1997
Equity Participation Plan to 425,000. Effective June 2, 1997, the shareholders
of the Company approved the 1997 Equity Participation Plan. As of January 19,
1998, options to purchase an aggregate of 140,000 shares of Common Stock have
been granted under the Plan. The Board believes it is desirable to increase the
authorized number of shares of Common Stock issuable under the 1997 Equity
Participation Plan 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 an
acquisition of a new line of business and other general corporate purposes.
If the amendment to the 1997 Equity Participation Plan is approved, Section
8 would, as amended, read in its entirety as follows:
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 425,000 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.
(END OF AMENDMENT)
Approval of the addition of 175,000 shares of Common Stock to the pool of
shares reserved for issuance thereunder will require the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock present or
represented at the annual meeting of shareholders and entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
APPROVAL OF THE AMENDMENT TO THE 1997 EQUITY
PARTICIPATION PLAN DESCRIBED HEREIN.
ITEM 4 -- 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 December 18, 1998, 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.
14
<PAGE> 17
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 September 26, 1998, in order to be
included in the proxy statement and proxy relating to the 1998 Annual Meeting.
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
February 9, 1998
15
<PAGE> 18
EXHIBIT A
SSE TELECOM, INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I -- PURPOSE
1.01. Purpose.
This SSE Telecom, Inc. 1997 Employee Stock Purchase Plan (the "Plan") is
being established for the benefit of employees of SSE Telecom, Inc., a Delaware
corporation (the "Company"), its wholly owned subsidiaries and any subsequently
designated subsidiaries of the Company. The Plan is intended to provide the
employees of the Employer with an opportunity to purchase common shares, $0.01
par value, of the Company through accumulated payroll deductions. It is the
intention of the Company that the Plan qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Code, and the provisions of the
Plan shall be construed in a manner consistent with the requirements of such
Section of the Code.
ARTICLE II -- DEFINITIONS
2.01. "Total Compensation" means regular earnings, including payments for
overtime, shift premium, bonuses and other special payments, commissions and
other incentive payments.
2.02. "Committee" means the individuals described in Article X.
2.03. "Common Stock" or "Stock" means the Common Stock, $0.01 par value,
of the Company.
2.04. "Employee" means any person who is customarily employed on a
full-time or part-time basis by the Company and is regularly scheduled to work
more than 20 hours per week and more than five months per calendar year.
2.05. "Plan Administrator" means the Company's Director of Human
Resources.
ARTICLE III -- ELIGIBILITY AND PARTICIPATION
3.01. Initial Eligibility.
Except as otherwise provided in the Plan, each and every Employee of the
Company shall be eligible to participate in Offerings (as hereinafter defined)
which commence on or after the respective Employee's commencement date of
employment.
3.02. Leave of Absence.
For purposes of participation in the Plan, an Employee on leave of absence
shall be deemed to be an Employee for the first one hundred eighty (180) days of
such leave of absence, and such Employee's employment shall be deemed to
terminate at the close of business on the 180th day of such leave of absence
unless such Employee shall have returned to regular full-time or part-time
employment (as the case may be) prior to the close of business on such 180th
day. Termination of any Employee's leave of absence, other than termination of
such leave of absence by return to full time or part time employment, shall
terminate an Employee's employment for all purposes of the Plan, and shall
terminate such Employee's participation in the Plan and right to exercise any
option hereunder.
3.03. Restrictions on Participation.
Notwithstanding any provisions of the Plan to the contrary, no Employee
shall be granted an option under the Plan if:
(a) immediately after the grant, such Employee would own Common Stock
and/or hold outstanding options to purchase Common Stock possessing 5% or
more of the total combined voting power or
A-1
<PAGE> 19
value of all classes of stock of the Company (for purposes of this
paragraph, the rules of Section 424(d) of the Code shall apply in
determining stock ownership of any Employee); or
(b) such option permits such Employee's rights to purchase Common
Stock under all employee stock purchase plans of the Company to accrue at a
rate which exceeds $25,000 in fair market value of the Common Stock
(determined at the time such option is granted) for the calendar year in
which such option is outstanding.
