<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission file number 0-12489
SPECTRAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-2729372
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 Hall Road, Sturbridge, Massachusetts 01566
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (508) 347-2261
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No.
The number of shares of the registrant's Common Stock outstanding as of
July 31, 1996, was 5,387,963.
1
<PAGE> 2
PART I - FINANCIAL INFORMATION
SPECTRAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales $ 28,753,735 $ 17,064,463 $ 15,281,212 $ 9,099,384
Cost of Sales 18,679,936 11,329,407 9,963,632 6,257,904
------------ ------------ ------------ ------------
Gross Profit 10,073,799 5,735,056 5,317,580 2,841,480
Selling and Administrative Expenses 6,267,479 4,165,695 3,448,363 2,128,046
Research and Development Costs 1,580,542 1,412,545 671,263 659,100
------------ ------------ ------------ ------------
Income from Operations 2,225,778 156,816 1,197,954 54,334
Other Income (Expense):
Interest Income 120,729 168,184 52,817 83,561
Interest Expense (319,391) (253,731) (133,193) (151,918)
Other 63,045 84,099 29,267 27,953
------------ ------------ ------------ ------------
(135,617) (1,448) (51,109) (40,404)
------------ ------------ ------------ ------------
Income before Taxes 2,090,161 155,368 1,146,845 13,930
Income Tax Provision 573,481 64,235 314,070 5,711
------------ ------------ ------------ ------------
Net Income $ 1,516,680 $ 91,133 $ 832,775 $ 8,219
============ ============ ============ ============
Weighted Average Number of Shares of
Common Stock Outstanding 5,892,795 5,319,034 6,035,640 5,409,358
========= ========= ========= =========
Net Income per Share of Common Stock $.26 $.02 $.14 $--
==== ==== ==== ===
</TABLE>
See accompanying notes to these condensed consolidated financial statements.
2
<PAGE> 3
SPECTRAN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 2,364,575 $ 1,624,515
Current Portion of Marketable Securities 957,025 4,088,316
Trade Accounts Receivable, net 8,804,735 7,798,517
Inventories 8,287,270 7,414,718
Current Deferred Income Taxes, net 588,000 588,000
Prepaid Expenses and Other Current Assets 690,226 513,356
------------ ------------
Total Current Assets 21,691,831 22,027,422
Property, Plant and Equipment, net 13,463,662 10,290,048
Other Assets:
Long-term Marketable Securities 1,382,642 1,132,682
License Agreements, net 903,975 1,004,417
Deferred Income Taxes, net 1,934,000 1,652,000
Goodwill, net 4,008,831 4,156,392
Other 183,005 101,751
------------ ------------
Total Other Assets 8,412,453 8,047,242
------------ ------------
Total Assets $ 43,567,946 $ 40,364,712
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 2,451,920 $ 2,762,265
Income Taxes Payable 512,248 224,576
Accrued Liabilities 3,614,820 3,082,431
------------ ------------
Total Current Liabilities 6,578,988 6,069,272
Long-term Debt 11,000,000 10,000,000
Stockholders' Equity:
Common Stock, voting, $.10 par value; authorized
20,000,000 shares; outstanding 5,380,397 shares and
5,353,686 shares in 1996 and 1995, respectively 538,040 535,369
Common Stock, non-voting, $.10 par value;
authorized 250,000 shares; no shares outstanding -- --
Paid-in Capital 26,599,632 26,442,794
Net Unrealized Loss on Marketable Securities (4,935) (22,264)
Retained Earnings (Deficit) (1,143,779) (2,660,459)
------------ ------------
Total Stockholders' Equity 25,988,958 24,295,440
------------ ------------
Total Liabilities and Stockholders' Equity $ 43,567,946 $ 40,364,712
============ ============
</TABLE>
See accompanying notes to these condensed consolidated financial statements.
3
<PAGE> 4
SPECTRAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1996 1995
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 1,516,680 $ 91,133
Reconciliation of Net Income to Net Cash Provided by
(Used in) Operating Activities
Add (Deduct) Items Not Affecting Cash:
Depreciation and Amortization 1,467,450 1,035,307
Other Non-Cash Charges (286,019) (156,379)
Changes in Other Components of Working Capital (1,649,365) (1,172,696)
----------- -----------
Net Cash Provided by (Used in) Operating Activities 1,048,746 (202,635)
Cash Flows from Investing Activities:
Acquisition of Business -- (4,182,051)
Acquisition of Property, Plant and Equipment (4,361,360) (959,765)
Purchase of Marketable Securities (7,192,908) (1,400,222)
Proceeds from Maturity of Marketable Securities 2,953,765 --
Proceeds from Sale of Marketable Securities 7,132,308 2,491,181
----------- -----------
Cash Used in Investing Activities (1,468,195) (4,050,857)
Cash Flows from Financing Activities:
Borrowings of Long-term Debt 1,000,000 3,851,942
Proceeds from Exercise of Stock Options and Warrants 159,509 --
Proceeds from Issuance of Stock -- 422,498
----------- -----------
Cash Provided by Financing Activities 1,159,509 4,274,440
Increase in Cash and Cash Equivalents 740,060 20,948
Cash and Cash Equivalents at Beginning of Period 1,624,515 477,022
----------- -----------
Cash and Cash Equivalents at End of Period $ 2,364,575 $ 497,970
=========== ===========
</TABLE>
See accompanying notes to these condensed consolidated financial statements.
4
<PAGE> 5
SPECTRAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The financial information for the six months ended June 30, 1996, is
unaudited but reflects all adjustments (consisting solely of normal recurring
adjustments) which the Company considers necessary for a fair statement of
results for the interim period. The results of operations for the six months
ended June 30, 1996, are not necessarily indicative of the results for the
entire year.
The consolidated results for the six months ended June 30, 1996,
include the accounts of SpecTran Corporation (the Company) and all wholly owned
subsidiaries: SpecTran Communication Fiber Technologies, Inc., SpecTran
Specialty Optics Company and Applied Photonic Devices, Inc. All significant
intercompany balances and transactions have been eliminated.
These financial statements supplement, and should be read in
conjunction with, the Company's audited financial statements for the year ended
December 31, 1995, as contained in the Company's Form 10-K as filed with the
United States Securities and Exchange Commission.
2. INVENTORIES
Inventories consisted of:
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Raw Materials $ 3,848,729 $ 3,131,753
Work in Process 1,485,731 1,507,830
Finished Goods 2,952,810 2,775,135
--------------- ---------------
$ 8,287,270 $ 7,414,718
=============== ===============
</TABLE>
5
<PAGE> 6
3. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Property, plant and equipment consisted of:
Land and Land Improvements $ 407,705 $ 407,705
Buildings and Improvements 3,763,006 3,729,114
Machinery and Equipment 18,591,912 17,229,195
Construction in Progress 4,605,536 1,640,786
----------- -----------
27,368,159 23,006,800
Less Accumulated Depreciation and Amortization 13,904,497 12,716,752
----------- -----------
$13,463,662 $10,290,048
=========== ===========
</TABLE>
4. INCOME PER SHARE OF COMMON STOCK
Income per share of common stock is based on the weighted average of
the number of shares outstanding during the periods, including common stock
equivalents of stock purchase warrants and stock options for both primary and
fully diluted earnings per share. Fully diluted income per share approximates
primary income per share.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three and Six Months Ended June 30, 1996 Versus Three and Six Months
Ended June 30, 1995
Overview
SpecTran's revenue increased 67.9% to $15,281,212 and the Company
earned net income of $832,775, or $.14 per share in the second quarter of 1996
compared with revenues of $9,099,384 and net income of $8,219, or less than one
cent per share in the second quarter of 1995. For the six month period ended
June 30, 1996 revenue increased 68.5% to $28,753,735 and the Company earned net
income of $1,516,680 or $.26 per share compared with revenues of $17,064,463 and
net income of $91,133 or $.02 per share for the comparable period of 1995. The
improved revenues and earnings in 1996 resulted from continued strong market
demand and improved gross profit margin for the Company's standard products, the
results of Applied Photonic Devices, Inc., acquired May 23, 1995 and increased
sales volumes of the Company's specialty products.
Net Sales
Consolidated net sales of $15,281,212 and $28,753,735 for the three and
six month periods ended June 30, 1996, were $6,181,828 (67.9%) and $11,689,272
(68.5%) higher than for the comparable periods of 1995. The increase in both
periods was primarily due to increased sales volumes of the Company's standard
multimode fiber products. Also contributing to the increase in the second
quarter and first six months of 1996 were sales of Applied Photonic Devices,
Inc., acquired by the Company May 23, 1995.
Gross Profit
SpecTran earned a consolidated gross profit of $5,317,580 and
$10,073,799 for the three and six months ended June 30, 1996, respectively,
which was $2,476,100 (87.1%) and $4,338,743 (75.7%) higher than the comparable
periods of 1995, respectively. The increase in gross profit was primarily due to
the higher sales level in the 1996 three and six month periods. The gross
margin, as a percentage of sales, increased to 34.8% in the second quarter of
1996 from 31.2% in the second quarter of 1995. For the six month period ended
June 30, 1996 the gross margin, as a percent of sales, increased to 35.0% from
33.6% in the comparable period of 1995. The increase in the margin was
principally due to lower production costs of the Company's standard products
resulting from manufacturing process improvements. This was offset in part by
lower margins earned by the APD cabling operation which was acquired in May
1995. Royalties expense was 4.0% and 4.1% of SpecTran's sales for the three and
six month periods, respectively, compared to 5.5% and 5.6% in the comparable
period of 1995, with a higher level of sales in 1996 not subject to royalties.
7
<PAGE> 8
Selling and Administration
Consolidated selling and administrative expenses increased by
$1,320,317 (62.0%) and $2,101,784 (50.5%) during the three and six month periods
ended June 30, 1996. The increase was primarily due to expenses incurred by
Applied Photonic Devices, Inc. in both periods of 1996. As a percentage of sales
these expenses decreased during 1996 to 22.6% and 21.8% compared to 23.4% and
24.4% for the comparable three and six month periods.
Research and Development
Consolidated spending for internal research and development increased
by $12,163 (1.8%) and $167,997 (11.9%) for the three and six month periods ended
June 30, 1996. Consolidated research and development costs decreased as a
percentage of sales to 4.4% and 5.5% in 1996 compared to 7.2% and 8.3% for the
comparable three and six month periods of 1995. The Company's increased research
and development spending is primarily in programs designed to improve
manufacturing cost and product performance in both the multimode and single-mode
product lines, to develop new special performance fiber products and to develop
alternative process technologies.
Other Income (Expense), net
Net other expense increased $10,705 (26.5%) and $134,169 (9266%) during
the three and six months ended June 30, 1996 compared to the same period of
1995. Interest income decreased by $30,744 (36.8%) and $47,455 (28.2%) during
the three and six months of 1996, respectively, primarily as a result of lower
investment balances than in the comparable periods of 1995. Interest expense
decreased during the second quarter of 1996 $18,725 (12.3%) as a result of
capitalization of interest expense on asset construction. Interest expense
increased during the six month period of 1996 by $65,660 (25.9%) as a result of
increased debt levels.
Income Taxes
A tax provision of 28% of pre-tax income was provided in the three and
six month periods of 1996 compared to a tax provision of 41% of pre-tax income
in the comparable periods of 1995. The estimated effective tax rate for 1996 of
28% is lower than the statutory tax rate due to an anticipated reduction in the
valuation allowance for deferred tax assets due to the Company's belief that it
is more likely than not that the additional deferred tax asset will be realized
through the utilization of operating loss and tax credit carryforwards.
