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:
[ ] 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 ss. 14a-11(c) or ss. 14a-12
SSE Telecom, Inc.
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(Name of Registrant as Specified in Its Charter)
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(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 transactions applies:
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2. Aggregate number of securities to which transactions applies:
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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):
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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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[ ] 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.
6. Amount previously paid:
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7. Form, Schedule or Registration Statement No.:
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<PAGE>
SSE TELECOM, INC.
47823 Westinghouse Drive, Fremont, CA 94539
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 15, 2000
TO THE STOCKHOLDERS OF SSE TELECOM, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders OF SSE
TELECOM, INC., a Delaware corporation (the "Company"), will be held on Wednesday
of March 15, 2000 at 10:00 a.m. local time at Bankers' Club, 555 California
Street, Floor 52, San Francisco, California, for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To approve the Company's 1997 Equity Participation Plan, as amended, to
increase the aggregate number of shares of Common Stock authorized for
issuance under such plan by 400,000 shares.
3. To approve the Company's 1997 Directors' Stock Option Plan, as amended,
to increase the aggregate number of shares of Common Stock authorized
for issuance under such plan by 100,000 shares, increase the annual
grant from 2,500 shares of Common Stock to 5,000 shares of Common Stock
and provide for an initial appointment grant of 10,000 shares of Common
Stock.
4. To ratify the selection of Deloitte & Touche LLP as independent
auditors of the Company for its fiscal year ending September 30, 2000.
5. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on January 18,
2000, as the record date for the determination of stockholders entitled to
notice of and to vote at this Annual Meeting and at any adjournment or
postponement thereof
By Order of the Board of Directors
/s/ Kenneth Guernsey
Kenneth Guernsey
Secretary
Fremont, California
February 16, 2000
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ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
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<PAGE>
SSE TELECOM, INC.
47823 Westinghouse Drive, Fremont, CA 94539
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
March 15, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
SSE TELECOM, INC., a Delaware corporation (the "Company"), for use at the Annual
Meeting of Stockholders to be held on March 15, 2000, at 10:00 a.m. local time
(the "Annual Meeting"), or at any adjournment or postponement thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting. The
Annual Meeting will be held at Bankers' Club, 555 California Street, Floor 52,
San Francisco, California. The Company intends to mail this proxy statement and
accompanying proxy card on or about February 16, 2000, to all stockholders
entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of this proxy statement,
the proxy card and any additional information furnished to stockholders. Copies
of solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of Common Stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of Common Stock for their
costs of forwarding solicitation materials 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.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on
January 18, 2000 will be entitled to notice of and to vote at the Annual
Meeting. At the close of business on January 18, 2000 the Company had
outstanding and entitled to vote 5,923,377 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to
one vote for each share held on all matters to be voted upon at the Annual
Meeting.
All votes will be tabulated by the inspector of election appointed for
the meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this 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, Kenneth Guernsey, at the Company's
principal executive office, 47823 Westinghouse Drive, Fremont, CA 94539, a
written notice of revocation or a 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.
STOCKHOLDER PROPOSALS
<PAGE>
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2001 annual
meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is October 18, 2000. Unless a stockholder who wishes to bring a
matter before the stockholders at the Company's 2001 annual meeting of
stockholders notifies the Company of such matter prior to January 3, 2000,
management will have discretionary authority to vote all shares for which it has
proxies in opposition to such matter.
PROPOSAL 1
ELECTION OF DIRECTORS
There are seven nominees for the nine Board positions presently
authorized in the Company's Bylaws. Each director to be elected will hold office
until the next annual meeting of stockholders and until his successor is elected
and has qualified, or until such director's earlier death, resignation or
removal. Each nominee listed below is currently a director of the Company, five
directors having been elected by the stockholders, and two directors, Messrs.
Frank S. Trumbower and D. Jonathan Merriman, having been elected by the Board.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote. Shares represented by executed
proxies will be voted, if authority to do so is not withheld, for the election
of the seven nominees named below. In the event that any nominee should be
unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as management may
propose. Each person nominated for election has agreed to serve if elected and
management has no reason to believe that any nominee will be unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE
NOMINEES
<TABLE>
The following table sets forth information regarding the Company's
executive officers and nominees for director as of December 31, 1999:
<CAPTION>
NAME AGE POSITION HELD WITH THE COMPANY
<S> <C> <C>
Mr. Leon F. Blachowicz 60 President, Chief Executive Officer and Director
Mr. Frank S. Trumbower 62 Chairman of the Board of Directors
Mr. Daniel E. Moore 46 Director
Mr. Joseph T. Pisula 58 Director
Mr. Lawrence W. Roberts 60 Director
Mr. D. Jonathan Merriman 39 Director
Mr. Olin L. Wethington 51 Director
Mr. James J. Commendatore 56 Executive Vice President and Chief Financial Officer
Mr. George M. Walley 44 Executive Vice President, Product Development
Mr. Michael Wytyshyn 61 Executive Vice President, Business Development
Mr. Myron Gilbert 60 Executive Vice President, Operations
</TABLE>
Mr. Leon F. Blachowicz has served as President, Chief Executive
Officer, and Director of the Company since April 1998, the date he joined the
Company. He has also served as a member of the Nominating Committee of the Board
of Directors since April 1998. From 1995 to 1998, he was at California
Microwave, Inc. and served as Group President of the Wireless and Satellite
Communications Group. From 1989 to 1995 he was Vice President/General Manager of
Varian Associates, Microwave Products Division, a manufacturer of satellite
communication equipment. Mr. Blachowicz earned his M.S. and B.S. degrees in
Electrical Engineering from the University of Florida.
<PAGE>
Mr. Frank S. Trumbower has served as our Chairman since May 1999, as a
member of our Board of Directors from 1989 to 1994 and from 1995 to 1997 and as
our President and Chief Executive Officer from 1990 to 1994. From 1990 to 1994
he also served as the President and Chief Executive Officer of DirectSat
Corporation, a Direct Broadcast Satellite (DBS) licensee partly owned by the
Company. Mr. Trumbower is currently the President of Cambridge Technology
Partners, Inc., a private venture capital firm specializing in
telecommunications and related computer technology. Mr. Trumbower currently
serves as a member of the board of directors of Cambridge Technology Group,
Inc., Cambridge Technology Partners, Inc., Cambridge Research Associates, Inc.,
Avenel Capital Management, Inc., Prinz (USA) Distributors, Inc. and Network
Storage Solutions, Inc. Mr. Trumbower received a degree from the University of
San Francisco and, as a Marshall Scholar, did graduate work in microeconomics at
the London School of Economics.
Mr. Daniel E. Moore has served as a Director of the Company since April
1989, as a member of the Nominating Committee since April 1998 and as a member
of the Audit Committee since June 1998. From April 1998 to May 1999, Mr. Moore
served as Chairman of the Board of Directors. From January 1994 through May 1997
Mr. Moore served as Executive Vice President and Chief Financial Officer of the
Company. From August 1992 to December 1993 Mr. Moore served as acting Chief
Financial Officer of the Company. In May 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. Since October 1998 Mr. Moore has
been Chief Financial Officer of Price Interactive, a privately held information
technology firm in the interactive voice response and Internet solutions
business. Mr. Moore received his M.A. in Business Administration from the
University of Pittsburgh, and his B.A. from Lafayette College.
Mr. Joseph T. Pisula has served as a Director of the Company since
March 1995. He has served as a member of the Audit Committee of the Board of
Directors since 1995. Since June 1998, he has served as President and Chief
Executive Officer of TSI TelSys, Corp., a manufacturer of high-performance
digital telemetry processing and simulation systems for ground station terminals
used in the satellite remote sensing market. From October 1996 until April 1998
he was President and Chief Executive Officer of Network Storage Solutions, Inc.,
a network-attached storage appliance manufacturer. From February 1995 to May
1996, he was President of Treev Inc., (formerly, Network Imaging Corporation),
an enterprise client-server software company. From April 1993 to September 1994,
Mr. Pisula was Chairman and Chief Executive Officer of Digital Transmission
System Inc., a telecommunications equipment manufacturer. Mr. Pisula received
his M.A. in Business Administration from the University of Rochester and his
B.S. in Electrical Engineering from the University of Pittsburgh.
Mr. Lawrence W. Roberts has served as Director of the Company since
June 1997. He has served as a member of the Compensation and Nominating
Committees of the Board of Directors since 1997. Since 1985, he has been
President and a Director of Technology Strategies & Alliances, a strategic
investment banking firm specializing in the technology industry. Mr. Roberts
serves on the Board of Directors of Illgen Simulation Technologies, Inc., a
software company, and MountainGate Imaging Systems Corporation a provider of
digital video data storage and management solutions. He received his M.B.A. from
the Harvard Graduate School of Business Administration, an M.A. in International
Relations from American University and a B.A. from the University of Louisville.