3.04. Commencement of Participation.
An eligible Employee may become a participant by completing an
authorization for a payroll deduction on the form provided by the Company and
delivering it to the Plan Administrator on or before the date set therefor by
the Committee, which date shall be prior to the Offering Commencement Date for
the Offering (as such terms are defined below). Payroll deductions for a
participant shall commence on the applicable Offering Commencement Date when his
or her authorization for a payroll deduction becomes effective and shall end on
the offering termination Date (as hereinafter defined) of the Offering to which
such authorization is applicable, unless sooner terminated by the participant as
provided in Article VIII.
ARTICLE IV -- OFFERINGS
4.01. Semi-Annual Offerings.
The Plan will be implemented through four (4) semi-annual offerings (the
"Offerings" and each an "Offering") of the Company's Common Stock. The initial
Offering shall commence on November 1, 1997, and shall terminate on April 30,
1998. The subsequent Offerings shall commence on the first day of the following
May and on the first day of the following November, and shall terminate on the
on the 31st day of October and the 30th day of April, respectively, with the
last Offering commencing on May 1, 1999. The maximum number of shares of the
Company's Common Stock to be issued in each Offering shall be thirty-seven
thousand five hundred (37,500), plus unissued shares from any prior Offerings,
whether offered or not.
As used in the Plan, "Offering Commencement Date" means November 1, or May
1, as the case may be, on which the particular Offering begins and "Offering
Termination Date" means the April 30 or October 31, as the case may be, on which
the particular Offering terminates.
ARTICLE V -- PAYROLL DEDUCTIONS
5.01. Amount of Deduction.
At the time a participant files his or her authorization for payroll
deduction, he or she shall elect to have deductions made from his or her pay on
each payday during the time he or she is a participant in an Offering at a rate
not less than one percent (1%) and not more than ten percent (10%) of his or her
Total Compensation in effect at the Offering Commencement Date of such Offering.
5.02. Participant's Account.
All payroll deductions from Total Compensation made for a participant shall
be credited to his or her account under the Plan (a "Plan Account"). A
participant may not make any separate cash payment into his or her Plan Account
except when on leave of absence and then only as provided in Section 5.04.
5.03. Changes in Payroll Deductions.
A participant may increase payroll deductions at the commencement date of
each offering period. Employees may decrease, or discontinue his or her
participation in the Plan any time during the six month offering period.
5.04. Leave of Absence.
If a participant goes on a leave of absence, such participant shall have
the right to elect: (a) to withdraw the balance in his or her Plan Account
pursuant to Section 7.02, (b) to discontinue contributions to the Plan
A-2
<PAGE> 20
but remain a participant in the Plan, or (c) remain a participant in the Plan
during such leave of absence, authorizing deductions to be made from payments by
the Company to the participant during such leave of absence and undertaking to
make cash payments to the Plan at the end of each payroll period to the extent
that amounts payable by the Company to such participant are insufficient to meet
such participant's authorized Plan deductions.
5.05. Limitations on Plan Deductions.
Notwithstanding any provisions of the Plan to the contrary, no deduction
shall be made from an Employee's Base Pay, and no contribution to an Employee's
Plan Account pursuant to Section 5.04 shall be accepted, to the extent that such
deduction or such contribution would cause the balance in such Employee's Plan
Account to exceed the sum of $10,000 at any time.
ARTICLE VI -- GRANTING OF OPTION
6.01. Number of Options Shares.
Subject to Section 5.05 hereof, on the Offering Commencement Date of each
Offering, a participating Employee shall be deemed to have been granted an
option to purchase a maximum number of shares of the Common Stock of the Company
equal to an amount determined as follows:
(a) that percentage of the Employee's Total Compensation which he or
she has elected to have deducted (but not in any case in excess of ten
percent (10%), multiplied by
(b) the Employee's Total Compensation during the period of the
Offering plus rollovers pursuant to Section 7.03, divided by
(c) the option price of common stock as defined in section 6.0.2.
For purposes of subsection (d) of this Section 6.01, the market value of
the Company's Common Stock shall be determined as provided in subsections (a)
and (b) of Section 6.02 below.
6.02. Option Price.
The option price of Common Stock purchased with payroll deductions made
during an Offering for a participant therein shall be the lower of:
(a) 85% of the closing price of the Common Stock on the Offering
Commencement Date or the nearest prior business day on which trading
occurred on NASDAQ; or
(b) 85% of the closing price of the Common Stock on the offering
Termination Date or the nearest prior business day on which trading
occurred on NASDAQ.