Net Income
Net income for the three and six months of 1996 was $832,775, or 5.4%
of net sales, and $1,516,680, or 5.3% of net sales, respectively. Net income for
the same periods in 1995 was $8,219, or .1% of net sales, and $91,133 or .5% of
sales, respectively.
8
<PAGE> 9
Liquidity and Capital Resources
At June 30, 1996, the Company had net working capital of $15,112,905, a
current ratio of 3.3 to 1, and an aggregate of $2,364,575 in cash and cash
equivalents. In addition, the Company had total marketable securities of
$2,339,667 including $1,382,642 classified at long-term which could be converted
into cash if needed.
First half 1996 capital expenditures of $4,361,360 were made to
increase capacity and represented a $3,401,595 (354.4%) increase compared to
capital expenditures in the first half of 1995. The Company is planning
additional significant capital expenditures during the remainder of 1996 to
further expand capacity.
At June 30, 1996, the Company had outstanding an $11 million loan under
a revolving credit agreement with Fleet National Bank, leaving $1 million of
borrowing available under the agreement.
The Company expects but can not assure that existing working capital,
borrowings, and expected positive cash flow should be sufficient to meet the
Company's cash needs in 1996.
9
<PAGE> 10
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 10.69 Supplemental Retirement Agreement between SpecTran
Corporation and Raymond E. Jaeger dated May 8, 1996.
Exhibit 10.70 Supplemental Retirement Agreement between SpecTran
Corporation and Bruce A. Cannon dated May 8, 1996.
Exhibit 10.71 Supplemental Retirement Agreement between SpecTran
Corporation and Crawford L. Cutts dated May 8, 1996.
Exhibit 10.72 Supplemental Retirement Agreement between SpecTran
Corporation and William B. Beck dated May 8, 1996.
Exhibit 10.73 Supplemental Retirement Agreement between SpecTran
Corporation and John E. Chapman dated May 8, 1996.
Exhibit 10.74 Lease between CRJ Realty Trust and SpecTran
Communication Fiber Technologies, Inc. dated July 22,
1996.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the quarter
which this report was filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
SPECTRAN CORPORATION
(Registrant)
Date: August 9, 1996 BY:
/s/ Glenn E. Moore
-------------------------------------------------
Glenn E. Moore
President and Chief Executive Officer
Date: August 9, 1996 BY:
/s/ Bruce A. Cannon
-------------------------------------------------
Bruce A. Cannon
Senior Vice President and Chief Financial Officer
10
<PAGE> 1
EXHIBIT 10.69
SUPPLEMENTAL RETIREMENT AGREEMENT
THIS AGREEMENT is made and entered into this 8th day of May, 1996 by
and between SpecTran Corporation ("SpecTran"), a Delaware corporation, and
Raymond E. Jaeger (hereinafter called "Jaeger").
PURPOSE AND INTENT
This agreement (the "Agreement") is designed to recognize Jaeger's
contribution to the Corporation(1) as both a founder of the Corporation and as
its President and Chief Executive Officer since inception and to encourage
Jaeger to remain in the Corporation's employ by providing supplemental
retirement benefits, keyed to a specified percentage of his compensation, so
that Jaeger's percentage of spendable retirement income will approximate the
percentage of spendable retirement income available to less compensated
employees who also participate in the Corporation's retirement plans. Due to
restrictions presently imposed by the Internal Revenue Code on benefits for
highly compensated employees, the percentage of spendable retirement income
Jaeger would receive under the Corporation's current benefit plans relative to
his current compensation would be less than that of employees at lower salary
levels. The benefits provided in this Agreement are designed to be entirely
supplemental to the Corporation's other retirement benefits payable to Jaeger;
if Jaeger receives the specified percentage of compensation through pension
plans and other benefits (as described below) provided by the Corporation, no
benefits will be paid out under this Agreement. While any benefits are paid
under this Agreement Jaeger will be available to consult for the Corporation.
Further, these benefits are subject to forfeiture if Jaeger is terminated for
Cause (as defined herein) or, as described below, competes with the Corporation.
- --------
(1) Initial capitalized words may be defined below under the heading "Certain
Definitions".
Page 1
<PAGE> 2
EXHIBIT 10.69
Jaeger is a founder of the Corporation, has been employed by the
Corporation since its inception in 1981, and served as President and Chief
Executive Officer of the Corporation and its subsidiaries from its inception
through December 31, 1995. The Board of Directors of SpecTran voted on May 8,
1996 to authorize the Corporation to enter into this Agreement with Jaeger.
CERTAIN DEFINITIONS(a) "Accrued Benefit" shall have the meaning set forth in
Section 2.01 of this Agreement.
(b) "Affiliate" shall mean any person or entity which controls, is controlled by
or is under common control with the Corporation. For the purpose of this
Agreement, control shall mean ownership of fifty percent (50%) or more of the
voting stock of any entity.
(c) "Benefit Computation Base" shall mean the average of Jaeger's annual
compensation (defined as base salary, bonus(2) and any salary reduction amounts
pursuant to Sections 401(k)
- -----------------------------
(2) To the extent that the average annual bonus paid to Jaeger during the 36
month period in which the Benefit Computation Base is calculated is greater than
fifty percent (50%) of Jaeger's average base salary over such period, the excess
bonus payments shall be considered ineligible for the purpose of calculating the
Benefit Computation Base. For example, assume that Jaeger's base salary and
bonuses over the 36 month period are as shown in the following two examples:
1.
<TABLE>
<CAPTION>
Base Salary Bonus
-----------------------------------------------------------------
<S> <C> <C>
Months 1-12 $200,000 $200,000
Months 13-24 $210,000 $100,000
Months 25-36 $220,000 $ 90,000
Average $210,000 $130,000
</TABLE>
In this example, fifty percent (50%) of Jaeger's average annual base
salary over the 36 month period is $105,000. Accordingly, of Jaeger's average
annual bonus of $130,000 paid over that period, $25,000 will be deemed
ineligible for the purpose of calculating the Benefit Computation Base,
resulting in $105,000 of the average bonus being considered eligible.
Page 2
<PAGE> 3
EXHIBIT 10.69
or 125 of the Code) paid during the thirty-six (36) consecutive calendar months
during Jaeger's period of employment by the Corporation in which such
compensation is the highest.(d) "Change in Control" shall have the meaning set
forth in Section 10.02 of this Agreement.(e) The "Corporation" shall mean
SpecTran, its successors and assigns, including but not limited to any
corporation, firm or person which is the survivor of a merger or consolidation
with SpecTran or which acquires substantially all of the assets of SpecTran, and
any of SpecTran's Affiliates.(f) "Normal Retirement Date" shall mean Jaeger's
sixty-fifth birthday.(g) "Offsetting Benefits" shall have the meaning set forth
in Section 2.03 of this Agreement.(h) "Supplemental Retirement Benefit" shall
have the meaning set forth in Section 2.01 of this Agreement.
ARTICLE ONE
1.01 EMPLOYMENT. The Corporation may employ Jaeger in such capacity as the
Corporation may from time to time determine. Notwithstanding anything contained
herein, this Agreement is not an agreement of employment, a guaranty of
continuing employment or of employment in any particular position and nothing
herein shall restrict the Corporation concerning the terms and conditions of
Jaeger's employment. The benefits provided by this Agreement are not part of any
salary reduction plan or an arrangement deferring a bonus or a salary increase.
Jaeger has no option to take any current payment or bonus in lieu of these
salary continuation benefits.
2.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Base Salary Bonus
-----------------------------------------------------------------
<S> <C> <C>
Months 1-12 $200,000 $200,000
Months 13-24 $210,000 $ 10,000
Months 25-36 $220,000 $ 30,000
Average $210,000 $ 80,000
</TABLE>
In this example, fifty percent (50%) percent of Jaeger's average
annual base salary over the 36 month period is $105,000. Jaeger's average annual
bonus over that period of $80,000 is less than the average annual base salary,
and accordingly the entire average annual bonus will be eligible in determining
the Benefit Computation Base.
Page 3
<PAGE> 4
EXHIBIT 10.69
ARTICLE TWO
2.01 SUPPLEMENTAL RETIREMENT BENEFIT. Depending upon how many years Jaeger has
been continuously in the employ of the Corporation, Jaeger will be entitled to a
retirement benefit determined as of the effective date of his leaving the
Corporation's employment for whatever reason except Cause (as defined below),
including whether by (i) death, (ii) disability, (iii) termination of employment
or (iv) early retirement. The retirement benefit (also known as the "Accrued
Benefit") shall be an annual amount equal to Jaeger's Benefit Computation Base
multiplied by the Annual Percentage Amount (as determined pursuant to Section
2.02, below). Jaeger will receive a supplemental retirement benefit (the
"Supplemental Retirement Benefit") equal to (i) the amount of the Accrued
Benefit reduced by (ii) the sum of the benefits described in Subsections (1),
(2), (3) and (4) of Section 2.03, below (such benefits are referred to herein as
the "Offsetting Benefits"). The Supplemental Retirement Benefit, if any, to be
paid out under this Agreement, shall continue for fifteen (15) years, and be
paid in equal monthly installments commencing on the first day of the month
immediately following the later of Jaeger's actual retirement or the Normal
Retirement Date (unless payment is accelerated in accordance with Sections 10.01
and 10.02 below). No payment will be made under this Agreement if the Offsetting
Benefits are equal to or greater than the Accrued Benefit.
Page 4
<PAGE> 5
EXHIBIT 10.69
2.02 ANNUAL PERCENTAGE AMOUNT.
(a) The Annual Percentage Amount shall be determined (subject to subsection
(b), below) by the number of years Jaeger has been continuously employed by the
Corporation as follows:
<TABLE>
<CAPTION>
=========================================================================================
YEARS OF CONTINUOUS SERVICE ANNUAL PERCENTAGE AMOUNT
=========================================================================================
<S> <C>
25 or more 65%
20 -24 60%
15-19 40%
less than 15 0% (No Supplemental Retirement Benefit)
=========================================================================================
</TABLE>
(b) Notwithstanding the provisions of Subsection (a) of this Section 2.02,
in the event (a) Jaeger does not remain employed by the Corporation for any
reason during the twelve (12) month period following a Change in Control (as
defined in Section 10.01, below) or (b) an event described in Section 10.01
occurs and either such other corporation, firm or person (as described in
Section 10.01) does not agree that Jaeger shall continue in the employ of the
Corporation for any reason following such event or the Corporation's successor
does not assume its obligations hereunder, Jaeger will be deemed eligible to
receive a Supplemental Retirement Benefit under this Agreement if at the time of
the termination of his employment he will have completed at least five full
years of service to the Corporation. In this case, the Annual Percentage Amount
shall be determined by the number of years Jaeger has been continuously employed
by the Corporation as follows:
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EXHIBIT 10.69
<TABLE>
<CAPTION>
=========================================================================================
YEARS OF SERVICE ANNUAL PERCENTAGE AMOUNT
=========================================================================================
<S> <C>
25 or more 65%
20 -24 60%
15-19 40%
14 36%
13 32%
12 28%
11 24%
10 20%
9 16%
8 12%
7 8%
6 4%
less than 6 0% (No Supplemental Retirement Benefit)
=========================================================================================
</TABLE>
c) Anything else to the contrary in this Agreement notwithstanding, in the
event of either (a) Jaeger does not remain employed by the Corporation for any
reason during the twelve month period following a Change in Control or (b) an
event described in Section 10.01 occurs and either such other corporation, firm
or person (as described in Section 10.01) does not agree that Jaeger shall
continue in the employ of the Corporation for any reason following such event or
the Corporation's successor does not assume its obligations hereunder, and (c)
in either case, the payment of the Supplementary Retirement Benefit hereunder,
is considered a Parachute Payment and when combined with all other payments
considered to be Parachute Payments from the Corporation to Jaeger due to the
events described in (a) and (b) above, result in an Excess Parachute Payment, as
defined by Section 280G of the Internal Revenue Code of 1986, as amended, then
the amount of the Supplementary Retirement Benefit shall be reduced so that the
total Parachute Payments received by Jaeger from the Corporation do not
constitute an Excess Parachute Payment; provided, however, that this Section
2.02(c) shall not apply if the total Parachute Payments from the Corporation to
Jaeger due to the events described in (a) and (b) above exceed one hundred
twenty percent (120%) of the amount of all Parachute Payments not including any
amount that would be considered an Excess Parachute
Page 6
<PAGE> 7
EXHIBIT 10.69
Payment.