Mr. D. Jonathan Merriman has served as a Director of the Company since
October 1999. He is currently the Senior Managing Director in charge of the
Equity Capital Markets Group at First Security Van Kasper and Company, an
investment banking and brokerage firm, and oversees the research, institutional
sales, equity trading, syndicate, and derivatives trading departments. He is
also a member of Van Kasper's management, executive and commitment committees as
well as the Van Kasper Advisors investment committee. He currently serves as a
member of the board of directors of Van Kasper, Leading Brands Inc., a brand
management company, Brio Industries, Inc., a packaging and distribution company,
BigStar Entertainment Inc., an Internet commerce company, Fiberstars Inc., a
fiber optic lighting company, and Pacer Technology. He received a B.A. degree in
psychology from Dartmouth College and an M.B.A. from New York University's
Graduate School of Business.
Mr. Olin L. Wethington has served as a Director of the Company since
February 1994. He also served as Chairman of the Audit Committee since 1994.
From 1985 to January 1990 and since January 1993 Mr. Wethington has been a
partner of Steptoe & Johnson LLP, a law firm. From January 1990 to January 1993,
Mr. Wethington served as Special Assistant to the President, Executive Secretary
to the Economic Policy Council at the White House, and Assistant Secretary of
International Affairs at the U.S. Department of Treasury. Mr. Wethington
<PAGE>
received his B.A. and M.A. in Oriental Studies from the University of
Pennsylvania and his J.D. from Harvard Law School.
James J. Commendatore has served as the Company's Executive Vice
President and Chief Financial Officer since November 1998. From 1995 to 1998,
Mr. Commendatore was President and General Manager of the Satcom Division of
Communication and Power Industries (CPI). Before joining CPI, he managed
operations and headed finance of the Microwave Equipment Products Division of
Varian. Mr. Commendatore holds a Bachelor's degree in Business and Industrial
Management and a M.B.A degree from San Jose State University.
George M. Walley has served as the Company's Executive Vice President
of Product Development since October 1998. From 1997 to 1998, Mr. Walley was the
Manager of the RF Communication Department of the Government Communication
Systems Division of Harris Corporation. Prior to 1997 he served as Senior Member
of the Technical Staff of the Modem Engineering Department of M/A-Com DCC. Mr.
Walley received his Bachelor's and Master's degrees in Electrical Engineering
from Mississippi State University.
Michael B. Wytyshyn has served as the Company's Executive Vice
President of Business Development since May 1998. From 1995 to 1998, Mr.
Wytyshyn was Senior Vice President of Marketing, Sales and Services at
California Microwave. Previously, he worked at Varian Associates in management
roles in business development and marketing and sales. Mr. Wytyshyn currently
serves as a member of the Board of Directors of Web Silicon, Inc. Mr. Wytyshyn
has a B.S. degree in Electrical Engineering and a M.B.A. from Fairleigh
Dickinson University in New Jersey.
Myron B. Gilbert has served as the Company's Executive Vice President
of Operations since July 1998. From 1990 to 1998, Mr. Gilbert was Vice President
of Operations of the Satcom Division of Communication and Power Industries
(CPI), formerly, Varian Electron Devices Group. Before joining CPI in 1990, Mr.
Gilbert was Corporate Quality Manager at Avantek. Mr. Gilbert has a degree in
Quality Management and is a credentialed college instructor in Business and
Industrial Management.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended September 25, 1999 the Board of Directors
held six meetings. The Board has an Audit Committee, a Compensation Committee
and a Nominating Committee.
The Audit Committee reviews and consults with the independent auditors
concerning the Company's financial statements, accounting and financial
policies, internal controls, adequacy of staff and management performance, and
reviews the scope of the independent auditors' activities and 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 is composed of three non-employee
directors: Messrs. Wethington, Pisula, and Moore. It met three times during
fiscal 1999.
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 the Company, approves
the form and terms of all stock option plans, and prepares the Compensation
Committee Report. The Compensation Committee is composed of two non-employee
directors: Messrs. Roberts and Trumbower. It met four times during fiscal 1999.
The Nominating Committee evaluates, nominates and recommends
individuals for membership on the Company's Board of Directors. The committee
may consider candidates recommended by stockholders. The Nominating Committee is
composed of two non-employee directors: Messrs. Roberts and Trumbower. It met
three times during fiscal 1999.
During the fiscal year ended September 25, 1999, each Board member
attended 75% or more of the aggregate of the meetings of the Board and of the
committees on which such member served, held during the period for which the
member was a director or committee member, respectively.
<PAGE>
PROPOSAL 2
APPROVAL OF AMENDMENT TO THE 1997 EQUITY PARTICIPATION PLAN,
AS AMENDED, TO INCREASE THE TOTAL NUMBER OF SHARES ISSUABLE THEREUNDER
On February 20, 1997, the Board adopted, and the stockholders
subsequently approved, the Company's 1997 Equity Participation Plan
("Participation Plan"). On January 21, 1998, the Board amended and restated the
Participation Plan, and the stockholders subsequently approved such amendment.
As a result of a series of amendments, as of December 31, 1999, there were
425,000 shares of Common Stock authorized for issuance under the Participation
Plan.
On January 12, 2000, the Board amended the Participation Plan, subject
to stockholder approval, to increase the number of shares of Common Stock
authorized for issuance under the Participation Plan from a total of 425,000
shares to a total of 825,000 shares. The Board adopted this amendment in order
to ensure that the Company can continue to grant stock options at levels
determined appropriate by the Board.
A brief summary of the Participation Plan follows. All statements made
in the following summary are qualified by reference to the 1997 Equity
Participation Plan, as amended, attached to this Proxy Statement as Exhibit A.
As of December 31, 1999, awards (net of canceled or expired awards)
covering an aggregate of 400,233 shares of the Company's Common Stock had been
granted under the Participation Plan. Only 24,767 shares of Common Stock (plus
any shares that might in the future be returned to the Participation Plan as a
result of cancellations or expiration of awards) remained available for future
grant under the Participation Plan.
Stockholders are requested in this Proposal 2 to approve the amendment
to the Participation Plan described above. The affirmative vote of the holders
of a majority of the shares present in person or represented by proxy and
entitled to vote at the meeting will be required to approve the amendment to the
Participation Plan. Abstentions will be counted toward the tabulation of votes
cast on proposals presented to the stockholders and will have the same effect as
negative votes. Broker non-votes are counted towards a quorum, but are not
counted for any purpose in determining whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
The essential features of the Participation Plan are outlined below:
GENERAL
The Participation Plan provides for the grant of incentive stock
options, nonqualified stock options, stock appreciation rights, stock bonuses
and restricted stock purchase awards (collectively "awards"). Incentive stock
options granted under the Participation Plan are intended to qualify as
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). Nonqualified stock options
granted under the Participation Plan are not intended to qualify as incentive
stock options under the Code. See "Federal Income Tax Information" for a
discussion of the tax treatment of awards. To date, the Company has granted
only stock options under the Plan.
PURPOSE
The Board adopted the Participation Plan to provide a means by which
employees (including officers and directors who are also employees) and
consultants of the Company and its affiliates may be given an opportunity to
purchase stock in the Company, to assist in retaining the services of such
persons, to secure and retain the services of persons capable of filling such
positions and to provide incentives for such persons to exert maximum efforts
for the success of the Company and its affiliates. All of the approximately 110
employees and consultants of the Company and its affiliates are eligible to
participate in the Participation Plan.
<PAGE>
ADMINISTRATION
The Board has delegated the administration of the Participation Plan to
the Compensation Committee. The Board may, in the future, delegate the
administration of the Participation Plan to another committee composed of at
least two members of the Board. In the discretion of the Board, such a committee
may consist solely of two or more outside directors in accordance with Section
162(m) of the Code or solely of two or more non-employee directors in accordance
with Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). As used herein with respect to the Participation Plan, the
"Committee" refers to the Compensation Committee of the Board or any committee
the Board appoints to administer the Plan. Subject to the provisions of the
Participation Plan, the Committee has the power to construe and interpret the
Participation Plan and to determine the persons to whom and the dates on which
awards will be granted, the number of shares of Common Stock to be subject to
each award, the time or times during the term of each award within which all or
a portion of such award may be exercised, the exercise price, the type of
consideration and other terms of the award.