If the Common Stock of the Company is not admitted to trading on any of the
aforesaid dates for which closing prices of the Common Stock are to be
determined, then reference shall be made to the fair market value of the Common
Stock on that date, as determined on such basis as shall be established or
specified for the purposes hereof by the Committee.
ARTICLE VII -- EXERCISE OF OPTION
7.01. Automatic Exercise.
Unless a participant gives written notice to the Company as hereinafter
provided, his or her option for the purchase of Common Stock with payroll
deductions made during any Offering ill be deemed to have been exercised
automatically on the Offering Termination Date applicable to such Offering, for
the purchase of the number of full shares of Common Stock which the accumulated
payroll deductions in his or her Plan Account at that time will purchase at the
applicable option price (but not in excess of the number of shares for which
options have been granted to the Employee pursuant to Section 6.01), and any
excess in his or her Plan
A-3
<PAGE> 21
Account will roll forward to the next Offering period, until the last Offering
period when the excess will be returned to him or her.
7.02. Withdrawal of Plan Account.
By written notice to the Plan Administrator not less than five (5) business
days prior to the Offering Termination Date applicable to any Offering, a
participant may elect to withdraw all the accumulated payroll deductions in his
or her Plan Account at such time.
7.03. Fractional Shares.
Fractional shares will not be issued under the Plan and any balance in an
Employee's Plan Account which would have been used to purchase fractional shares
will roll forward to the next Offering period, until the last Offering period
when the excess will be returned to the participant.
7.04. Transferability of Option.
During a participant's lifetime, options held by the participant shall be
exerciseable only by the participant.
7.05. Delivery of Stock.
As promptly as practicable after the Offering Termination Date of each
Offering, the Company will deliver to each participants Plan Account the Common
Stock purchased upon exercise of his or her option.
ARTICLE VIII -- WITHDRAWAL
8.01. In General.
As indicated in Section 7.02, a participant may withdraw payroll deductions
credited to his or her Plan Administrator no later than five (5) business days
prior to the Offering Termination Date applicable to any Offering. Upon the
Company's timely receipt of the Withdrawal Notice, a participant's withdrawal
from any Offering will not have any effect upon his or her participation in any
succeeding Offering, or in any similar plan which may hereafter be adopted by
the Company.
8.02. Effect on Subsequent Participation
Unless a participant expressly indicates to the contrary in the Withdrawal
Notice, a participant's withdrawal from any Offering will not have any effect
upon his or her participation in any succeeding Offering, or in any similar plan
which may hereafter be adopted by the Company.
8.03. Termination of Employment.
Upon termination of the participant's employment for any reason, including
retirement (but excluding death while in the employ of the Company or
continuation of a leave of absence for a period beyond one hundred eighty (180)
days, the payroll deductions credited to his or her Plan Account will be
returned to him or her, or, in the case of his or her death subsequent to the
termination of his or her employment, to the person or persons entitled thereto
under Section 11.01.
8.04. Termination of Employment Due to Death.
Upon termination of the participant's employment because of his or her
death, his or her beneficiary (as defined in Section 11.01) shall have the right
to elect, by written notice given to the Plan Administrator prior to the earlier
of the Offering Termination Date or the expiration of a period of sixty (60)
days commencing with the date of the death of the participant, either:
(a) to withdraw all of the payroll deductions credited to the
participant's Plan Account under the Plan, or
(b) To exercise the participant's option for the purchase of Common
Stock on the Offering Termination Date next following the date of the
participant's death for the purchase of the number of full
A-4
<PAGE> 22
shares of Common Stock which the accumulated payroll deductions in the
participant's Plan Account at the date of the participant's death will
purchase at the applicable option price, and any excess in such Plan
Account will be returned to said beneficiary.
In the event that no such written notice of election shall be duly received
by the office of the Plan Administrator, the beneficiary shall automatically be
deemed to have elected, pursuant to subsection (b) of this Section 8.04, to
exercise the participant's option.