Page 7
<PAGE> 8
EXHIBIT 10.69
2.03 OFFSETTING BENEFITS.
(a) The following are the Offsetting Benefits, which reduce the Accrued
Benefit for the purpose of calculating the Supplemental Retirement Benefit:
1. Fifty percent (50%) of Jaeger's (actual or projected) annual primary
social security retirement benefit projected as of Jaeger's social security
normal retirement age based on his Benefit Computation Base in effect on
the date of termination of Jaeger's employment with the Corporation;
2. The annual amount of benefits payable to Jaeger (or his beneficiaries)
at the Normal Retirement Date calculated on a single life annuity basis
from any qualified defined benefit pension plan maintained and funded by
the Corporation as of the date of this Agreement, or their successors, as
such plan or plans may be amended or modified from time to time;
3. The annual amount of benefits payable at the Normal Retirement Date on a
single life annuity basis attributable to the portion of the account
balances of Jaeger arising from employer contributions (but excluding the
portion of such balances arising from employee salary reduction and
elective contributions) at the date of determination from the Corporation's
401(k) and other defined contribution retirement plans maintained by the
Corporation as of the date of this Agreement, or their successors, as such
plan or plans may be modified from time to time;
4. The annual amount of benefits payable to Jaeger at the Normal Retirement
Date calculated on a single life annuity basis from any other non-qualified
supplemental retirement plan maintained and funded by the Corporation as of
the date of this Agreement, or their successors, as such plan or plans may
be amended or modified from time to time.
(b) The Corporation's obligation to pay the Offsetting Benefits shall not be
affected by the termination of this Agreement and the Supplemental Retirement
Benefit payable hereunder for any reason whatsoever.
(c) All calculations of the Supplemental Retirement Agreement payable to Jaeger
under this Agreement will be made assuming that Jaeger participates in the
Offsetting Benefits to the full extent permitted by law and the terms of those
plans.
(d) If Jaeger terminates his employment prior to his Normal Retirement Date, in
calculating his Accrued Benefit, (i) the offset of primary social security
retirement benefit shall be calculated on the basis of the amount projected to
be payable at Jaeger's social security normal retirement age assuming continued
earnings by Jaeger at the rate in effect at termination of employment until
Jaeger's social security normal retirement age; (ii) the offset for any
qualified defined benefit plan shall be calculated on the basis of Jaeger's
accrued benefit in said plan upon termination of employment projected to be
payable at Jaeger's Normal Retirement Date; (iii) the offset for any benefits
arising from employer contributions attributable to the account balances of
Jaeger arising from the Corporation's 401(k) plan or any other defined
contribution retirement plan shall also be calculated on the basis of Jaeger's
accrued benefit in such plan(s) upon termination of employment projected to be
payable at Jaeger's Normal Retirement Date; and (iv) the offset for any
non-qualified supplemental
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EXHIBIT 10.69
retirement plan shall be calculated on the basis of Jaeger's accrued benefit in
said plan upon termination of employment projected to be payable at Jaeger's
Normal Retirement Date .
2.04 OPTIONAL FORMS OF PAYMENT. In lieu of the fifteen (15) year certain
payments provided in Section 2.01 above, or whenever a Supplemental Retirement
Benefit is payable under Section 4.01 or 5.01 of this Agreement, Jaeger may
elect by written notice to the Corporation in the calendar year prior to the
calendar year in which payments are to begin, an optional form of payment which
shall be the actual equivalent (factors defined in SpecTran's qualified defined
benefit pension plan) of the said fifteen (15) year certain payments. The
optional form of payment shall be any optional form of payment which is provided
to Jaeger under the terms of SpecTran's qualified defined benefit pension plan.
2.05 VESTING. Anything to the contrary in this Agreement notwithstanding, Jaeger
shall be entitled to one hundred percent (100%) of any benefit payable under
this Agreement under any one or more of Sections 2.01, 3.01, 4.01, 5.01, 10.01
or 10.02 at the date on which his entitlement to such benefit shall be
determined commencing with his original date of hire by the Corporation,
provided that such benefits are subject to forfeiture as described in Sections
5.03 and 5.04, below.
ARTICLE THREE
3.01 DEATH OF JAEGER.
(a) If Jaeger dies while employed by the Corporation but prior to the
commencement of the payment of the Supplemental Retirement Benefit under
Section 2.01, 4.01 or 5.01, SpecTran will pay to the designated
beneficiaries of Jaeger, a total annual amount equal to the Supplemental
Benefit earned by Jaeger as of the date of death, payable over a period of
fifteen (15) years certain commencing on the first day of the month next
following the delivery to the Corporation of a death certificate and on a
monthly basis thereafter.
(b) If Jaeger dies following the commencement of the payment of the
Supplemental Retirement Benefit under Section 2.01, 4.01 or 5.01, such
payments shall continue to the designated beneficiaries of Jaeger until all
of the Supplemental Retirement Benefit has been paid.
c) If Jaeger dies following the termination of his employment with the
Corporation and prior to the commencement of the payment of the
Supplemental Retirement Benefit under Section 2.01, 4.01 or 5.01, SpecTran
shall pay to Jaeger's named beneficiaries an annual benefit which shall be
Jaeger's Supplemental Retirement Benefit as of the date of the termination
of his employment. Such benefits shall be payable monthly, commencing on
the first day of the month following the Normal Retirement Date, or any
date prior to the Normal Retirement Date approved by the Corporation, and
continuing for fifteen (15) years; provided, however, that Jaeger's
designated beneficiaries shall be entitled to accelerated payments of such
benefits if and to the same extent Jaeger would have been entitled to an
accelerated payment of the Supplemental Retirement Benefit had he survived.
3.02 BENEFICIARIES. Jaeger shall designate, in writing to the Corporation, on
the form titled "Designation of Beneficiary" attached hereto as Schedule A, one
or more beneficiaries. Jaeger
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EXHIBIT 10.69
from time to time may change his designated beneficiaries by delivering to the
Corporation a dated, revised Designation of Beneficiary form, revoking the prior
designation. If no beneficiary is so named or if no named beneficiary is living
at the time a payment is due, benefit payments shall be made, when due, to
Jaeger's estate. If payments of benefits to a beneficiary commences and such
beneficiary dies before all amounts to which such beneficiary is entitled have
been paid, the remaining benefits shall be paid to the successive beneficiary or
beneficiaries, if any, designated by Jaeger, or if none, to the beneficiary's
estate.
ARTICLE FOUR
4.01 DISABILITY PRIOR TO RETIREMENT. In the event Jaeger shall become disabled,
mentally or physically, which disability prevents him from performing the
material aspects of his duties, the Corporation will pay no disability benefits
hereunder. Disability benefits (if any) will be paid to Jaeger through such
insurance programs as may be sponsored by the Corporation. Upon the later of
termination of such other disability benefits (if any), or Jaeger's attainment
of the Normal Retirement Date, Jaeger shall commence receiving payment of his
Accrued Benefit determined as of the date of the disability. The Supplemental
Retirement Benefit shall be paid in equal monthly installments, for fifteen (15)
years certain commencing on the first day of the month following the later of
the termination of such benefits or the Normal Retirement Date, or in the manner
provided in Section 2.04.
4.02 RE-EMPLOYMENT FOLLOWING DISABILITY. In the event Jaeger returns to work
with the Corporation after terminating employment because of disability, this
Agreement shall continue in full force and effect as though such disability had
not occurred. Under such circumstances, Jaeger will receive credit towards
determining the Annual Percentage Amount for service prior to terminating his
employment because of disability and for service after resuming employment with
the Corporation, but will not receive credit for the interim prior during which
he was not employed by the Corporation.
ARTICLE FIVE
5.01 EARLY RETIREMENT, TERMINATION OF SERVICE OR DISCHARGE. Except to the extent
otherwise provided in Sections 5.03 and 5.04, in the event that Jaeger's
employment with the Corporation is terminated, voluntarily or involuntarily,
before Jaeger attains the Normal Retirement Date, for reasons other than death
or disability, Jaeger shall be entitled to a Supplemental Retirement Benefit,
determined as of the date of his termination of employment. Such benefit shall
be payable in equal monthly installments, commencing on the first day of the
month next following the later of the Normal Retirement Date or the date of
Jaeger's actual retirement, and continuing for fifteen (15) years (except as set
forth in Sections 10.01 and 10.02); provided, however, that Jaeger may elect by
execution and delivery to the Corporation of the form attached hereto as
Schedule B to have the monthly payments of the Supplemental Retirement Benefit
commence prior to the Normal Retirement Date at any date between age 60 and the
Normal Retirement Date. Jaeger understands that such election is being made
prospectively and is irrevocable.
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EXHIBIT 10.69
5.02 OPTIONAL FORMS OF PAYMENT. In lieu of the fifteen (15) years certain
payments provided in Section 5.01, the Supplemental Retirement Benefit payable
under such Section may be payable in the manner provided in Section 2.04.
5.03 EMPLOYMENT BY COMPETITION. In the event that during the two year period
immediately following the termination of Jaeger's employment for any reason,
Jaeger shall compete with the business of the Corporation, then the Supplemental
Retirement Benefit which might otherwise be due and payable hereunder shall be
immediately forfeited and all rights of Jaeger and his beneficiaries hereunder
shall become void; provided, however, that if (a) Jaeger does not remain
employed by the Corporation for any reason during the twelve (12) month period
following a Change in Control or (b) an event described in Section 10.01 occurs
and either such other corporation, firm or person (as described in Section
10.01) does not agree that Jaeger shall continue in the employ of the
Corporation for any reason following such event or the Corporation's successor
does not assume its obligations hereunder, the provisions of Section 5.03 shall
not apply, but the provisions of Sections 10.01 and 10.02 shall govern. Jaeger
will be deemed to have competed with the business of the Corporation if, during
the two year period following termination of his employment with the
Corporation, he either (a) engages, directly or indirectly, or by stock interest
exceeding five percent (5%), or otherwise in any way, in any business in which
the Corporation was engaged during the term of his employment or which the
Corporation planned, during the term of his employment to enter, (b) solicits
any past, present or future customers of the Corporation in any way relating to
any business in which the Corporation was engaged during the term of his
employment, or which the Corporation planned during the term of his employment,
to enter, or (c) induces or actively attempt to influence any other employee or
consultant of the Corporation to terminate his or her employment or consultancy
with the Corporation.