The regulations under Section 162(m) of the Code require that in order
to grant awards that qualify as "performance-based compensation," the directors
who serve as members of the Committee must be "outside directors." (See the
section entitled "Potential Limitation on Company Deductions" below for more
information regarding Section 162(m) of the Code.) The Participation Plan
provides that, in the Board's discretion, directors serving on the Committee may
be "outside directors" within the meaning of Section 162(m). This limitation
would exclude from the Committee directors who are (i) current employees of the
Company or an affiliate, (ii) former employees of the Company or an affiliate
receiving compensation for past services (other than benefits under a
tax-qualified pension Participation Plan), (iii) current and former officers of
the Company or an affiliate, (iv) directors currently receiving direct or
indirect remuneration from the Company or an affiliate in any capacity (other
than as a director), and (v) any other person who is otherwise considered an
"outside director" for purposes of Section 162(m). The definition of an "outside
director" under Section 162(m) is generally narrower than the definition of a
"non-employee director" under Rule 16b-3 of the Exchange Act.
ELIGIBILITY
Incentive stock options may be granted under the Participation Plan
only to employees (including officers and directors who are also employees) of
the Company and its affiliates. Employees (including officers and directors who
are also employees) and consultants of both the Company and its affiliates are
eligible to receive all other types of awards under the Participation Plan.
However, non-employee directors of the Company are not eligible to receive
awards under the Participation Plan.
No incentive stock option may be granted under the Participation Plan
to any person who, at the time of the grant, owns (or is deemed to own) stock
possessing more than 10% of the total combined voting power of the Company or
any affiliate of the Company. In addition, the aggregate fair market value,
determined at the time of grant, of the shares of Common Stock with respect to
which incentive stock options are exercisable for the first time by a
participant during any calendar year (under the Participation Plan and all other
such plans of the Company and its affiliates) may not exceed $100,000.
No person may be granted awards under the Participation Plan
exercisable for more than 500,000 shares of Common Stock during any calendar
year ("Section 162(m) Limitation").
STOCK SUBJECT TO THE PARTICIPATION PLAN
Subject to this Proposal, an aggregate of 825,000 shares of Common
Stock is reserved for issuance under the Participation Plan. If awards granted
under the Participation Plan expire or otherwise terminate without being
exercised, the shares of Common Stock not acquired pursuant to such awards again
become available for issuance under the Participation Plan. If the Company
reacquires unvested stock issued under the Participation Plan, the reacquired
stock will again become available for reissuance under the Participation Plan
for awards other than incentive stock options.
TERMS OF OPTIONS
The following is a description of the permissible terms of options
under the Participation Plan. Individual option grants may be more restrictive
as to any or all of the permissible terms described below.
<PAGE>
Exercise Price; Payment. The exercise price of options may not be less
than 100% of the fair market value of the stock subject to the option on the
date of the grant. As of January 18, 2000, the closing price of the Company's
Common Stock as reported on the Nasdaq National Market System was $10.125 per
share.
The exercise price of options granted under the Participation Plan must
be paid either (i) in cash or a check at the time the option is exercised, (ii)
by delivery of other Common Stock of the Company that has been held for a period
sufficient to avoid a charge to the earnings of the Company for financial
accounting purposes or (iii) pursuant to a deferred payment arrangement which
may be financed by the Company in accordance with applicable Federal Reserve
Board regulations.
Option Exercise. Options granted under the Participation Plan may
become exercisable in cumulative increments ("vest") as determined by the
Committee. Shares covered by currently outstanding options under the
Participation Plan typically vest at the rate of 25% of the total number of
shares covered by each option on each of the first, second, third, and fourth
anniversary dates of the date of grant of the option during the participant's
employment by, or service as a director or consultant to, the Company or an
affiliate (collectively, "service"). Shares covered by options granted in the
future under the Participation Plan may be subject to different vesting terms.
The Committee has the power to accelerate the time during which an option may
vest or be exercised. To the extent provided by the terms of an option, a
participant may satisfy any federal, state or local tax withholding obligation
relating to the exercise of such option by a cash payment upon exercise or, with
respect to an exercise of a nonqualified stock option, by authorizing the
Company to withhold a portion of the stock otherwise issuable to the
participant.
Term. The maximum term of options under the Participation Plan is 10
years. Options under the Participation Plan generally terminate upon earlier of
(i) expiration of the option term or (ii) three months after termination of the
participant's service, unless such termination is due to the participant's
death, total and permanent disability or retirement. If a participant's service
is terminated due to the participant's death or total and permanent disability,
the participant's options become fully vested upon such termination and remain
exercisable until the earlier of (i) expiration of the option term or (ii) three
years from the termination of service. In case of the participant's death, the
options may be exercised by the person or persons to whom the rights to such
options pass by will or applicable law. If a participant's service is terminated
upon the participant's retirement, the options become fully vested upon such
termination and remain exercisable until the earlier of (i) expiration of the
option term or (ii) five years (or such longer period established by the
Committee on the date the options were granted) from the date of such
termination. For purposes of the term of options granted under the Participation
Plan, retirement means (i) the termination of service on or after the date the
participant is entitled to receive distribution under a qualified retirement
plan of the Company or an affiliate or (ii) if the participant is not eligible
to participate in such qualified retirement plan, the termination of service
after attaining age 55.
Restrictions on Transfer. During the lifetime of the participant, only
the participant may exercise an option. The participant may not transfer an
incentive stock option otherwise than by will or by the laws of descent and
distribution. The Board may grant nonqualified stock options that are
transferable in certain limited instances.
TERMS OF RESTRICTED STOCK PURCHASE AWARDS
Purchase Price. The Board determines the purchase price, if any, under
each restricted stock purchase agreement. The purchase price of stock acquired
pursuant to a restricted stock purchase agreement under the Participation Plan
must be paid either in cash at the time the purchase right is exercised or, at
the discretion of the Board, pursuant to a deferred payment arrangement which
may be financed by the Company in accordance with applicable Federal Reserve
Board regulations.
Vesting. Shares of stock sold or awarded under the Participation Plan
shall be subject to a repurchase option in favor of the Company in accordance
with a vesting schedule as determined by the Board, which vesting schedule shall
be at least one year and not more than ten years. The Board has the power to
extend the applicable vesting period or accelerate the vesting of stock acquired
pursuant to a restricted stock purchase agreement under the Participation Plan.
Restrictions on Transfer. Rights under a restricted stock purchase
agreement may not be transferred.
<PAGE>
STOCK APPRECIATION RIGHTS
The Participation Plan authorizes the grant of tandem stock
appreciation rights. Tandem stock appreciation rights are tied to an underlying
nonqualified stock option and require the participant to elect whether to
exercise the underlying option or to surrender the option for an appreciation
distribution equal to the market price of the vested shares purchasable under
the surrendered option less the aggregate exercise price payable for such
shares. Appreciation distributions payable upon exercise of tandem stock
appreciation rights must be made in cash.
ADJUSTMENT PROVISIONS
Transactions not involving receipt of consideration by the Company,
such as a merger, consolidation, reorganization, stock dividend or stock split,
may change the class and number of shares of Common Stock subject to the
Participation Plan and outstanding awards. In that event, the Participation Plan
will be appropriately adjusted as to the class and the maximum number of shares
of Common Stock subject to the Participation Plan and the Section 162(m)
Limitation, and outstanding awards will be adjusted as to the class, number of
shares and price per share of Common Stock subject to such awards.
EFFECT OF CERTAIN CORPORATE EVENTS
The Participation Plan provides that, in the event (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 ("change of control"), any surviving corporation
may either assume awards outstanding under the Participation Plan or substitute
similar awards for those outstanding under the Participation Plan. In addition,
in the event of a change of control, options granted under the Participation
Plan shall become immediately vested and exercisable. The acceleration of
vesting of an award in the event of an acquisition or similar corporate event
may be viewed as an anti-takeover provision, which may have the effect of
discouraging a proposal to acquire or otherwise obtain control of the Company.
DURATION, AMENDMENT AND TERMINATION
The Committee may suspend or terminate the Participation Plan without
stockholder approval or ratification at any time or from time to time. Unless
sooner terminated, the Participation Plan will terminate on February 20, 2007.
The Board may also amend the Participation Plan at any time or from
time to time. However, no amendment will be effective unless approved by the
stockholders of the Company within 12 months before or after its adoption by the
Board if the amendment would (i) modify the requirements as to eligibility for
participation (to the extent such modification requires stockholder approval in
order for the Participation Plan to satisfy Section 422 of the Code, if
applicable, or Rule 16b-3 of the Exchange Act; (ii) increase the number of
shares reserved for issuance upon exercise of awards; or (iii) change any other
provision of the Participation Plan in any other way if such modification
requires stockholder approval in order to comply with Rule 16b-3 of the Exchange
Act or satisfy the requirements of Section 422 of the Code or any securities
exchange listing requirements. The Board may submit any other amendment to the
Participation Plan for stockholder approval, including, but not limited to,
amendments intended to satisfy the requirements of Section 162(m) of the Code
regarding the exclusion of performance-based compensation from the limitation on
the deductibility of compensation paid to certain employees.