8.05. Leave of Absence.
A participant on leave of absence shall, subject to the election made by
such participant pursuant to Section 5.04, continue to be a participant in the
Plan so long as such participant is on continuous leave of absence. A
participant who has been on leave of absence for more than one hundred eighty
(180) days and who therefore is not an Employee for purposes of the Plan shall
not be entitled to participate in any Offering commencing after the 180th day of
such leave of absence. Notwithstanding any other provisions of the Plan, unless
a participant on leave of absence returns to regular full time or part time
employment with the Company at the earlier of: (a) the termination of such leave
of absence or (b) three (3) months from the 180th day of such leave of absence,
such participant's participation in the Plan shall terminate on whichever of
such dates first occurs.
ARTICLE IX -- STOCK
9.01. Maximum Shares.
The maximum number of shares of the Company's Common Stock which shall be
issued under the Plan, subject to adjustment upon changes in capitalization of
the Company as provided in Section 11.04, shall be thirty-seven thousand five
hundred (37,500) shares each Offering (plus in each Offering all unissued shares
from prior Offerings, whether offered or not), not to exceed one hundred fifty
thousand (150,000) shares for all Offerings. If the total number of shares for
which options are exercised on any Offering Termination Date in accordance with
Article VI exceeds the maximum number of shares for the applicable Offering, the
Company shall make a pro rata allocation of the shares available for delivery
and distribution in as nearly a uniform manner as shall be practicable and as it
shall determine to be equitable, and the balance of payroll deductions credited
to the Plan Account of each participant shall be returned to him or her as
promptly as possible.
9.02. Participant's Interest in Option Stock.
The participant will have no interest in Common Stock covered by his or her
option until such option has been exercised.
9.03. Registration of Stock.
Stock to be delivered to a participant under the Plan will be registered in
the name of the participant, or, if the participant so directs by written notice
to the Plan Administrator prior to the Offering Termination Date applicable
thereto, in the names of the participant and one such other person as may be
designated by the participant, as joint tenants with rights of survivorship or
as tenants by the entirety, to the extent permitted by applicable law.
9.04 Restrictions on Exercise.
The Board of Directors may, in its discretion, require as conditions to the
exercise of any option that the shares of Common Stock reserved for issuance
upon the exercise of the option shall have been duly listed, upon official
notice of issuance, on NASDAQ or another stock exchange, and that either:
(a) A Registration Statement under the Securities Act of 1933, as
amended, with respect to said shares shall be effective, or
A-5
<PAGE> 23
(b) the participant shall have represented at the time of purchase, in
form and substance satisfactory to the Company, that it is his or her
intention to purchase the shares for investment and not for resale or
distribution.
ARTICLE X -- ADMINISTRATION
10.01. Appointment of Committee.
The Plan shall be administered by the Chief Financial Officer, Director of
Human Resources and another member of senior management, hereafter called the
"Committee".
10.02. Authority of Committee.
Subject to the express provisions of the Plan, the Committee shall have
plenary authority in its discretion to interpret and construe any and all
provisions of the Plan, to adopt rules and regulations for administering the
Plan, and to make all other determinations deemed necessary or advisable for
administering the Plan. The Committee's determination on the foregoing matters
shall be conclusive and binding upon all Plan participants.
10.03. Rules Governing the Administration of the Committee.
The Board of Directors may from time to time appoint members of the
Committee in substitution for, or in addition to, members previously appointed
and may fill vacancies, however caused, in the Committee. The Committee may
select one of its members as its Chairman and shall hold its meetings at such
time and places as it shall deem advisable and may hold telephonic meetings. A
majority of the Committee's members shall constitute a quorum. All
determinations of the Committee shall be made by a majority of its members. The
Committee may correct any defect or omission or reconcile any inconsistency in
the Plan, in the manner and to the extent it shall deem desirable. Any decision
or determination reduced to writing and signed by a majority of the members of
the Committee shall be as fully effective as if it had been made by a majority
vote at a meeting duly called and held. The Committee may appoint a secretary
and shall make such rules and regulations for the conduct of its business as it
shall deem advisable.