5.04 FORFEITURE. Anything to the contrary in this Agreement notwithstanding
(other than Sections 10.01 and 10.02), the Supplemental Retirement Benefits
shall be immediately forfeited and all rights of Jaeger and his beneficiaries
hereunder shall become null and void, if Jaeger's employment with the
Corporation is terminated for Cause. For this purpose, a termination shall be a
termination for "Cause" only if the termination if for one or more of the
following: (i) the conviction of Jaeger for committing any felony, (ii) stealing
from the Corporation, (iii) a willful breach by Jaeger of a material provision
of this Agreement and (iv) if Jaeger engages in gross misconduct, such as fraud,
dishonesty, gross negligence or insubordination. If (a) Jaeger does not remain
employed by the Corporation for any reason within one year following a Change in
Control or (b) an event described in Section 10.01 occurs and either such other
corporation, firm or person (as described in Section 10.01) does not agree that
Jaeger shall continue in the employ of the Corporation for any reason following
such event or the Corporation's successor does not agree to assume its
obligation hereunder, the provisions of this Section 5.04 shall not apply, but
the provisions of Sections 10.01 and 10.02 shall govern.
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EXHIBIT 10.69
5.05 AVAILABILITY TO CONSULT. For so long as Jaeger is receiving benefits
pursuant to this Agreement, Jaeger will keep himself available to consult with,
and respond to inquiries from, the Corporation relating to its business affairs,
at reasonable time(s) and to reasonable extent.
ARTICLE SIX
6.01 INTEREST. Any payment that is required to be made hereunder that is delayed
beyond the date specified in this Agreement shall bear interest at a variable
rate which shall be the rate of interest on one year U.S. Treasury Bills
determined at the first auction of each calendar year or part thereof during the
period of which interest is to be applied to any obligation hereunder.
ARTICLE SEVEN
7.01 ALIENABILITY. Neither Jaeger, nor any beneficiary under this Agreement
shall have any power or right to transfer, assign, anticipate, hypothecate,
mortgage, commute, modify, or otherwise encumber in advance any of the benefits
payable hereunder, and any attempt to do so shall be deemed null and void. The
seizure of the benefits payable hereunder for the payment of any debts,
judgments, alimony or separate maintenance, owed by Jaeger or his beneficiary or
any of them, or the transfer of such benefit by operation of law in the event of
bankruptcy, or otherwise, shall be deemed to be a transfer prohibited by this
Agreement, and will result in the immediate termination of all benefits payable
hereunder.
ARTICLE EIGHT
8.01 PARTICIPATION IN OTHER PLANS. Nothing contained in this Agreement shall be
construed to alter, abridge, or in any manner affect the rights and privileges
of Jaeger to participate in and be covered by any pension, profit sharing, group
insurance, bonus or any other employee plan or plans which the Corporation may
have or hereafter have.
ARTICLE NINE
9.01 FUNDING.
(a) The Corporation reserves the right at its sole and exclusive discretion
to insure or otherwise provide for the obligations of the Corporation
undertaken by this Agreement or to refrain from same, and to determine
the extent, nature and method thereof, including the establishment of
one or more trusts. Should the Corporation elect to insure this
Agreement, in whole or in part, through the medium of insurance or
annuities, or both, the Corporation shall be the owner and beneficiary
of the policy or annuity. At no time shall Jaeger be deemed to have any
right, title or interest in or to any specified asset or assets of the
Corporation, or any trust or escrow arrangement, including, but not by
way of restriction, any insurance or annuity contracts or the proceeds
therefrom.
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EXHIBIT 10.69
(b) Any such policy, contract or asset shall not in any way be considered
to be security for the performance of the obligations of this
Agreement.
c) If the Corporation purchases a life insurance or annuity policy on the
life of Jaeger, Jaeger agrees to sign any papers that may be required
for that purpose and to undergo any medical examination or tests (at
the Corporation's expense) which may be necessary, and generally
cooperate with the Corporation in securing such policy.
d) To the extent Jaeger acquires a right to receive benefits under this
Agreement, such right shall be equivalent to the right of an unsecured
general creditor of the Corporation.
ARTICLE TEN
10.01 REORGANIZATION. SpecTran shall not merge or consolidate into or with
another corporation if such merger or consolidation shall result in the other
corporation being the survivor corporation, nor shall it sell substantially all
of its assets to another corporation, firm or person, unless and until Jaeger
and such other corporation, firm or person agree that Jaeger shall continue in
the employ of the succeeding, continuing or acquiring corporation, firm or
person and such other corporation, firm or person agrees in writing without
further qualification to assume and discharge the obligations of SpecTran under
this Agreement. If Jaeger and such corporation, firm or person do not agree that
Jaeger shall continue in the employ of such corporation, firm or person, or such
corporation, firm or person does not so agree to assume and discharge such
obligations, SpecTran shall pay to Jaeger, in one lump sum, his Supplemental
Retirement Benefit as of the date of such merger, consolidation or sale. All
calculations of the Supplemental Retirement Benefit, for purposes of this
Section 10.01, shall be discounted to present value in accordance with the
actuarial tables used in SpecTran's defined benefit pension plan.For the purpose
of clarification, any transaction between SpecTran and any of its Affiliates is
not intended to be covered by this Section 10.01.
10.02 CHANGE IN CONTROL. In the event that a Change in Control occurs prior to
the Normal Retirement Date and either (a) Jaeger is dismissed without Cause from
employment by the Corporation up to and including
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EXHIBIT 10.69
twelve (12) months from such Change in Control or (b) Jaeger voluntarily leaves
the employ of the Corporation up to and including twelve (12) months from such
Change in Control, then in either case SpecTran shall pay to Jaeger, in one lump
sum, his Supplemental Retirement Benefit as of the date of the termination of
Jaeger's employment. All calculations of the Supplemental Retirement Benefit,
for purposes of this Section 10.02, shall be discounted to present value in
accordance with the actuarial tables used in SpecTran's defined benefit pension
plan. For the purposes of this Agreement, "Change in Control" shall mean (a) the
date of public announcement that a person has become, without the approval of
SpecTran's Board of Directors, the beneficial owner of 20% or more of the voting
power of all securities of SpecTran then outstanding; (b) the date of the
commencement of a tender offer or tender exchange by any person, without the
approval of SpecTran's Board of Directors, if upon the consummation thereof such
person would be the beneficial owner of 20% or more of the voting power of all
securities of SpecTran then outstanding; or (c) the date on which individuals
who constituted the Board of Directors of SpecTran on the date this Agreement
was adopted cease for any reason to constitute a majority thereof, provided that
any person becoming a director subsequent to such date whose election or
nomination was approved by at least three quarters of such incumbent Board of
Directors shall be considered as though such person were an incumbent director.
ARTICLE ELEVEN
11.01 BENEFITS AND BURDENS. This Agreement shall be binding upon and inure to
the benefit of Jaeger and his personal representatives, the Corporation, and any
successor organization which shall succeed to substantially all of the
Corporation's assets and business without regard to the form of such succession.
ARTICLE TWELVE
12.01 COMMUNICATIONS. Any notice or communication required of either party with
respect to this Agreement shall be made in writing and may either be delivered
personally or sent by certified mail, return receipt requested, as the case may
be:
To the Corporation:
c/o President of the Corporation
SpecTran Corporation
50 Hall Road
Sturbridge, MA 01566
To Jaeger:
Raymond E. Jaeger
25 Old Village Road
Sturbridge, MA 01566
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EXHIBIT 10.69
Each party shall have the right by written notice to change the place to which
any notice may be addressed.
ARTICLE THIRTEEN
13.01 CLAIMS PROCEDURE. In the event that benefits under this Agreement are not
paid to Jaeger (or his beneficiary in the case of Jaeger's death), and such
person feels entitled to receive them, a claim shall be made in writing to the
Corporation within sixty (60) days after written notice from the Corporation to
Jaeger or his beneficiary or personal representative that payments are not being
made or are not to be made under this Agreement. Such claim shall be reviewed by
the Corporation. If the claim is approved or denied, in full or in part, the
Corporation shall provide a written notice of approval or denial within sixty
(60) days from the date of receipt of the claim setting forth the specific
reason for denial, specific reference to the provision of this Agreement upon
which the denial is based, and any additional material or information necessary
to perfect the claim, if any. Also, such written notice shall indicate the steps
to be taken if a review of the denial is desired. If a claim is denied (a claim
shall be deemed denied if the Corporation does not take action within the
aforesaid sixty (60) day period) and a review is desired, Jaeger (or beneficiary
in the case of Jaeger's death), shall notify the Corporation in writing within
twenty (20) days. In requesting a review, Jaeger or his beneficiary may review
this Agreement or any document relating to it and submit any written issues and
comments he or she may feel appropriate. In its sole discretion the Corporation
shall then review the claim and provide a written decision within sixty (60)
days. This decision likewise shall state the specific reasons for the decision
and shall include reference to specific provisions of this Agreement on which
the decision is based.Any decision of the Corporation shall not be binding on
Jaeger, his personal representative, or any beneficiary without consent, nor
shall it preclude further action by Jaeger, his personal representatives or
beneficiary.
13.02 ARBITRATION. All claims, disputes and other matters in question between
the parties hereto arising out of or relating to this Agreement or the breach
thereof shall be decided by arbitration in accordance with the Rules of the
American Arbitration Association then obtaining, subject to the limitations and
restrictions stated below. Neither party will be permitted to submit a dispute
to arbitration without first following the procedures set forth in Section
13.01. Notice of demand for arbitration must be filed in writing with the other
party to this Agreement and with the American Arbitration Association. The
demand must be made within a reasonable time after the claim, dispute or other
matter in question has arisen. In no event may the demand for arbitration be
made if the institution of legal or equitable proceedings based on such claim,
dispute or other matter in question would be barred by the applicable statute of
limitations. Arbitrations hereunder will be held in the English language in
Boston, Massachusetts or such other place as the parties may agree. The award
rendered by the arbitrators will be final, not subject to appeal and judgment
may be entered upon it in any court having jurisdiction thereof. Each party will
bear all of his or its own costs and expenses
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EXHIBIT 10.69
associated with the arbitration, and the parties shall equally share the
administrative costs of the arbitration.
ARTICLE FOURTEEN
14.01 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof, and supersedes all prior
agreements, written or verbal, with respect to such subject matter. This
instrument may be altered or amended only by written agreement signed by the
parties hereto.
14.02 GENDER. Any reference in this Agreement to the masculine shall be deemed
to include the feminine where the context so requires.
14.03 OPERATION OF LAW ON CORPORATION'S OBLIGATIONS. In the event that any
governmental entity promulgates any statute, rule, regulation, policy or order
which restricts or prohibits the Corporation from making payments to Jaeger
under this Agreement, then the Corporation's obligations to make payments to
Jaeger (or his beneficiary) hereunder shall terminate or be restricted or
suspended (consistent with such law or binding regulation, policy or order) for
so long as such restriction or prohibition applies to the Corporation. Nothing
in this Agreement is intended to require or shall be construed as requiring the
Corporation to do or fail to do any act in violation of any applicable law or
binding regulation, policy or order.
14.04 COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be considered an original, but together shall constitute one
and the same document.
14.05 SEVERANCE. In the event any provision of this Agreement is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Agreement shall remain in full force and effect and will not be affected by
such invalid or unenforceable provisions.
14.06 JURISDICTION, GOVERNING LAW. The parties, terms and conditions of this
Agreement are subject to and shall be governed by the laws of the Commonwealth
of Massachusetts without giving effect to the principles of conflicts of law.
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EXHIBIT 10.69
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed by its duly authorized officer and its Corporate Seal affixed at
Sturbridge, Massachusetts the day and year first above written.
SPECTRAN CORPORATION
_________________________ By_____________________________________
Witness Name:
Title:
_________________________ _______________________________________
Witness Raymond E. Jaeger
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EXHIBIT 10.69
SCHEDULE A
DESIGNATION OF BENEFICIARY
Gentlemen:In accordance with the provisions of the Supplemental Retirement
Agreement dated May 8, 1996, between SpecTran Corporation and the undersigned, I
hereby designate ____________________, residing at ________________________,* as
my beneficiary to receive payments thereunder in the event of my death before
payments in full thereunder have been made. In the event said beneficiary
predeceases me, I hereby designate _________________, residing at
___________________________,* as beneficiary in his/her stead.
Very truly yours,
_________________________
*If more than one beneficiary is to be designated, add a page listing the
beneficiaries and specify the percentage of each payment to be received by each
beneficiary.