FEDERAL INCOME TAX INFORMATION
Long-term capital gains currently are generally subject to lower tax
rates than ordinary income or short-term capital gains. The maximum long-term
capital gains rate for federal income tax purposes is currently 20% while the
maximum ordinary income rate and short-term capital gains rate is effectively
39.6%. Slightly different rules may apply to participants who acquire stock
subject to certain repurchase options or who are subject to Section 16(b) of the
Exchange Act.
Incentive Stock Options. Incentive stock options under the
Participation Plan are intended to be eligible for the favorable federal income
tax treatment accorded "incentive stock options" under the Code.
<PAGE>
There generally are no federal income tax consequences to the
participant or the Company by reason of the grant or exercise of an incentive
stock option. However, the exercise of an incentive stock option may increase
the participant's alternative minimum tax liability, if any.
If a participant holds stock acquired through exercise of an incentive
stock option for at least two years from the date on which the option is granted
and at least one year from the date on which the shares are transferred to the
participant upon exercise of the option, any gain or loss on a disposition of
such stock will be a long-term capital gain or loss if the participant held the
stock for more than one year.
Generally, if the participant disposes of the stock before the
expiration of either of these holding periods (a "disqualifying disposition"),
then at the time of disposition the participant will realize taxable ordinary
income equal to the lesser of (i) the excess of the stock's fair market value on
the date of exercise over the exercise price or (ii) the participant's actual
gain, if any, on the purchase and sale. The participant's additional gain or any
loss upon the disqualifying disposition will be a capital gain or loss, which
will be long-term or short-term depending on whether the stock was held for more
than one year.
To the extent the participant recognizes ordinary income by reason of a
disqualifying disposition, the Company will generally be entitled (subject to
the requirement of reasonableness, the provisions of Section 162(m) of the Code
and the satisfaction of a tax reporting obligation) to a corresponding business
expense deduction in the tax year in which the disqualifying disposition occurs.
Nonqualified Stock Options and Restricted Stock Purchase Awards.
Nonqualified stock options and restricted stock purchase awards granted under
the Participation Plan generally have the following federal income tax
consequences:
There are no tax consequences to the participant or the Company by
reason of the grant. Upon acquisition of the stock, the participant normally
will recognize taxable ordinary income equal to the excess, if any, of the
stock's fair market value on the acquisition date over the purchase price.
However, to the extent the stock is subject to certain types of vesting
restrictions, the taxable event will be delayed until the vesting restrictions
lapse unless the participant elects to be taxed on receipt of the stock. With
respect to employees, the Company is generally required to withhold from regular
wages or supplemental wage payments an amount based on the ordinary income
recognized. Subject to the requirement of reasonableness, the provisions of
Section 162(m) of the Code and the satisfaction of a tax reporting obligation,
the Company will generally be entitled to a business expense deduction equal to
the taxable ordinary income realized by the participant.
Upon disposition of the stock, the participant will recognize a capital
gain or loss equal to the difference between the selling price and the sum of
the amount paid for such stock plus any amount recognized as ordinary income
upon acquisition (or vesting) of the stock. Such gain or loss will be long-term
or short-term depending on whether the stock was held for more than one year.
Slightly different rules may apply to participants who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Exchange
Act.
Stock Appreciation Rights. No taxable income is realized upon the
receipt of a stock appreciation right, but upon exercise of the stock
appreciation right the fair market value of the shares (or cash in lieu of
shares) received must be treated as compensation taxable as ordinary income to
the participant in the year of such exercise. Generally, with respect to
employees, the Company is required to withhold from the payment made on exercise
of the stock appreciation right or from regular wages or supplemental wage
payments an amount based on the ordinary income recognized. Subject to the
requirement of reasonableness, Section 162(m) of the Code and the satisfaction
of a reporting obligation, the Company will be entitled to a business expense
deduction equal to the taxable ordinary income recognized by the participant.
Potential Limitation on Company Deductions. Section 162(m) of the Code
denies a deduction to any publicly-held corporation for compensation paid to
certain "covered employees" in a taxable year to the extent that compensation to
such covered employee exceeds $1 million. It is possible that compensation
attributable to awards, when combined with all other types of compensation
received by a covered employee from the Company, may cause this limitation to be
exceeded in any particular year.
<PAGE>
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m), compensation
attributable to stock options and stock appreciation rights will qualify as
performance-based compensation if the award is granted by a compensation
committee comprised solely of "outside directors" and either (i) the plan
contains a per-employee limitation on the number of shares for which such awards
may be granted during a specified period, the per-employee limitation is
approved by the stockholders, and the exercise price of the award is no less
than the fair market value of the stock on the date of grant or (ii) the award
is granted (or exercisable) only upon the achievement (as certified in writing
by the compensation committee) of an objective performance goal established in
writing by the compensation committee while the outcome is substantially
uncertain, and the award is approved by stockholders.
Compensation attributable to restricted stock will qualify as
performance-based compensation, provided that: (i) the award is granted by a
compensation committee comprised solely of "outside directors" and (ii) the
purchase price of the award is no less than the fair market value of the stock
on the date of grant. Stock bonuses qualify as performance-based compensation
under the Treasury regulations only if (i) the award is granted by a
compensation committee comprised solely of "outside directors," (ii) the award
is granted (or exercisable) only upon the achievement of an objective
performance goal established in writing by the compensation committee while the
outcome is substantially uncertain, (iii) the compensation committee certifies
in writing prior to the granting (or exercisability) of the award that the
performance goal has been satisfied and (iv) prior to the granting (or
exercisability) of the award, stockholders have approved the material terms of
the award (including the class of employees eligible for such award, the
business criteria on which the performance goal is based, and the maximum amount
- -- or formula used to calculate the amount -- payable upon attainment of the
performance goal).
<PAGE>
PROPOSAL 3
AMENDMENT TO THE 1997 DIRECTORS' STOCK OPTION PLAN TO INCREASE THE
TOTAL NUMBER OF SHARES ISSUABLE THEREUNDER, INCREASE THE
ANNUAL GRANT, PROVIDE FOR AN INITIAL APPOINTMENT GRANT
AND EXTEND THE TERM THEREOF
At the Annual Meeting, the Stockholders are being asked to approve the
amendment to the Directors' Stock Option Plan (the "Directors' Plan"). The
amendment would (i) increase the number total number of shares reserved under
the plan by 100,000 shares to a total of 200,000 shares, (ii) increase the
annual option grant from 2,500 shares to 5,000 shares, (iii) provide for an
initial appointment option grant of 10,000 shares, and (iv) extend the term of
the Directors' Plan from five years to ten years. A copy of the amendment is
attached as Exhibit B.
A brief summary of the Directors' Plan follows. All statements made in
the following summary are qualified by reference to the full text of the 1997
Directors' Stock Option Plan, as amended, attached to this Proxy Statement as
Exhibit B.
PURPOSE
Management believes that the ability to grant stock options to
directors who 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 stockholders.
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.
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 Directors' Plan shall include only options, which are
rights to purchase the Common Stock of the Company. Options granted under the
Directors' Plan are not intended to qualify as incentive stock options within
the meaning of Section 422 of the Code. 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.
Subject to this Proposal, upon their initial election or appointment as
a member of the Board of Directors, each Non-Employee Director automatically
shall receive an option for 10,000 shares of Common Stock. In addition, subject
to this Proposal, 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
stockholders of the Company, each Non-Employee Director automatically shall
receive an option for 5,000 shares of Common Stock. The Directors' Plan also
permits the grant of additional or separate options to directors serving on a
committee of the Board.
SHARES SUBJECT TO DIRECTORS' PLAN
Subject to this Proposal, there may be issued under the Directors' Plan
pursuant to the exercise of options an aggregate of not more than 200,000
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
stockholder with respect to
<PAGE>
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.
TERMS OF OPTIONS
Each option shall vest as to one-third of the total number of shares
covered by the option each year beginning with the first anniversary of the date
it is granted; provided, however, 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. Options shall have a term
of ten years.
Payment of the exercise price of options shall be made in United States
dollars by cash or check or by tender to the Company of shares of Common Stock
owned by the person exercising the option having a fair market value equal to
the cash exercise price applicable to such option.
If an optionholder ceases to be 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.
If an optionholder shall die holding an option that has not been fully
exercised, his executors, administrators, heirs or distributees, as the case may
be, 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), may
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 upon the exercise of options
granted 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 each optionholder 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 Directors' 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 stockholders 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.