ARTICLE XI -- MISCELLANEOUS
11.01. Designation of Beneficiary.
A participant may file a written designation of a beneficiary who is to
receive any Common Stock and/or cash under the Plan. Such designation of
beneficiary may be changed by the participant at any time or by written notice
to the Plan Administrator. Upon the death of a participant and upon receipt by
the Company of proof of identity and existence at the participant's death of a
beneficiary validly designated by him or her under the Plan, the Company shall
deliver such Common Stock and/or cash to such beneficiary. In the event of the
death of a participant and in the absence of a beneficiary validly designated
under the Plan who is living at the time of such participant's death, the
Company shall deliver such Common Stock and/or cash to the executor or
administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company,
in its discretion, may deliver such Common Stock and/or cash to the spouse or to
any one or more dependents of the participant as the Company may designate. No
beneficiary shall, prior to the death of the participant by whom he or she has
been designated, acquire any interest in the Common Stock and/or cash credited
to the participant under the Plan.
11.02. Transferability.
Neither payroll deductions credited to a participant's Plan Account nor any
rights with regard to the exercise of an option or to receive Common Stock under
the Plan may be assigned, transferred, pledged, or otherwise disposed of in any
way by the participant other than by will or the laws of descent and
distribution. Any such attempted assignment, transfer, pledge or other
disposition shall be without effect, except that the Company may treat such act
as an election to withdraw funds in accordance with Section 7.02.
A-6
<PAGE> 24
11.03. Use of Funds.
All payroll deductions received or held by the Company under this Plan may
be used by the Company for any corporate purpose and the Company shall not be
obligated to segregate such payroll deductions.
11.04. Adjustment Upon Changes in Capitalization.
(a) If, while any options are outstanding under the Plan, the outstanding
shares of Common Stock of the Company have increased, decreased, changed into,
or been exchanged for a different number of kind of shares or securities of the
Company through reorganization, merger, recapitalization, reclassification,
stock split, reverse stock split or similar transaction, appropriate and
proportionate adjustments may be made be made by the Committee in the number
and/or kind of shares which are subject to purchase under outstanding options
and to the option exercise price or prices applicable to such outstanding
options. In addition, in any event, the number and/or kind of shares which may
be offered in the Offerings described in Article IV hereof shall also be
proportionately adjusted. No adjustments shall be made for stock dividends. For
the purposes of this Section 11.04, any distribution of shares to shareholders
in an amount aggregating 20% or more of the outstanding shares shall be deemed a
stock split and any distributions of shares aggregating less than 20% of the
outstanding shares shall be deemed a stock dividend.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or stock of the Company to
another corporation (any of such transaction being hereinafter referred to as a
"Terminating Transaction"), the holder of each option then outstanding under the
Plan will thereafter be entitled to receive at the next Offering Termination
Date upon the exercise of such option for each share as to which such option
shall be exercised, as nearly as reasonably may be determined, the cash,
securities and/or property which a holder of one share of the Common Stock was
entitled to receive upon and at the time of such Terminating Transaction. The
Board of Directors shall take such steps in connection with any such Terminating
Transaction as the Board shall deem necessary to ensure that the provisions of
this Section 11.04 shall thereafter be applicable, as nearly as reasonably may
be determined, in relation to the said cash, securities, and/or property as to
which such holder of such option might thereafter be entitled to receive.
11.05. Amendment and Termination.
The Board of Directors shall have complete power and authority to terminate
or amend the Plan; provided, however, that the Board of Directors shall not,
without approval of the stockholders of the Corporation, (i) increase the
maximum number of shares which may be issued under the Plan (except pursuant to
Section 11.04); (ii) amend the requirements as to the class of Employees
eligible to purchase Common Stock under the Plan. No termination, modification,
or amendment of the Plan, may without the consent of an Employee then having an
option under the Plan to purchase Common Stock, adversely affect the rights of
such Employee under such option.
11.06. Effective Date.
The Plan shall be effective (the "Effective Date") upon adoption by the
Company's Board of Directors provided, however, the effectiveness of the Plan is
subject to the following occurring prior to April 15, 1998: (i) this Plan shall
have been approved by the shareholders as set forth in Section 11.10(c) hereof,
and (ii) a registration statement for the Plan shall have become effective under
the Securities Act of 1933, as amended.
11.07. No Employment Rights.
The Plan does not, directly or indirectly, create any right for the
benefits of any Employee or class of Employees to purchase any shares under the
Plan, or create in any Employee or class of Employees any right with respect to
continuation of employment by the Company, and it shall not be deemed to
interfere in any way with the Company's right to terminate, or otherwise modify,
an Employee's employment at any time.