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EXHIBIT 10.69
SCHEDULE B
Gentlemen:
In accordance with Section 5.01 of the Supplemental Retirement Agreement dated
May 8, 1996, between SpecTran Corporation and the undersigned, I hereby
prospectively and irrevocably make the election indicated below with respect to
the payment of benefits:
[CHECK ONE]
______ I elect to commence receiving benefits prior to age 65 if I retire before
the Normal Retirement Age, with the benefits to commence at age ____ [Specify
age between 60 and 65].
OR
______ I elect to commence receiving benefits after the Normal Retirement Date
and forego my right to receive benefits prior to the Normal Retirement Age.
Very truly yours,
_______________________
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EXHIBIT 10.70
SUPPLEMENTAL RETIREMENT AGREEMENT
THIS AGREEMENT is made and entered into this 8th day of May, 1996 by
and between SpecTran Corporation ("SpecTran"), a Delaware corporation, and Bruce
A. Cannon (hereinafter called "Cannon").
PURPOSE AND INTENT
This agreement (the "Agreement") is designed to recognize Cannon's
contribution to the Corporation(1) and encourage Cannon to remain in the
Corporation's employ by providing supplemental retirement benefits, keyed to a
specified percentage of his compensation, so that Cannon's percentage of
spendable retirement income will approximate the percentage of spendable
retirement income available to less compensated employees who also participate
in the Corporation's retirement plans. Due to restrictions presently imposed by
the Internal Revenue Code on benefits for highly compensated employees, the
percentage of spendable retirement income Cannon would receive under the
Corporation's current benefit plans relative to his current compensation would
be less than that of employees at lower salary levels. The benefits provided in
this Agreement are designed to be entirely supplemental to the Corporation's
other retirement benefits payable to Cannon; if Cannon receives the specified
percentage of compensation through pension plans and other benefits (as
described below) provided by the Corporation, no benefits will be paid out under
this Agreement. While any benefits are paid under this Agreement Cannon will be
available to consult for the Corporation. Further, these benefits are subject to
forfeiture if Cannon is terminated for cause (as defined herein) or, as
described below, competes with the Corporation.
Cannon has been in the employ of the Corporation since 1983, is now
serving SpecTran as its Chief Financial Officer, Senior Vice President,
Secretary and Treasurer, and is
- ---------------------------
(1) Initial capitalized words may be defined below under the heading "Certain
Definitions".
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EXHIBIT 10.70
currently the Secretary and Treasurer of each of SpecTran's Affiliates, SpecTran
Fiber Communications Technologies, Inc., SpecTran Specialty Optics Company and
Applied Photonic Devices, Inc. The Board of Directors of SpecTran voted on May
8, 1996 to authorize the Corporation to enter into this Agreement with Cannon.
CERTAIN DEFINITIONS(a) "Accrued Benefit" shall have the meaning set forth in
Section 2.01 of this Agreement.
(b) "Affiliate" shall mean any person or entity which controls, is controlled by
or is under common control with the Corporation. For the purpose of this
Agreement, control shall mean ownership of fifty percent (50%) or more of the
voting stock of any entity.
(c) "Benefit Computation Base" shall mean the average of Cannon's annual
compensation (defined as base salary, bonus(2) and any salary reduction amounts
pursuant to Sections 401(k)
- -------------------
(2)To the extent that the average annual bonus paid to Cannon during the 36
month period in which the Benefit Computation Base is calculated is greater than
fifty percent (50%) of Cannon's average base salary over such period, the excess
bonus payments shall be considered ineligible for the purpose of calculating the
Benefit Computation Base. For example, assume that Cannon's base salary and
bonuses over the 36 month period are as shown in the following two examples:
1.
<TABLE>
<CAPTION>
Base Salary Bonus
---------------------------------------------
<S> <C> <C>
Months 1-12 $200,000 $200,000
Months 13-24 $210,000 $100,000
Months 25-36 $220,000 $ 90,000
Average $210,000 $130,000
</TABLE>
In this example, fifty percent (50%) of Cannon's average annual base
salary over the 36 month period is $105,000. Accordingly, of Cannon's average
annual bonus of $130,000 paid over that period, $25,000 will be deemed
ineligible for the purpose of calculating the Benefit Computation Base,
resulting in $105,000 of the average bonus being considered eligible.
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EXHIBIT 10.70
or 125 of the Code) paid during the thirty-six (36) consecutive calendar months
during Cannon's period of employment by the Corporation in which such
compensation is the highest.
(d) "Change in Control" shall have the meaning set forth in Section 10.02 of
this Agreement.
(e) The "Corporation" shall mean SpecTran, its successors and assigns, including
but not limited to any corporation, firm or person which is the survivor of a
merger or consolidation with SpecTran or which acquires substantially all of the
assets of SpecTran, and any of SpecTran's Affiliates.
(f) "Normal Retirement Date" shall mean Cannon's sixty-fifth birthday.
(g) "Offsetting Benefits" shall have the meaning set forth in Section 2.03 of
this Agreement.
(h) "Supplemental Retirement Benefit" shall have the meaning set forth in
Section 2.01 of this Agreement.
ARTICLE ONE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2.
Base Salary Bonus
---------------------------------------------
<S> <C> <C>
Months 1-12 $200,000 $200,000
Months 13-24 $210,000 $ 10,000
Months 25-36 $220,000 $ 30,000
Average $210,000 $ 80,000
</TABLE>
In this example, fifty percent (50%) percent of Cannon's average annual
base salary over the 36 month period is $105,000. Cannon's average annual bonus
over that period of $80,000 is less than the average annual base salary, and
accordingly the entire average annual bonus will be eligible in determining the
Benefit Computation Base.
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EXHIBIT 10.70
1.01 EMPLOYMENT. The Corporation may employ Cannon in such capacity as the
Corporation may from time to time determine. Notwithstanding anything contained
herein, this Agreement is not an agreement of employment, a guaranty of
continuing employment or of employment in any particular position and nothing
herein shall restrict the Corporation concerning the terms and conditions of
Cannon's employment. The benefits provided by this Agreement are not part of any
salary reduction plan or an arrangement deferring a bonus or a salary increase.
Cannon has no option to take any current payment or bonus in lieu of these
salary continuation benefits.
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EXHIBIT 10.70
ARTICLE TWO
2.01 SUPPLEMENTAL RETIREMENT BENEFIT. Depending upon how many years Cannon has
been continuously in the employ of the Corporation, Cannon will be entitled to a
retirement benefit determined as of the effective date of his leaving the
Corporation's employment for whatever reason except Cause (as defined below),
including whether by (i) death, (ii) disability, (iii) termination of employment
or (iv) early retirement. The retirement benefit (also known as the "Accrued
Benefit") shall be an annual amount equal to Cannon's Benefit Computation Base
multiplied by the Annual Percentage Amount (as determined pursuant to Section
2.02, below). Cannon will receive a supplemental retirement benefit (the
"Supplemental Retirement Benefit") equal to (i) the amount of the Accrued
Benefit reduced by (ii) the sum of the benefits described in Subsections (1),
(2), (3) and (4) of Section 2.03, below (such benefits are referred to herein as
the "Offsetting Benefits"). The Supplemental Retirement Benefit, if any, to be
paid out under this Agreement, shall continue for fifteen (15) years, and be
paid in equal monthly installments commencing on the first day of the month
immediately following the later of Cannon's actual retirement or the Normal
Retirement Date (unless payment is accelerated in accordance with Sections 10.01
and 10.02 below). No payment will be made under this Agreement if the Offsetting
Benefits are equal to or greater than the Accrued Benefit.
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EXHIBIT 10.70
2.02 ANNUAL PERCENTAGE AMOUNT.
(a) The Annual Percentage Amount shall be determined (subject to
subsection (b), below) by the number of years Cannon has been
continuously employed by the Corporation as follows:
<TABLE>
<CAPTION>
=====================================================================================
YEARS OF CONTINUOUS SERVICE ANNUAL PERCENTAGE AMOUNT
- -------------------------------------------------------------------------------------
<S> <C>
25 or more 65%
20 -24 60%
15-19 40%
less than 15 0% (No Supplemental Retirement Benefit)
=====================================================================================
</TABLE>
(b) Notwithstanding the provisions of Subsection (a) of this
Section 2.02, in the event (a) Cannon does not remain employed
by the Corporation for any reason during the twelve (12) month
period following a Change in Control (as defined in Section
10.01, below) or (b) an event described in Section 10.01
occurs and either Cannon does not continue in the employ of
the Corporation for any reason following such event or the
Corporation's successor does not assume its obligations
hereunder, Cannon will be deemed eligible to receive a
Supplemental Retirement Benefit under this Agreement if at the
time of the termination of his employment he will have
completed at least five full years of service to the
Corporation. In this case, the Annual Percentage Amount shall
be determined by the number of years Cannon has been
continuously employed by the Corporation as follows:
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EXHIBIT 10.70
<TABLE>
<CAPTION>
================================================================================
YEARS OF SERVICE ANNUAL PERCENTAGE AMOUNT
- --------------------------------------------------------------------------------
<S> <C>
25 or more 65%
20 -24 60%
15-19 40%
14 36%
13 32%
12 28%
11 24%
10 20%
9 16%
8 12%
7 8%
6 4%
less than 6 0% (No Supplemental Retirement Benefit)
================================================================================
</TABLE>
(c) Anything else to the contrary in this Agreement
notwithstanding, in the event of either (a) Cannon does not
remain employed by the Corporation for any reason during the
twelve month period following a Change in Control or (b) an
event described in Section 10.01 occurs and either Cannon does
not continue in the employ of the Corporation for any reason
following such event or the Corporation's successor does not
assume its obligations hereunder, and (c) in either case, the
payment of the Supplementary Retirement Benefit hereunder,
when combined with all other payments from the Corporation to
Cannon due to
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EXHIBIT 10.70
the events described in (a) and (b) above, results in an
Excess Parachute Payment, as defined by Section 280G of the
Internal Revenue Code of 1986, as amended, then the amount
of the Supplementary Retirement Benefit shall be reduced so
that the total payments received by Cannon from the
Corporation do not constitute an Excess Parachute Payment;
provided, however, that this Section 2.02(c) shall not apply
if the total payments from the Corporation to Cannon exceed
the minimum amount which would constitute an Excess
Parachute Payment plus twenty percent (20%).
2.03 OFFSETTING BENEFITS.
(a) The following are the Offsetting Benefits, which reduce the Accrued
Benefit for the purpose of calculating the Supplemental Retirement
Benefit:
1. Fifty percent (50%) of Cannon's (actual
or projected) annual primary social security
retirement benefit projected as of Cannon's social
security normal retirement age based on his Benefit
Computation Base in effect on the date of termination
of Cannon's employment with the Corporation;
2. The annual amount of benefits payable to
Cannon (or his beneficiaries) at the Normal
Retirement Date calculated on a single life annuity
basis from any qualified defined benefit pension plan
maintained and funded by the Corporation as of the
date of this Agreement, or their successors, as such
plan or plans may be amended or modified from time to
time;
3. The annual amount of benefits payable at
the Normal Retirement Date on a single life annuity
basis attributable to the portion of the account
balances of Cannon arising from employer
contributions
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EXHIBIT 10.70
(but excluding the portion of such balances arising
from employee salary reduction and elective
contributions) at the date of determination from the
Corporation's 401(k) and other defined contribution
retirement plans maintained by the Corporation as of
the date of this Agreement, or their successors, as
such plan or plans may be modified from time to time;
4. The annual amount of benefits payable to
Cannon at the Normal Retirement Date calculated on a
single life annuity basis from any other
non-qualified supplemental retirement plan maintained
and funded by the Corporation as of the date of this
Agreement, or their successors, as such plan or plans
may be amended or modified from time to time.