<PAGE>
TERMINATION
The Board may terminate the Directors' Plan at any time. If not
terminated sooner, the Directors' Plan shall terminate on June 2, 2007.
TAX CONSEQUENCES
Under current Federal tax law, generally, no taxable income will be
realized by an optionholder 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, an optionholder 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. Subject to the satisfaction of a tax
reporting obligation, the Company generally will be entitled to a business
expense deduction equal to the taxable ordinary income realized by the
optionholder. Upon disposition of the stock, the optionholder will recognize a
capital gain or loss equal to the difference between the selling price and the
sum of the amount paid for such stock plus any amount recognized as ordinary
income upon exercise of the option. Such gain or loss will be long-term or
short-term depending on the length of time the stock was held. See the section
entitled "Federal Tax Information" in Proposal 2 for further information
regarding the taxation of nonqualifed stock options.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
<PAGE>
PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending September 30, 2000 and
has further directed that management submit the selection of independent
auditors for ratification by the stockholders at the Annual Meeting. Deloitte &
Touche LLP has audited the Company's financial statements for fiscal 1998 and
1999. Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting, will have an opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
Stockholder ratification of the selection of Deloitte & Touche LLP as
the Company's independent auditors is not required by the Company's By-laws or
otherwise. However, the Board is submitting the selection of Deloitte & Touche
LLP to the stockholders for ratification as a matter of good corporate practice.
If the stockholders fail to ratify the selection, the Audit Committee and the
Board will reconsider whether or not to retain that firm. Even if the selection
is ratified, the Audit Committee and the Board in their discretion may direct
the appointment of different independent auditors at any time during the year if
they determine that such a change would be in the best interests of the Company
and its stockholders.
The affirmative vote of the holders of a majority of the shares present
in person or represented by proxy and entitled to vote at the Annual Meeting
will be required to ratify the selection of Deloitte & Touche LLP. Abstentions
will be counted toward the tabulation of votes cast on proposals presented to
the stockholders and will have the same effect as negative votes. Broker
non-votes are counted towards a quorum, but are not counted for any purpose in
determining whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 4.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
The following table sets forth certain information regarding the
ownership of the Company's Common Stock as of December 31, 1999 by: (i) each
nominee for director; (ii) each of the executive officers named in the Summary
Compensation Table; (iii) all executive officers and directors of the Company as
a group; and (iv) all those known by the Company to be beneficial owners of more
than five percent of its Common Stock. The address for each nominee for
director, and executive officer named in the table is 47823 Westinghouse Drive,
Fremont, California 94539; the address for Alcatel Telspace, S.A. is 5 Rue Noel
Pons, 92734 Nanterre Cedex, France; and the address for Cannell Capital
Management is 600 California Street, San Francisco, California 94108.
<CAPTION>
Beneficial Ownership (1)
------------------------
Number Percent
Beneficial Owner of Shares of Total
---------------- --------- --------
<S> <C> <C>
Directors and Executive Officers :
Leon F. Blachowicz (2)..................................... 101,250 1.7
Frank S. Trumbower 3)...................................... 606,343 10.2
Daniel E. Moore............................................ 155,689 2.6
Olin L. Wethington (4)..................................... 24,165 *
Joseph T. Pisula (5)....................................... 24,165 *
Lawrence W. Roberts (6).................................... 5,165 *
D. Jonathan Merriman ...................................... - -
Myron B. Gilbert (7)....................................... 42,755 *
Michael B. Wytyshyn (8).................................... 31,980 *
James J. Commendatore (9).................................. 21,500 *
George M. Walley (10)...................................... 18,500 *
Directors and Executive Officers as a
Group (11 persons) (11) ................................. 1,031,512 17.0
Five Percent Stockholders:
Alcatel Telspace, C.I.T. .................................. 625,000 10.2
Cannell Capital Management (12)............................ 700,000 11.8
<FN>
- ---------------------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors
and principal stockholders and Schedules 13D and 13G filed with the
Securities and Exchange Commission (the "SEC"). Beneficial ownership is
determined in accordance with the rules of the SEC and generally
includes voting or investment power with respect to securities. Except
as indicated by footnote, and subject to community property laws where
applicable, the persons named in the table above have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them. Percentage of beneficial ownership is based
on 5,916,213 shares of Common Stock outstanding as of December 31,
1999, adjusted as required by rules promulgated by the SEC.
(2) Includes 56,250 shares subject to options exercisable within 60 days of
December 31, 1999.
(3) The number of shares includes 192,827 shares owned by Mr. Trumbower's
spouse, 12,500 shares held by UGMA Emily Ashby Trust, of which Mr.
Trumbower is the trustee, 10,000 shares held by UGMA Megan McFillen
Trust, of which Mr. Trumbower is the trustee, 5,000 shares held by UGMA
Tess Ashby Trust, of which Mr. Trumbower is the trustee and 10,000
shares held by 94 Grandchildren Trust, of which Mr. Trumbower is the
trustee. Mr. Trumbower disclaims beneficial ownership of these shares.
<PAGE>
(4) Includes 9,165 shares subject to options exercisable within 60 days of
December 31, 1999.
(5) Includes 19,165 shares subject to options exercisable within 60 days of
December 31, 1999.
(6) Includes 1,865 shares subject to options exercisable within 60 days of
December 31, 1999.
(7) Includes 12,500 shares subject to options exercisable within 60 days of
December 31, 1999.
(8) Includes 18,750 shares subject to options exercisable within 60 days of
December 31, 1999.
(9) Includes 12,500 shares subject to options exercisable within 60 days of
December 31, 1999.
(10) Includes 10,000 shares subject to options exercisable within 60 days of
December 31, 1999.
(11) Includes the Directors and Executive Officers named in the table.
(12) Based on a Schedule 13G filed January 12, 2000, J. Carlo Cannell D/B/A
Cannell Capital Management has shared dispositive power and shared
voting power with respect to 700,000 shares of the Company's Common
Stock.
</FN>
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 25, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with; except that two
reports, covering an aggregate of seven transactions, were filed late by Mr.
Myron Gilbert and an initial report of ownership was filed late by Mr. George M.
Walley.
<PAGE>
COMPENSATION OF DIRECTORS
During fiscal 1999, each non-employee director of the Company received
a quarterly retainer of $3,000 and a per meeting fee of $500. In the fiscal year
ended September 25, 1999, the total compensation paid to non-employee directors
was $75,000. The members of the Board of Directors are also eligible for
reimbursement for their expenses incurred in connection with attendance at Board
meetings in accordance with Company policy.
Each non-employee director of the Company also receives stock option
grants under the 1997 Directors' Stock Option Plan (the "Directors' Plan"). Only
non-employee directors of the Company or an affiliate of such directors (as
defined in the Code) are eligible to receive options under the Directors' Plan.
Options granted under the Directors' Plan are intended by the Company not to
qualify as incentive stock options under the Code.
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 Directors' Plan permits the grant
of additional or separate options to directors serving on a committee of the
Board. The exercise price of options granted under the Directors' Plan shall be
the closing price of a share of Common Stock on the date of grant as reported on
the Nasdaq National Market. Options granted under the Directors' Plan may not be
exercised until the date upon which such optionee has provided one year of
continuous service as a non-employee director following the date of grant of
such option, whereupon such option shall become exercisable as to one-third of
the option shares and one-third of the option shares shall become exercisable
each year thereafter in accordance with its terms. The term of options granted
under the Directors' Plan is 10 years.
During the last fiscal year, Messrs. Moore, Pisula, Roberts, and
Wethington were each granted options covering 2,500 shares at an exercise price
per share of $1.31, the fair market value of such Common Stock on the date of
grant. As of December 31, 1999, no options had been exercised under the
Directors' Plan. In October, 1999, D. Jonathan Merriman was appointed to our
Board of Directors. In connection with his appointment, Mr. Merriman received an
initial option grant of 10,000 shares of our common stock.
On May 6, 1999 Mr. Frank Trumbower was appointed Chairman of the Board.
In this capacity the Company entered into the following agreements with Mr.
Trumbower: (i) Common Stock Purchase Agreement pursuant to which Mr. Trumbower
purchased 50,000 shares of the Company's common stock at $1.125 per share for an
aggregate purchase price of $56,250. The purchase price for the shares
represented the closing price of the stock on the date of sale, as reported on
the Nasdaq National Market; (ii) Nonqualified Stock Option Agreement to purchase
70,000 shares of the Company's Common Stock at a purchase price of $1.50 per
share. The option was granted outside of any of the Company's stock option or
equity incentive plans; (iii) Nonqualified Stock Option Agreement to purchase an
aggregate of 10,000 shares of the Company's Common Stock at a purchase price of
$1.50 per share pursuant to the Company's Directors Stock Option Plan; and (iv)
Nonqualified Stock Option Agreements to purchase an aggregate of 20,000 shares
of the Company's Common Stock pursuant to the Company's 1997 Equity
Participation Plan at a purchase price of $1.50 per share. Additionally, Mr.