A-7
<PAGE> 25
11.08. Effect of Plan.
The provisions of the Plan shall, in accordance with its terms, be binding
upon, and inure to the benefit of, all successors of each Employee participating
in the Plan including, without limitation, such Employee's estate and the
executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such Employee.
11.09. Withholding of Taxes.
By electing to participate in the Plan, each Employee acknowledges that the
Company and its participating subsidiaries are required to withhold taxes with
respect to the amounts deducted from the Employee's compensation and accumulated
for the benefit of the Employee under the Plan, and each Employee agrees that
the Company and its participating subsidiaries may deduct additional amounts
from the Employee's compensation, when amounts are added to the Employee's Plan
Account, used to purchase common stock or refunded, in order to satisfy such
withholding obligations. If the Participant makes a disposition, within the
meaning of Section 424(c) of the Code and regulations promulgated thereunder, of
any Common Stock issued to such Participant pursuant to such Participant's
exercise of an option, and such disposition occurs within the two year period
commencing on the day after the Offering Date or within the one year period
commencing on the day after the Exercise Date, such Participant shall, within
ten (10) days of such disposition, notify the Company thereof and thereafter
immediately deliver to the Participant's Employer any amount of federal, state
or local income taxes and other amounts which the company informs the
Participant the Company is required to withhold. The Participant's Employer may
also satisfy any applicable withholding amounts by deducting the necessary
amounts of withholding from the Participant's wages and, in the Committee's sole
discretion, any other amounts owed to or held for the account of the
Participant.
11.10. Regulations and other Approvals; Governing Law; Section 16
Compliance.
(a) This Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of Delaware
without giving effect to the choice of law principles thereof, except to the
extent that such law if preempted by federal law.
(b) The obligation of the Company to sell or deliver Common Stock with
respect to options granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
(c) To the extent applicable hereto, the Plan is intended to comply with
Rule 16b-3 under the Exchange Act, and the Committee shall interpret and
administer the provisions of the Plan in a manner consistent therewith. Any
provisions inconsistent with such Rule shall be inoperative and shall not affect
the validity of the Plan. This Plan shall be subject to approval by shareholders
of the Company owning a majority of the issued outstanding shares of common
stock present or represented and entitled to vote at a meeting duly held in
accordance with applicable law.
(d) Common stock shall not be issued unless such issuance and delivery
shall comply with all applicable provisions of law, domestic or foreign, and the
requirements of any stock exchange upon which the Common Stock may then be
listed, including, in each case the rules and regulations promulgated
thereunder, and shall be further subject to the approval of counsel for the
Company with respect to such compliance, which may include a representation and
warranty from the Participant that the Common Stock are being purchased only for
investment and without any present intention to sell or distribute such Common
Stock.
(e) Nothing contained in this Plan, or any modification or amendment to the
Plan, or in the creation of any account, or the execution of any subscription
agreement, or the issuance of any Common Stock under the Plan, shall give any
Employee any right against the Company or any Subsidiary, or any officer,
director, or employee thereof, except as expressly provided by the Plan.
A-8
<PAGE> 26
SSE TELECOM, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Daniel E. Moore, Russ D. Kinsch, 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 March
20, 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.)
SEE REVERSE SIDE
<PAGE> 27
/X/ Please mark your
votes as in this
example.
FOR ALL OF
THE NOMINEES WITHHOLD
(except as marked in AUTHORITY
the contrary below) to vote for all nominees
1. ELECTION OF / / / /
DIRECTORS
NOMINEES: JEROME DE VITRY, CHARLES W. ERGEN,
DANIEL E. MOORE, JOSEPH T. PISULA,
LAWRENCE W. ROBERTS, ERIC H. VAN DER KAAY,
OLIN L. WETHINGTON
FOR AGAINST ABSTAIN
2. APPROVAL OF EMPLOYEE STOCK / / / / / /
PURCHASE PLAN
3. AMENDMENT TO THE 1997 EQUITY / / / / / /
PARTICIPATION PLAN TO INCREASE
BY 175,000 THE NUMBER OF SHARES
OF COMMON STOCK ISSUABLE
THEREUNDER
4. 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, AND "FOR" PROPOSAL 4.
SIGNATURE _________________________________ DATE __________________________