(b) The Corporation's obligation to pay the Offsetting
Benefits shall not be affected by the termination of this
Agreement and the Supplemental Retirement Benefit payable
hereunder for any reason whatsoever.
(c) All calculations of the Supplemental Retirement Agreement
payable to Cannon under this Agreement will be made assuming
that Cannon participates in the Offsetting Benefits to the
full extent permitted by law and the terms of those plans.
(d) If Cannon terminates his employment prior to his Normal
Retirement Date, in calculating his Accrued Benefit, (i) the
offset of primary social security retirement benefit shall be
calculated on the basis of the amount projected to be payable
at Cannon's social security normal retirement age assuming
continued earnings by Cannon at the rate in effect at
termination of employment until Cannon's social security
normal retirement age; (ii) the offset for any qualified
defined benefit plan shall be calculated on the basis of
Cannon's accrued benefit
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EXHIBIT 10.70
in said plan upon termination of employment projected to be
payable at Cannon's Normal Retirement Date; (iii) the offset
for any benefits arising from employer contributions
attributable to the account balances of Cannon arising from
the Corporation's 401(k) plan or any other defined
contribution retirement plan shall also be calculated on the
basis of Cannon's accrued benefit in such plan(s) upon
termination of employment projected to be payable at Cannon's
Normal Retirement Date; and (iv) the offset for any
non-qualified supplemental retirement plan shall be calculated
on the basis of Cannon's accrued benefit in said plan upon
termination of employment projected to be payable at Cannon's
Normal Retirement Date.
2.04 OPTIONAL FORMS OF PAYMENT. In lieu of the fifteen (15) year certain
payments provided in Section 2.01 above, or whenever a Supplemental Retirement
Benefit is payable under Section 4.01 or 5.01 of this Agreement, Cannon may
elect by written notice to the Corporation in the calendar year prior to the
calendar year in which payments are to begin, an optional form of payment which
shall be the actual equivalent (factors defined in SpecTran's qualified defined
benefit pension plan) of the said fifteen (15) year certain payments. The
optional form of payment shall be any optional form of payment which is provided
to Cannon under the terms of SpecTran's qualified defined benefit pension plan.
2.05 VESTING. Anything to the contrary in this Agreement notwithstanding, Cannon
shall be entitled to one hundred percent (100%) of any benefit payable under
this Agreement under any one or more of Sections 2.01, 3.01, 4.01, 5.01, 10.01
or 10.02 at the date on which his entitlement to such benefit shall be
determined commencing with his original date of hire by the Corporation,
provided that such benefits are subject to forfeiture as described in Sections
5.03 and 5.04, below.
ARTICLE THREE
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EXHIBIT 10.70
3.01 DEATH OF CANNON.
(a) If Cannon dies while employed by the Corporation but prior
to the commencement of the payment of the Supplemental
Retirement Benefit under Section 2.01, 4.01 or 5.01, SpecTran
will pay to the designated beneficiaries of Cannon, a total
annual amount equal to the Supplemental Benefit earned by
Cannon as of the date of death, payable over a period of
fifteen (15) years certain commencing on the first day of the
month next following the delivery to the Corporation of a
death certificate and on a monthly basis thereafter.
(b) If Cannon dies following the commencement of the payment
of the Supplemental Retirement Benefit under Section 2.01,
4.01 or 5.01, such payments shall continue to the designated
beneficiaries of Cannon until all of the Supplemental
Retirement Benefit has been paid.
(c) If Cannon dies following the termination of his employment
with the Corporation and prior to the commencement of the
payment of the Supplemental Retirement Benefit under Section
2.01, 4.01 or 5.01, SpecTran shall pay to Cannon's named
beneficiaries an annual benefit which shall be Cannon's
Supplemental Retirement Benefit as of the date of the
termination of his employment. Such benefits shall be payable
monthly, commencing on the first day of the month following
the Normal Retirement Date, or any date prior to the Normal
Retirement Date approved by the Corporation, and continuing
for fifteen (15) years; provided, however, that Cannon's
designated beneficiaries shall be entitled to accelerated
payments of such benefits if and to the same extent Cannon
would have been entitled to an accelerated payment of the
Supplemental Retirement Benefit had he survived.
3.02 BENEFICIARIES. Cannon shall designate, in writing to the Corporation, on
the form titled "Designation of Beneficiary" attached hereto as Schedule A, one
or more beneficiaries.
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EXHIBIT 10.70
Cannon from time to time may change his designated beneficiaries by delivering
to the Corporation a dated, revised Designation of Beneficiary form, revoking
the prior designation. If no beneficiary is so named or if no named beneficiary
is living at the time a payment is due, benefit payments shall be made, when
due, to Cannon's estate. If payments of benefits to a beneficiary commences and
such beneficiary dies before all amounts to which such beneficiary is entitled
have been paid, the remaining benefits shall be paid to the successive
beneficiary or beneficiaries, if any, designated by Cannon, or if none, to the
beneficiary's estate.
ARTICLE FOUR
4.01 DISABILITY PRIOR TO RETIREMENT. In the event Cannon shall become disabled,
mentally or physically, which disability prevents him from performing the
material aspects of his duties, the Corporation will pay no disability benefits
hereunder. Disability benefits (if any) will be paid to Cannon through such
insurance programs as may be sponsored by the Corporation. Upon the later of
termination of such other disability benefits (if any), or Cannon's attainment
of the Normal Retirement Date, Cannon shall commence receiving payment of his
Accrued Benefit determined as of the date of the disability. The Supplemental
Retirement Benefit shall be paid in equal monthly installments, for fifteen (15)
years certain commencing on the first day of the month following the later of
the termination of such benefits or the Normal Retirement Date, or in the manner
provided in Section 2.04.
4.02 RE-EMPLOYMENT FOLLOWING DISABILITY. In the event Cannon returns to work
with the Corporation after terminating employment because of disability, this
Agreement shall continue in full force and effect as though such disability had
not occurred. Under such circumstances, Cannon will receive credit towards
determining the Annual Percentage Amount for service prior to terminating his
employment because of disability and for service after resuming employment with
the Corporation, but will not receive credit for the interim prior during which
he was not employed by the Corporation.
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EXHIBIT 10.70
ARTICLE FIVE
5.01 EARLY RETIREMENT, TERMINATION OF SERVICE OR DISCHARGE. Except to the extent
otherwise provided in Sections 5.03 and 5.04, in the event that Cannon's
employment with the Corporation is terminated, voluntarily or involuntarily,
before Cannon attains the Normal Retirement Date, for reasons other than death
or disability, Cannon shall be entitled to a Supplemental Retirement Benefit,
determined as of the date of his termination of employment. Such benefit shall
be payable in equal monthly installments, commencing on the first day of the
month next following the later of the Normal Retirement Date or the date of
Cannon's actual retirement, and continuing for fifteen (15) years (except as set
forth in Sections 10.01 and 10.02); provided, however, that Cannon may elect by
execution and delivery to the Corporation of the form attached hereto as
Schedule B to have the monthly payments of the Supplemental Retirement Benefit
commence prior to the Normal Retirement Date at any date between age 60 and the
Normal Retirement Date. Cannon understands that such election is being made
prospectively and is irrevocable.
5.02 OPTIONAL FORMS OF PAYMENT. In lieu of the fifteen (15) years certain
payments provided in Section 5.01, the Supplemental Retirement Benefit payable
under such Section may be payable in the manner provided in Section 2.04.
5.03 EMPLOYMENT BY COMPETITION. In the event that during the two year period
immediately following the termination of Cannon's employment for any reason,
Cannon shall compete with the business of the Corporation, then the Supplemental
Retirement Benefit which might otherwise be due and payable hereunder shall be
immediately forfeited and all rights of Cannon and his beneficiaries hereunder
shall become void; provided, however, that if (a) Cannon does not remain
employed by the Corporation for any reason during the twelve (12) month period
following a Change in Control or (b) an event described in Section 10.01 occurs
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EXHIBIT 10.70
and either Cannon does not continue in the employ of the Corporation for any
reason following such event or the Corporation's successor does not assume its
obligations hereunder, the provisions of Section 5.03 shall not apply, but the
provisions of Sections 10.01 and 10.02 shall govern.
Cannon will be deemed to have competed with the business of the Corporation if,
during the two year period following termination of his employment with the
Corporation, he either (a) engages, directly or indirectly, or by stock interest
exceeding five percent (5%), or otherwise in any way, in any business in which
the Corporation was engaged during the term of his employment or which the
Corporation planned, during the term of his employment to enter, (b) solicits
any past, present or future customers of the Corporation in any way relating to
any business in which the Corporation was engaged during the term of his
employment, or which the Corporation planned during the term of his employment,
to enter, or (c) induces or actively attempt to influence any other employee or
consultant of the Corporation to terminate his or her employment or consultancy
with the Corporation.
5.04 FORFEITURE. Anything to the contrary in this Agreement notwithstanding
(other than Sections 10.01 and 10.02), the Supplemental Retirement Benefits
shall be immediately forfeited and all rights of Cannon and his beneficiaries
hereunder shall become null and void, if Cannon's employment with the
Corporation is terminated for Cause. For this purpose, a termination shall be a
termination for "Cause" only if the termination if for one or more of the
following: (i) the conviction of Cannon for committing any felony, (ii) stealing
from the Corporation, (iii) a willful breach by Cannon of a material provision
of this Agreement and (iv) if Cannon engages in gross misconduct, such as fraud,
dishonesty, gross negligence or insubordination.
If (a) Cannon does not remain employed by the Corporation for any reason within
one year following a Change in Control or (b) an event described in Section
10.01 occurs and either Cannon does not continue in the employ of the
Corporation for any reason following such
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EXHIBIT 10.70
event or the Corporation's successor does not agree to assume its obligation
hereunder, the provisions of this Section 5.04 shall not apply, but the
provisions of Sections 10.01 and 10.02 shall govern.
5.05 AVAILABILITY TO CONSULT. For so long as Cannon is receiving benefits
pursuant to this Agreement, Cannon will keep himself available to consult with,
and respond to inquiries from, the Corporation relating to its business affairs,
at reasonable time(s) and to reasonable extent.
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EXHIBIT 10.70
ARTICLE SIX
6.01 INTEREST. Any payment that is required to be made hereunder that is delayed
beyond the date specified in this Agreement shall bear interest at a variable
rate which shall be the rate of interest on one year U.S. Treasury Bills
determined at the first auction of each calendar year or part thereof during the
period of which interest is to be applied to any obligation hereunder.
ARTICLE SEVEN
7.01 ALIENABILITY. Neither Cannon, nor any beneficiary under this Agreement
shall have any power or right to transfer, assign, anticipate, hypothecate,
mortgage, commute, modify, or otherwise encumber in advance any of the benefits
payable hereunder, and any attempt to do so shall be deemed null and void. The
seizure of the benefits payable hereunder for the payment of any debts,
judgments, alimony or separate maintenance, owed by Cannon or his beneficiary or
any of them, or the transfer of such benefit by operation of law in the event of
bankruptcy, or otherwise, shall be deemed to be a transfer prohibited by this
Agreement, and will result in the immediate termination of all benefits payable
hereunder.