Trumbower receives $500 per month.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
<TABLE>
The following table shows for the fiscal years ended September 25,
1999, September 26, 1998 and September 27, 1997, compensation awarded or paid
to, or earned by, the Company's Chief Executive Officer and its other four most
highly compensated executive officers (the "Named Executive Officers"):
<CAPTION>
Long-term
Annual Compensation Compensation
-------------------------- -------------
Securities
Underlying All Other
Salary Bonus Options Compensation
Name and Principal Position Year ($) ($) (#) ($)
- --------------------------- ---- --------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
Leon F. Blachowicz 1999 235,000 100,000 75,000 3,058(1)
President and Chief 1998 88,576(2) -- 150,000 623(3)
Executive Officer 1997 -- -- -- --
Michael B. Wytyshyn 1999 184,995 45,000 100,000 3,933(4)
Executive Vice President 1998 60,479(2) 35,000 -- 1,972(5)
Business Development 1997 -- -- -- --
Myron B. Gilbert 1999 136,864 20,000 50,000 2,925(4)
Executive Vice President 1998 32,694(2) -- -- 623(3)
Operations 1997 -- -- -- --
George M. Walley 1999 137,088 4,595 10,000 7,933(5)
Executive Vice President 1998 18,000(2) 5,000 30,000 60(3)
Product Development 1997 -- -- -- --
James J. Commendatore 1999 117,113(2) 10,000 50,000 2,679(4)
Executive Vice President 1998 -- -- -- --
Chief Financial Officer 1997 -- -- -- --
<FN>
- ---------------------
(1) Includes employee insurance and imputed interest on employee loans.
(2) Employed for less than a full year.
(3) Includes employee insurance.
(4) Includes employee insurance, 401k benefits, and imputed interest on
employee loans.
(5) Includes employee insurance, 401k benefits, imputed interest on
employee loans and a temporary housing allowance of $6,400.
</FN>
</TABLE>
<PAGE>
STOCK OPTION GRANTS AND EXERCISES
The Company may grant options to its executive officers under its 1997
Equity Participation Plan or its 1992 Incentive Stock Option Plan. Percentage of
total options as set forth below was calculated based on options to purchase an
aggregate of 712,350 shares of common stock granted under our plans and 70,000
shares granted outside of our plans. The potential realizable value as set forth
below was calculated based on the five-year term of the option and assumed rates
of stock appreciation of 5% and 10% compounded annually from the date the
options were granted to their expiration date based on the fair market value of
the Common Stock on the date of grant. Options are granted to purchase Common
Stock at exercise prices no less than 100% of the market value of the stock on
the grant date. Options generally vest in a series of annual installments
beginning from the vesting start date and extending through the next four years
of service. The stock option agreements provide that options granted to all
employees will vest upon any "change in control" of the Company, as defined by
the agreements.
<TABLE>
The following tables show for the fiscal year ended September 25, 1999,
certain information regarding options granted to, exercised by, and held at year
end by, the Named Executive Officers:
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizeable
Values at Assumed
% of Total Annual Rates of Stock
Options Price Appreciation
Number of Granted to For Option Term
Securities Employees (5 Years)
Underlying Fiscal Price Expiration ----------------------
Name Options Year Per Share Date 5% ($) 10% ($)
- --------------------- ---------- ------ ----- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Leon F. Blachowicz 75,000 9.59% $ 1.88 11/12/03 38,956 86,082
Michael B. Wytyshyn 75,000 9.59% $ 2.50 10/16/03 51,803 114,471
25,000 3.20% $ 1.25 6/18/04 8,634 19,078
Myron B. Gilbert 50,000 6.39% $ 2.50 10/16/03 34,535 76,314
George M. Walley 10,000 1.28% $ 2.50 10/16/03 6,907 15,263
James J. Commendatore 50,000 6.39% $ 2.00 11/23/03 27,628 61,051
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END OPTION VALUES
Value of Unexercised
Number of Unexercised in-the-Money Options
Shares Value Options at Fiscal Year End at Fiscal Year End (2)
Acquired on Realized ----------------------------- -----------------------------
Name Exercise (#) ($) (1) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------- ------------ ------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Leon F. Blachowicz -- -- 37,500 187,500 -- 75,375
Michael B. Wytyshyn -- -- -- 100,000 -- 69,250
Myron B. Gilbert -- -- -- 50,000 -- 19,000
George M. Walley -- -- 7,500 32,500 11,775 39,350
James J. Commendatore -- -- -- 50,000 -- 44,000
<FN>
- ---------------------
(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 24, 1999 (last trading day prior to
September 25, 1999) on the Nasdaq National Market system of $2.88 minus
the exercise price.
</FN>
</TABLE>
<PAGE>
EMPLOYMENT AGREEMENTS
In April 1998 the Company entered into an employment agreement with Mr.
Blachowicz to serve as its President and Chief Executive Officer. Mr. Blachowicz
received a base salary of $235,000 per year. In addition, Mr. Blachowicz is
entitled to receive an annual bonus, a portion of which is guaranteed, payable
in cash and/or stock options with a target range of sixty percent (60%) of base
salary upon the Company's achieving certain pre-established goals determined by
the Board. In addition, the Company committed to grant Mr. Blachowicz an option
to purchase an aggregate of 250,000 shares of its Common Stock of which 150,000
shares were granted upon execution of the agreement. In the event of a change of
control, the vesting of Mr. Blachowicz's options accelerates such that they are
100% vested upon the closing of the change of control transaction.
In May 1998 the Company entered into an employment agreement with Mr.
Wytyshyn to serve as its Executive Vice President of Business Development. Mr.
Wytyshyn received an annual base salary of $185,000 per year. In addition, Mr.
Wytyshyn is entitled to receive an annual bonus payable in cash and/or stock
options with a target range of fifty percent (50%) of base salary upon the
Company's achieving certain pre-established goals determined by the Board. In
addition, the Company committed to grant Mr. Wytyshyn an option to purchase an
aggregate of 100,000 shares of its Common Stock of which 75,000 shares were
granted upon execution of the agreement. In the event of a change of control,
the vesting of Mr. Wytyshyn's options accelerates such that they are 100% vested
upon the closing of the change in control transaction.
In May 1998, the Company entered into an employment agreement with Mr.
Gilbert to serve as its Executive Vice President of Operations. Mr. Gilbert
received an annual base salary of $125,000 per year. In addition, Mr. Gilbert is
entitled to receive an annual bonus payable in cash and/or stock options with a
target range of forty percent (40%) of base salary upon the Company's achieving
certain pre-established goals determined by the Board. In addition, the Company
granted Mr. Gilbert an option to purchase an aggregate of 50,000 shares of its
Common Stock.
In November 1998, the Company entered into an employment agreement with
Mr. Commendatore to serve as its Executive Vice President and Chief Financial
Officer. Mr. Commendatore received an initial annual base salary of $145,000 per
year. In addition, Mr. Commendatore is entitled to receive an annual bonus
payable in cash and/or stock options with a target range of forty percent (40%)
of base salary upon the Company's achieving certain pre-established goals
determined by the Board. In addition, the Company granted Mr. Commendatore an
option to purchase an aggregate of 50,000 shares of its Common stock
In February 1999, the Company entered into an employment agreement with
Mr. Walley to serve as its Executive Vice President of Product Development. Mr.
Walley received an initial annual base salary of $138,000 per year. In addition,
Mr. Walley is entitled to receive an annual bonus payable in cash and/or stock
options with a target range of forty percent (40%) of base salary upon the
Company's achieving certain pre-established goals determined by the Board. In
addition, the Company agreed to pay a temporary mortgage allowance of up to
$1,600 a month for up to six months from the date of the agreement.
In accordance with all the agreements, subsequent to the fiscal year of
initial employment, annual base salary is to be determined by the Company's
Board of Directors. In addition, if any of the named executive officers is
terminated without cause, (a) within the first twelve month period from the
effective date of the employment agreements, the executive shall be entitled to
receive, and shall receive continuing compensation substantially equivalent to
their then current compensation for a period of twelve months from the date of
termination, payable in monthly installments during the twelve month period
following termination, (b) within the second twelve month period from the
effective date, the executive shall receive continuing compensation for a period
of nine months from the date of termination, payable in monthly installments
during the twelve month period following termination; and (c) within the third
twelve month period from the effective date, the executive shall receive
continuing compensation for a period of six months from the date of termination,
payable in monthly installments during the twelve month period following
termination. If any of the named executive officers are terminated upon a change
in control, such termination shall be termination without cause. All executive
officers have agreed not to (i) compete with the Company for the six (6) month
period following termination or during the period in which he receives such
salary continuation payments, whichever is longer or (ii) during the term of
their agreements, or at any time during the two year period thereafter, divulge,
furnish or make accessible to anyone other than the Company, the directors and
<PAGE>
officers of the Company, unless otherwise in the regular course of the business
of the Company, any knowledge of confidential information.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION (1)
The Compensation Committee (the "Committee") of the Board of Directors
is composed of two outside directors, Messrs. Roberts and Trumbower. The
Committee administers the Company's Executive Compensation Program. Participants
in the Executive Compensation Program in 1999 were Leon F. Blachowicz,, Michael
B. Wytyshyn, Myron B. Gilbert, and James J. Commendatore. 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:
o Levels of compensation that are competitive with those provided in the
industry and market in which the Company competes for its executive
resources;
o Annual incentive compensation that varies with the financial
performance of the Company, and rewards corporate and individual
performance; and
o Long-term incentives which align the interests of management with those
of the Stockholders.
Executive Officer Compensation Program
The Company's Executive Compensation program is composed of four
elements; base salary, annual cash incentive compensation, long-term incentive
compensation principally in the form of stock options, and various other
customary benefits. To align salaries with the Company's 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 published executive salary levels at similar companies with
comparable revenues. In general, the Committee believes that base salaries
should approximate those in the upper quarter of the comparable industry range.
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
who assist the Company in achieving 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 fiscal year and are based
upon financial plans and budget approved by the Board. For fiscal year 1999, the
incentive compensation was based upon operating profit and cash flow from
operating activities. For fiscal year 1998, the incentive compensation was based
upon operating profit, cash flow, and the execution of agreements with a number
of new customers. In fiscal 1998 bonuses to executive officer ranged from 8% to
25% of fiscal 1999 base compensation.
Equity Compensation
- ---------------------
(1) This section is not "soliciting material", is not deemed "filed" with the
SEC, and is not to be incorporated by reference in any filing of the Company
under the Securities Act of 1933, as amended or Exchange Act whether made before
or after the date hereof, and irrespective of any general incorporation language
in such filings.
<PAGE>
The 1992 and 1997 Employee Stock Option Plans (the "Option Plans") are
the Company's principal long-term incentive plans for executive officers and key
employees. The objectives of the option plans are to align executive and
stockholder long-term interests by creating a strong and direct link between
executive compensation and stockholder return, and to enable executives to
develop and maintain a significant, long-term ownership position in 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 stockholders because stock options provide value to the optionee only if the
stock price increases.
Stock options are granted at an exercise price equal to the fair market
value of the Company's Common Stock on the date of grant, have a five (5) year
term and generally vest on an annual basis over a four-year period. Options are
granted at the fair market value of the Company's Common Stock on the date of
grant so as to provide a reward only for future stock appreciation. The
Committee determined that all executive officers, including the Chief Executive
Officer, would receive option grants in fiscal 1999.
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 1999 for any executive officer.
Chief Executive Officer Compensation
The Committee uses the same procedures described above in setting the
annual salary, bonus, and stock option awards for Mr. Leon F. Blachowicz, the
Company's President and Chief Executive Officer. Mr. Blachowicz base salary for
fiscal 1999 was $235,000 per annum. For fiscal 1999 the Committee awarded bonus
of $100,000, and awarded him an option grant to purchase an additional 75,000
shares of the Company's Common Stock at the fair market value of the Common
Stock on the date of grant. Such option vests in a series of annual installments
over a four-year period beginning from the vesting start date. This grant was
intended to maintain the overall competitiveness of Mr. Blachowicz compensation
package and strengthen the alignment of Mr. Blachowicz's interest with those of
the stockholders during a crucial phase of the Company's development.
Report Summary
The Committee has reviewed the total compensation of the Chief
Executive Officer of the Company, Leon F. Blachowicz, and the other highest paid
executive officers in fiscal 1999, Michael B. Wytyshyn, Myron B. Gilbert, George
M. Walley and James J. Commendatore. The Committee believes that the
compensation of executives by the Company is appropriate and competitive with
the compensation programs provided by other similar companies with which the
Company competes for executives and employees. The Committee believes its
compensation strategy, principles and practices result in a compensation program
tied to stockholder returns and linked to the achievement of annual and
longer-term financial and operational results of the Company on behalf of the
Company's stockholders.
COMPENSATION COMMITTEE
Lawrence W. Roberts
Frank Trumbower
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON (1)
The following graph shows the total stockholder return of an investment
of $100 in cash on September 24, 1994 for (i) the Company's Common Stock, (ii)
the NASDAQ Market Index and (iii) a peer group index that includes the
securities of such companies as California Microwave, Inc., Datron Systems, Inc.
and Scientific-Atlanta, Inc. in the radio and TV communications equipment market
SIC code number 3663. All values assume reinvestment of the full amount of all
dividends and are calculated as the Companies fiscal year end:
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
Measurement
Period
(Fiscal
Year
Covered) SSE Telecom, Inc. Peer Group Broad Market
-------- ----------------- ---------- ------------
1994 100.00 100.00 100.00
1995 136.73 147.04 138.07
1996 138.78 116.38 163.84
1997 100.00 140.52 224.97
1998 26.53 84.16 228.77
1999 37.76 191.46 371.52
- ---------------------
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in an filing of the Company
under the 1933 Act or the 1934 Act whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
(2) The Peer Group Index (SIC Code Index) is calculated using an equal-dollar
weighting methodology.
<PAGE>
CERTAIN TRANSACTIONS
During the fourth quarter of fiscal 1999, the Company loaned $40,000 to
Mr. Blachowicz and $20,000 each to the other named executive officers in
exchange for unsecured notes receivable. The loan proceeds were used to purchase
the Company's Common Stock on the open market. The notes are generally interest
free prior to maturity and are due no later than August 31, 2003, earlier under
certain circumstances.
In May 1999 the Company and Mr. Trumbower entered into, (i) a common
stock purchase agreement dated May 13, 1999 pursuant to which Mr. Trumbower
purchased and the Company sold an aggregate of 50,000 shares of the Company's
Common Stock at a purchase price of $1.125 per share, the fair market value of
the stock on the date of purchase, and (ii) a nonqualified stock option ("NSO")
agreement to purchase 70,000 shares of the Company's Common Stock at an exercise
price of $1.50 per share, which exceeded the fair market value of the stock on
the date of grant. The NSO was granted to Mr. Trumbower outside of the Company's
equity incentive plans and director's stock option plan.
In March 1999, the Company loaned $150,000 to George M. Walley in
exchange for a promissory note due no later than March 2000. The note is
interest free. As of September 25, 1999, the outstanding balance had been
reduced to $50,000.
In June 1995, the Company and Alcatel Telspace C.I.T. ("Alcatel
Telspace"), a unit of Alcatel Telecom of France, and a principal stockholder of
the Company, invested equally in Media4, Inc. ("Media4"), a privately held
developer of products for distribution of multimedia information over wireless
networks to personal computers. During fiscal year 1998, the Company purchased
Alcatel's Media4 7% convertible debenture for $175,000 plus accrued interest,
and an additional $2,250,000 of 9.5% convertible debentures. Including the
initial investment and as of February 1, 1999, the Company has invested
approximately $965,000 in Media4 common stock, $350,000 in Media4 7% convertible
debentures, and $2,250,000 in Media4 9.5% convertible debentures. Daniel E.
Moore, a director of the Company, was a member of the Board of Directors of
Media4. On February 1, 1999, the Company sold its interest in Media4 at book
value in exchange for the common stock of Echostar Communications Corporation.
Alcatel Telspace and the Company also entered into an agreement, dated
September 1996, 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 $764,000 and purchases from Alcatel Telspace of $1.0
million, during fiscal 1999. As of September 25, 1999 the Company had trade
receivables and payables with Alcatel Telspace of $17,000 and $601,000,
respectively. Alcatel Telspace is currently a primary supplier of a key
component in the Company's STAR satellite transceiver products.