ARTICLE EIGHT
8.01 PARTICIPATION IN OTHER PLANS. Nothing contained in this Agreement shall be
construed to alter, abridge, or in any manner affect the rights and privileges
of Cannon to participate in and be covered by any pension, profit sharing, group
insurance, bonus or any other employee plan or plans which the Corporation may
have or hereafter have.
ARTICLE NINE
9.01 FUNDING.
(a) The Corporation reserves the right at its sole and exclusive discretion
to insure or otherwise provide for the obligations of the Corporation
undertaken by this Agreement
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EXHIBIT 10.70
or to refrain from same, and to determine the extent, nature and method
thereof, including the establishment of one or more trusts. Should the
Corporation elect to insure this Agreement, in whole or in part,
through the medium of insurance or annuities, or both, the Corporation
shall be the owner and beneficiary of the policy or annuity. At no time
shall Cannon be deemed to have any right, title or interest in or to
any specified asset or assets of the Corporation, or any trust or
escrow arrangement, including, but not by way of restriction, any
insurance or annuity contracts or the proceeds therefrom.
(b) Any such policy, contract or asset shall not in any way be considered
to be security for the performance of the obligations of this
Agreement.
(c) If the Corporation purchases a life insurance or annuity policy on the
life of Cannon, Cannon agrees to sign any papers that may be required
for that purpose and to undergo any medical examination or tests (at
the Corporation's expense) which may be necessary, and generally
cooperate with the Corporation in securing such policy.
(d) To the extent Cannon acquires a right to receive benefits under this
Agreement, such right shall be equivalent to the right of an unsecured
general creditor of the Corporation.
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EXHIBIT 10.70
ARTICLE TEN
10.01 REORGANIZATION. SpecTran shall not merge or consolidate into or with
another corporation if such merger or consolidation shall result in the other
corporation being the survivor corporation, nor shall it sell substantially all
of its assets to another corporation, firm or person, unless and until Cannon
and such other corporation, firm or person agree that Cannon shall continue in
the employ of the succeeding, continuing or acquiring corporation, firm or
person and such other corporation, firm or person agrees in writing without
further qualification to assume and discharge the obligations of SpecTran under
this Agreement. If Cannon and such corporation, firm or person do not agree that
Cannon shall continue in the employ of such corporation, firm or person, or such
corporation, firm or person does not so agree to assume and discharge such
obligations, SpecTran shall pay to Cannon, in one lump sum, his Supplemental
Retirement Benefit as of the date of such merger, consolidation or sale. All
calculations of the Supplemental Retirement Benefit, for purposes of this
Section 10.01, shall be discounted to present value in accordance with the
actuarial tables used in SpecTran's defined benefit pension plan.
For the purpose of clarification, any transaction between SpecTran and any of
its Affiliates is not intended to be covered by this Section 10.01.
10.02 CHANGE IN CONTROL. In the event that a Change in Control occurs prior to
the Normal Retirement Date and either (a) Cannon is dismissed without Cause from
employment by the Corporation up to and including twelve (12) months from such
Change in Control or (b) Cannon voluntarily leaves the employ of the Corporation
up to and including twelve (12) months from such Change in Control, then in
either case SpecTran shall pay to Cannon, in one lump sum, his Supplemental
Retirement Benefit as of the date of the termination of Cannon's employment. All
calculations of the Supplemental Retirement Benefit, for purposes of this
Section 10.02, shall be discounted to present value in accordance with the
actuarial tables used in SpecTran's defined benefit pension plan. For the
purposes of this Agreement, "Change in Control" shall mean (a) the date of
public announcement that a person has become, without the approval of SpecTran's
Board of Directors, the beneficial owner of 20% or more of the voting power of
all securities of SpecTran then outstanding; (b) the date of the commencement of
a tender offer or tender
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EXHIBIT 10.70
exchange by any person, without the approval of SpecTran's Board of Directors,
if upon the consummation thereof such person would be the beneficial owner of
20% or more of the voting power of all securities of SpecTran then outstanding;
or (c) the date on which individuals who constituted the Board of Directors of
SpecTran on the date this Agreement was adopted cease for any reason to
constitute a majority thereof, provided that any person becoming a director
subsequent to such date whose election or nomination was approved by at least
three quarters of such incumbent Board of Directors shall be considered as
though such person were an incumbent director.
ARTICLE ELEVEN
11.01 BENEFITS AND BURDENS. This Agreement shall be binding upon and inure to
the benefit of Cannon and his personal representatives, the Corporation, and any
successor organization which shall succeed to substantially all of the
Corporation's assets and business without regard to the form of such succession.
ARTICLE TWELVE
12.01 COMMUNICATIONS. Any notice or communication required of either party with
respect to this Agreement shall be made in writing and may either be delivered
personally or sent by certified mail, return receipt requested, as the case may
be:
To the Corporation:
c/o President of the Corporation
SpecTran Corporation
50 Hall Road
Sturbridge, MA 01566
To Cannon:
Bruce A. Cannon
135 Adam Street
Holliston, MA 01746
Each party shall have the right by written notice to change the place to which
any notice may be addressed.
ARTICLE THIRTEEN
13.01 CLAIMS PROCEDURE. In the event that benefits under this Agreement are not
paid to Cannon (or his beneficiary in the case of Cannon's death), and such
person feels entitled to receive them, a claim shall be made in writing to the
Corporation within sixty (60) days after written notice from the Corporation to
Cannon or his beneficiary or personal representative that payments are not being
made or are not to be made under this Agreement. Such claim shall be reviewed by
the Corporation. If the claim is approved or denied, in full or in part, the
Corporation shall provide a written notice of approval or denial within sixty
(60) days from the date of receipt of the claim setting forth the specific
reason for denial, specific reference to the provision of this Agreement upon
which the denial is based, and any additional material or information necessary
to perfect the claim, if any. Also, such written notice shall indicate the steps
to be taken if a review of the denial is desired. If a claim is denied (a claim
shall be deemed denied if the Corporation does not take action within the
aforesaid sixty (60) day period) and a review is desired, Cannon (or beneficiary
in the case of Cannon's death), shall notify the Corporation in writing within
twenty (20) days. In requesting a review, Cannon or his beneficiary may review
this Agreement or any document relating to it and submit any written issues and
comments he or she may feel appropriate. In its sole discretion the Corporation
shall then review the claim and provide a written decision within sixty (60)
days. This decision likewise shall state the specific reasons for the decision
and shall include reference to specific provisions of this Agreement on which
the decision is based.Any decision of the Corporation shall not be binding on
Cannon, his personal representative, or any beneficiary without consent, nor
shall it preclude further action by Cannon, his personal representatives or
beneficiary.
13.02 ARBITRATION. All claims, disputes and other matters in question between
the parties hereto arising out of or relating to this Agreement or the breach
thereof shall be decided by arbitration in accordance with the Rules of the
American Arbitration Association then obtaining, subject to the limitations and
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EXHIBIT 10.70
restrictions stated below. Neither party will be permitted to submit a dispute
to arbitration without first following the procedures set forth in Section
13.01. Notice of demand for arbitration must be filed in writing with the other
party to this Agreement and with the American Arbitration Association. The
demand must be made within a reasonable time after the claim, dispute or other
matter in question has arisen. In no event may the demand for arbitration be
made if the institution of legal or equitable proceedings based on such claim,
dispute or other matter in question would be barred by the applicable statute of
limitations. Arbitrations hereunder will be held in the English language in
Boston, Massachusetts or such other place as the parties may agree. The award
rendered by the arbitrators will be final, not subject to appeal and judgment
may be entered upon it in any court having jurisdiction thereof.Each party will
bear all of his or its own costs and expenses associated with the arbitration,
and the parties shall equally share the administrative costs of the arbitration.
ARTICLE FOURTEEN
14.01 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof, and supersedes all prior
agreements, written or verbal, with respect to such subject matter. This
instrument may be altered or amended only by written agreement signed by the
parties hereto.
14.02 GENDER. Any reference in this Agreement to the masculine shall be deemed
to include the feminine where the context so requires.
14.03 OPERATION OF LAW ON CORPORATION'S OBLIGATIONS. In the event that any
governmental entity promulgates any statute, rule, regulation, policy or order
which restricts or prohibits the Corporation from making payments to Cannon
under this Agreement, then the Corporation's obligations to make payments to
Cannon (or his beneficiary) hereunder shall terminate or be restricted or
suspended (consistent with such law or binding regulation, policy or order) for
so long as such restriction or prohibition applies to the Corporation. Nothing
in this Agreement is intended to require or shall be construed as requiring the
Corporation to do or fail to do any act in violation of any applicable law or
binding regulation, policy or order.
14.04 COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be considered an original, but together shall constitute one
and the same document.
14.05 SEVERANCE. In the event any provision of this Agreement is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Agreement shall remain in full force and effect and will not be affected by
such invalid or unenforceable provisions.
14.06 JURISDICTION, GOVERNING LAW. The parties, terms and conditions of this
Agreement are subject to and shall be governed by the laws of the Commonwealth
of Massachusetts without giving effect to the principles of conflicts of law.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed by its duly authorized officer and its Corporate Seal affixed at
Sturbridge, Massachusetts the day and year first above written.
SPECTRAN CORPORATION
_________________________________ By______________________________
Witness Chairman,
Board of Directors
_________________________ By______________________________
Witness Bruce A. Cannon,
Chief Financial Officer
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EXHIBIT 10.70
SCHEDULE A
DESIGNATION OF BENEFICIARY
Gentlemen: In accordance with the provisions of the Supplemental Retirement
Agreement dated May 8, 1996, between SpecTran Corporation and the undersigned, I
hereby designate ____________________ of ________________________* as my
beneficiary to receive payments thereunder in the event of my death before
payments in full thereunder have been made. In the event said beneficiary
predeceases me, I hereby designate _________________ of
___________________________* as beneficiary in his/her stead.
Very truly yours,
_________________________
*If more than one beneficiary is to be designated, add a page listing the
beneficiaries and specify the percentage of each payment to be received by each
beneficiary.
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EXHIBIT 10.70
SCHEDULE B
Gentlemen:
In accordance with Section 5.01 of the Supplemental Retirement Agreement dated
May 8, 1996, between SpecTran Corporation and the undersigned, I hereby
prospectively and irrevocably make the election indicated below with respect to
the payment of benefits:
[CHECK ONE]
______ I elect to commence receiving benefits prior to age 65 if I retire before
the Normal Retirement Age, with the benefits to commence at age ____ [Specify
age between 60 and 65].
OR
______ I elect to commence receiving benefits after the Normal Retirement Date
and forego my right to receive benefits prior to the Normal Retirement Age.
Very truly yours,
_______________________
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EXHIBIT 10.71
SUPPLEMENTAL RETIREMENT AGREEMENT
THIS AGREEMENT is made and entered into this 8th day of May, 1996 by
and between SpecTran Corporation ("SpecTran"), a Delaware corporation, and
Crawford L. Cutts (hereinafter called "Cutts").
PURPOSE AND INTENT
This agreement (the "Agreement") is designed to recognize Cutts'
contribution to the Corporation(1) and encourage Cutts to remain in the
Corporation's employ by providing supplemental retirement benefits, keyed to a
specified percentage of his compensation, so that Cutts' percentage of spendable
retirement income will approximate the percentage of spendable retirement income
available to less compensated employees who also participate in the
Corporation's retirement plans. Due to restrictions presently imposed by the
Internal Revenue Code on benefits for highly compensated employees, the
percentage of spendable retirement income Cutts would receive under the
Corporation's current benefit plans relative to his current compensation would
be less than that of employees at lower salary levels. The benefits provided in
this Agreement are designed to be entirely supplemental to the Corporation's
other retirement benefits payable to Cutts; if Cutts receives the specified
percentage of compensation through pension plans and other benefits (as
described below) provided by the Corporation, no benefits will be paid out under
this Agreement. While any benefits are paid under this Agreement Cutts will be
available to consult for the Corporation. Further, these benefits are subject to
forfeiture if Cutts is terminated for Cause (as defined herein) or, as described
below, competes with the Corporation.