Pursuant to that certain Stockholder Agreement by and among Alcatel
Telespace, the Company and certain stockholders of the Company dated September
6, 1996, (the "Agreement") Alcatel Telspace was granted certain Board
representation and observation rights. Specifically, Alcatel Telspace has the
right, but not the obligation to designate an individual for nomination to the
Board (the "Nominee"). Also, pursuant to the Agreement the Company and Frederick
C. Toombs and Daniel E. Moore (the "Current Stockholders") must use their best
efforts to cause such Nominee to be nominated to the Board. In addition, each
Current Stockholder must vote all his shares of Common Stock of the Company in
favor of the election of such Nominee. Further, if Alcatel Telspace chooses not
to designate a Nominee, Alcatel Telspace has the right to have a representative
designated by it to attend all meetings of the Board. The Company, however, has
the right to exclude such representative from any meeting or any part thereof if
the Company believes that such exclusion is reasonably necessary to preserve the
attorney-client privilege, to protect highly confidential proprietary
information or for other similar reasons. The right of Alcatel Telspace to
designate a Nominee or to have a representative designated by it attend all
meetings of the Board terminates in its entirety on the date on which Alcatel
Telspace and its affiliates hold, in the aggregate, less than 500,000 shares of
Common Stock, provided that on such date, such shares represent less than 8% of
the outstanding voting securities of the Company on a fully diluted basis.
Similarly, the obligation of the Current Stockholders to vote their shares in
favor of a Nominee terminates at the time that such Current Stockholder holds
less that 10,000 shares of Common Stock.
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented
for consideration at the Annual Meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/S/ KENNETH GUERNSEY
/s/ KENNETH GUERNSEY
Secretary
February 16, 2000
<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 affiliates, 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 stockholders of the Company
at the Company's 1997 Annual Meeting of stockholders.
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, or any other
committee to which the Board has delegated the administration of the Plan. In
the discretion of the Board, the Committee may consist solely of two or more
Outside Directors, in accordance with Section 162(m) of the Code, and/or solely
of two or more Non-Employee Directors, in accordance with Rule 16b-3. Within the
scope of such authority, the Board or the Committee may (i) delegate to a
committee of one or more members of the Board who are not Outside Directors, the
authority to grant Stock Awards to eligible persons who are either (a) not then
Covered Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Stock Award or (b) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code
and/or (ii) delegate to a committee of one or more members of the
1.
<PAGE>
Board who are not Non-Employee Directors the authority to grant Stock Awards to
eligible persons who are not then subject to Section 16 of the Exchange Act.
"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.
"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 that 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.
"Non-Employee Director" means a director of the Company who either (i) is
not a current employee or officer (within the meaning of Section 16 of the
Exchange Act) of the Company or its parent or a subsidiary, does not receive
compensation (directly or indirectly) from the Company or its parent or a
subsidiary for services rendered as a consultant or in any capacity other than
as a director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of Regulation S-K and is
not engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee director" for purposes of Rule 16b-3.
"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.
"Outside Director" means a director of the Company who either (i) is not a
current employee of the Company or an "affiliated corporation" (within the
meaning of Treasury Regulations promulgated under Section 162(m) of the Code),
is not a former employee of the
2.
<PAGE>
Company or an "affiliated corporation" receiving compensation for prior services
(other than benefits under a tax qualified pension plan), was not an officer of
the Company or an "affiliated corporation" at any time and is not currently
receiving direct or indirect remuneration from the Company or an "affiliated
corporation" for services in any capacity other than as a director or (ii) is
otherwise considered an "outside director" for purposes of Section 162(m) of the
Code.
"Participant" means an employee (including officers and directors who also
are employees) or a consultant of the Company or an Affiliate whom 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.
"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 in accordance with Section 22(3)(3) of the Code.
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.
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. Incentive Stock Options may be granted only to employees of the Company or
an Affiliate in which the Company owns at least 50% of the equity interest.
Consultants shall not be eligible for a grant under the Plan if, at the time
of grant, a Form S-8 Registration Statement under the Securities Act ("Form
S-8") is not available to register either the offer or the sale of the Company's
securities to such consultant because of the nature of the services that the
consultant is providing to the Company, or because the consultant is not a
natural person, or as otherwise provided by the rules governing the use of Form
S-8, unless the Company determines both (i) that such grant (A) shall be
registered in another manner under the Securities Act (e.g., on a Form S-3
Registration Statement) or (B) does not require registration under the
Securities Act in order to comply with the requirements of the Securities Act,
if
3.
<PAGE>
applicable, and (ii) that such grant complies with the securities laws of all
other relevant jurisdictions.
Subject to the provisions of section 10 relating to changes in
capitalization, no employee shall be granted Options or Restricted Shares
covering more than five hundred thousand (500,000) shares of Common Stock in a
calendar year.
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.
(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
4.
<PAGE>
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.
(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
stockholder 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
5.
<PAGE>
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.
(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
6.
<PAGE>
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 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 stockholder 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.
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 825,000 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.
In addition to the foregoing, in the event of a Change in Control, any
surviving corporation may assume outstanding Options and Restricted Shares or
may substitute similar stock awards (including an award to acquire the same
consideration paid to the stockholders in the transaction causing the Change in
Control) therefor.
8.
<PAGE>
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.
(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.
9.
<PAGE>
(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 tender 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; provided, however, that the value of the shares
of Common Stock tendered to satisfy the withholding tax required with respect to
an exercise shall not exceed the minimum amount of tax required to be withheld
by law. 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.
(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 stockholders of any such amendment, suspension or discontinuance,
then the Committee may take such action subject to the approval of the
stockholders. 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.
10.
<PAGE>
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 stockholder
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 at the time of the grant (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.
(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
200,000 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
1.
<PAGE>
Plan) shall have no rights as a stockholder 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) Upon their initial election or appointment as a member of the Board,
each Non-Employee Director automatically shall receive an Option for 10,000
common shares. Each year, as of the date 30 days after election or re-election
as a member of the Board at the annual meeting of stockholders of the Company,
each Non-Employee Director automatically shall receive an Option for 5,000
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:
(1) in United States dollars by cash or check, or
(2) 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 pre-ceding date on which the NASDAQ National Market was open
for trading, or
2.
<PAGE>
(3) 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
(1) 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
(2) 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 sub-paragraph 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.
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.
3.
<PAGE>
(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.
(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 stockholders of the Company in accordance with Paragraph 10
below, increase the maxi-mum 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
4.
<PAGE>
(b) ten years from the date the Plan is initially approved and adopted by
the stockholders of the Comp-any 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. Stockholder Adoption. The Plan shall be submitted to the stockholders 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 share-holders shall be deemed to
have approved and adopted the Plan only if it is approved and adopted at a
meeting of the stockholders duly held on or before that date by vote taken in
the manner required by the laws of the State of Delaware.
5.
<PAGE>
EXHIBIT C
PROXY SSE TELECOM, INC. PROXY
47823 Westinghouse Drive, Fremont, CA 94539
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 15, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Frank S. Trumbower, Leon F. Blachowicz,
and Larry W. Roberts, and each of them, with full power of substitution,
attorneys and proxies to appear and vote, as indicated on the reverse side, 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 15, 2000, and at any and all reconvened sessions thereof.
The Board of Directors recommend a vote FOR the following items:
(Continued and to be signed on the other Side)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
SSE TELECOM, INC.
Please Detach and Mail in the Envelope Provided
<TABLE>
<CAPTION>
<S> <C> <C>
A [X] Please mark your
votes as in this
example.
FOR ALL OF THE WITHHOLD
NOMINEES AUTHORITY Nominees
(except as marked to (to vote for all Leon F. Blachowicz FOR AGAINST ABSTAIN
the contrary below) nominees) Frank Trumbower
Daniel E. Moore 2. To approve the Company's [ ] [ ] [ ]
1. To elect [ ] [ ] Joseph T. Pisula 1997 Equity Participation
directors to Lawrence W. Roberts Plan, as amended, to increase
serve for the D. Jonathan Merriman the aggregate number of shares
ensuing year and until their successors are elected. Olin L. Wethington of Common Stock authorized for
issuance under such plan by
(INSTRUCTION: To withhold authority to vote for any 400,000 shares.
individual nominee or nominees, write that nominee's
name in the space below.) 3. To approve the Company's [ ] [ ] [ ]
1997 Directors' Stock Option
- -------------------------------------------------------- Plan, as amended, to increase
the aggregate number of shares
of Common Stock authorized for
issuance under such plan by
100,000 shares, increase the
annual grant from 2,500 shares
of Common Stock to 5,000
shares of Common Stock and
provide for an initial
appointment grant of 10,000
shares of Common Stock.
4. To ratify the selection of [ ] [ ] [ ]
Deloitte & Touche LLP as
independent auditors of the
Company for its fiscal year
ending September 30, 2000.
5. To transact such other business as may properly
come before the meeting or any adjournment or
postponement thereof.
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______________________
NOTE: Please sign proxy exactly as your name(s) appear(s) on the envelope addressed to you containing the Proxy Statement. When
signing as attorney, executor, administrator, trustee or guardian, please also give your full title. If shares are held
jointly EACH holder should sign.)
</TABLE>