Cutts has been employed by the Corporation since 1991, and currently
holds the position of President of Applied Photonic Devices, Inc., a wholly
owned subsidiary of
- ----------------------------
(1)Initial capitalized words may be defined below under the heading "Certain
Definitions".
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EXHIBIT 10.71
SpecTran. The Board of Directors of SpecTran voted on May 8, 1996 to authorize
the Corporation to enter into this Agreement with Cutts.
CERTAIN DEFINITIONS(a) "Accrued Benefit" shall have the meaning set forth in
Section 2.01 of this Agreement.
(b) "Affiliate" shall mean any person or entity which controls, is controlled by
or is under common control with the Corporation. For the purpose of this
Agreement, control shall mean ownership of fifty percent (50%) or more of the
voting stock of any entity.
(c) "Benefit Computation Base" shall mean the average of Cutts' annual
compensation (defined as base salary, eligible bonus(2) and any salary reduction
amounts pursuant to Sections
- ---------------------------
(2)To the extent that the average annual bonus paid to Cutts during the 36 month
period in which the Benefit Computation Base is calculated is greater than fifty
percent (50%) of Cutts' average base salary over such period, the excess bonus
payments shall be considered ineligible for the purpose of calculating the
Benefit Computation Base. For example, assume that Cutts' base salary and
bonuses over the 36 month period are as shown in the following two examples:
1.
<TABLE>
<CAPTION>
Base Salary Bonus
----------------------------------------------------
<S> <C> <C>
Months 1-12 $200,000 $200,000
Months 13-24 $210,000 $100,000
Months 25-36 $220,000 $ 90,000
Average $210,000 $130,000
</TABLE>
In this example, fifty percent (50%) of Cutts' average annual base
salary over the 36 month period is $105,000. Accordingly, of Cutts' average
annual bonus of $130,000 paid over that period, $25,000 will be deemed
ineligible for the purpose of calculating the Benefit Computation Base,
resulting in $105,000 of the average bonus being considered eligible.
2.
<TABLE>
<CAPTION>
Base Salary Bonus
-------------------------------------------
<S> <C> <C>
Months 1-12 $200,000 $200,000
Months 13-24 $210,000 $ 10,000
Months 25-36 $220,000 $ 30,000
</TABLE>
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EXHIBIT 10.71
401(k) or 125 of the Code) paid during the thirty-six (36) consecutive calendar
months during Cutts' period of employment by the Corporation in which such
compensation is the highest.
(d) "Change in Control" shall have the meaning set forth in Section 10.02 of
this Agreement.
(e) The "Corporation" shall mean SpecTran, its successors and assigns, including
but not limited to any corporation, firm or person which is the survivor of a
merger or consolidation with SpecTran or which acquires substantially all of the
assets of SpecTran, and any of SpecTran's Affiliates.
(f) "Normal Retirement Date" shall mean Cutts's sixty-fifth birthday.
(g) "Offsetting Benefits" shall have the meaning set forth in Section 2.03 of
this Agreement.
(h) "Supplemental Retirement Benefit" shall have the meaning set forth in
Section 2.01 of this Agreement.
ARTICLE ONE
1.01 EMPLOYMENT. The Corporation may employ Cutts in such capacity as the
Corporation may from time to time determine. Notwithstanding anything contained
herein, this Agreement is not an agreement of employment, a guaranty of
continuing employment or of employment in
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Base Salary Bonus
-------------------------------------------
<S> <C> <C>
Average $210,000 $ 80,000
</TABLE>
In this example, fifty percent (50%) percent of Cutts' average annual
base salary over the 36 month period is $105,000. Cutts' average annual bonus
over that period of $80,000 is less than the average annual base salary, and
accordingly the entire average annual bonus will be eligible in determining the
Benefit Computation Base.
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EXHIBIT 10.71
any particular position and nothing herein shall restrict the Corporation
concerning the terms and conditions of Cutts's employment. The benefits provided
by this Agreement are not part of any salary reduction plan or an arrangement
deferring a bonus or a salary increase. Cutts has no option to take any current
payment or bonus in lieu of these salary continuation benefits.
ARTICLE TWO
2.01 SUPPLEMENTAL RETIREMENT BENEFIT. Depending upon how many years Cutts has
been continuously in the employ of the Corporation, Cutts will be entitled to a
retirement benefit determined as of the effective date of his leaving the
Corporation's employment for whatever reason except Cause (as defined below),
including whether by (i) death, (ii) disability, (iii) termination of employment
or (iv) early retirement. The retirement benefit (also known as the "Accrued
Benefit") shall be an annual amount equal to Cutts's Benefit Computation Base
multiplied by the Annual Percentage Amount (as determined pursuant to Section
2.02, below). Cutts will receive a supplemental retirement benefit (the
"Supplemental Retirement Benefit") equal to (i) the amount of the Accrued
Benefit reduced by (ii) the sum of the benefits described in Subsections (1),
(2), (3) and (4) of Section 2.03, below (such benefits are referred to herein as
the "Offsetting Benefits"). The Supplemental Retirement Benefit, if any, to be
paid out under this Agreement, shall continue for fifteen (15) years, and be
paid in equal monthly installments commencing on the first day of the month
immediately following the later of Cutts's actual retirement or the Normal
Retirement Date (unless payment is accelerated in accordance with Sections 10.01
and 10.02 below). No payment will be made under this Agreement if the Offsetting
Benefits are equal to or greater than the Accrued Benefit.
2.02 ANNUAL PERCENTAGE AMOUNT.
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EXHIBIT 10.71
(a) The Annual Percentage Amount shall be determined (subject
to subsection (b), below) by the number of years Cutts has
been continuously employed by the Corporation as follows:
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EXHIBIT 10.71
<TABLE>
<CAPTION>
================================================================================
<S> <C>
YEARS OF CONTINUOUS SERVICE ANNUAL PERCENTAGE AMOUNT
25 or more 65%
20 -24 60%
15-19 40%
less than 15 0% (No Supplemental Retirement Benefit)
================================================================================
</TABLE>
(b) Notwithstanding the provisions of Subsection (a) of this
Section 2.02, in the event (a) Cutts does not remain employed
by the Corporation for any reason during the twelve (12) month
period following a Change in Control (as defined in Section
10.01, below) or (b) an event described in Section 10.01
occurs and either such other corporation, firm or person (as
described in Section 10.01) does not agree that Cutts shall
continue in the employ of the Corporation for any reason
following such event or the Corporation's successor does not
assume its obligations hereunder, Cutts will be deemed
eligible to receive a Supplemental Retirement Benefit under
this Agreement if at the time of the termination of his
employment he will have completed at least five full years of
service to the Corporation. In this case, the Annual
Percentage Amount shall be determined by the number of years
Cutts has been continuously employed by the Corporation as
follows:
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EXHIBIT 10.71
<TABLE>
<CAPTION>
================================================================================
<S> <C>
YEARS OF SERVICE ANNUAL PERCENTAGE AMOUNT
25 or more 65%
20 -24 60%
15-19 40%
14 36%
13 32%
12 28%
11 24%
10 20%
9 16%
8 12%
7 8%
6 4%
less than 6 0% (No Supplemental Retirement Benefit)
================================================================================
</TABLE>
(c) Anything else to the contrary in this Agreement
notwithstanding, in the event of either (a) Cutts does not
remain employed by the Corporation for any reason during the
twelve month period following a Change in Control or (b) an
event described in Section 10.01 occurs and either such other
corporation, firm or person (as described in Section 10.01)
does not agree that Cutts shall continue in the employ of the
Corporation for any reason following such event or the
Corporation's successor does not assume its obligations
hereunder, and (c) in either case, the payment of the
Supplementary Retirement Benefit hereunder, is considered a
Parachute Payment and when combined with all other payments
considered to be Parachute Payments from the Corporation to
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EXHIBIT 10.71
Cutts due to the events described in (a) and (b) above, result
in an Excess Parachute Payment, as defined by Section 280G of
the Internal Revenue Code of 1986, as amended, then the amount
of the Supplementary Retirement Benefit shall be reduced so
that the total Parachute Payments received by Cutts from the
Corporation do not constitute an Excess Parachute Payment;
provided, however, that this Section 2.02(c) shall not apply
if the total Parachute Payments from the Corporation to Cutts
due to the events described in (a) and (b) above exceed one
hundred twenty percent (120%) of the amount of all Parachute
Payments, not including any amount that would be considered an
Excess Parachute Payment.
2.03 OFFSETTING BENEFITS.
(a) The following are the Offsetting Benefits, which reduce the Accrued
Benefit for the purpose of calculating the Supplemental Retirement
Benefit:
1. Fifty percent (50%) of Cutts's (actual or
projected) annual primary social security retirement
benefit projected as of Cutts's social security
normal retirement age based on his Benefit
Computation Base in effect on the date of termination
of Cutts's employment with the Corporation;
2. The annual amount of benefits payable to
Cutts (or his beneficiaries) at the Normal Retirement
Date calculated on a single life annuity basis from
any qualified defined benefit pension plan maintained
and funded by the Corporation as of the date of this
Agreement, or their successors, as such plan or plans
may be amended or modified from time to time;
3. The annual amount of benefits payable at
the Normal Retirement Date on a single life annuity
basis attributable to the portion
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EXHIBIT 10.71
of the account balances of Cutts arising from
employer contributions (but excluding the portion of
such balances arising from employee salary reduction
and elective contributions) at the date of
determination from the Corporation's 401(k) and other
defined contribution retirement plans maintained by
the Corporation as of the date of this Agreement, or
their successors, as such plan or plans may be
modified from time to time;
4. The annual amount of benefits payable to
Cutts at the Normal Retirement Date calculated on a
single life annuity basis from any other
non-qualified supplemental retirement plan maintained
and funded by the Corporation as of the date of this
Agreement, or their successors, as such plan or plans
may be amended or modified from time to time.
(b) The Corporation's obligation to pay the Offsetting
Benefits shall not be affected by the termination of this
Agreement and the Supplemental Retirement Benefit payable
hereunder for any reason whatsoever.
(c) All calculations of the Supplemental Retirement Agreement
payable to Cutts under this Agreement will be made assuming
that Cutts participates in the Offsetting Benefits to the full
extent permitted by law and the terms of those plans.
(d) If Cutts terminates his employment prior to his Normal
Retirement Date, in calculating his Accrued Benefit, (i) the
offset of primary social security retirement benefit shall be
calculated on the basis of the amount projected to be payable
at Cutts's social security normal retirement age assuming
continued earnings by Cutts at the rate in effect at
termination of employment until Cutts's social security normal
retirement age; (ii) the offset for any qualified defined
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EXHIBIT 10.71
benefit plan shall be calculated on the basis of Cutts's
accrued benefit in said plan upon termination of employment
projected to be payable at Cutts's Normal Retirement Date;
(iii) the offset for any benefits arising from employer
contributions attributable to the account balances of Cutts
arising from the Corporation's 401(k) plan or any other
defined contribution retirement plan shall also be calculated
on the basis of Cutts's accrued benefit in such plan(s) upon
termination of employment projected to be payable at Cutts's
Normal Retirement Date; and (iv) the offset for any
non-qualified supplemental retirement plan shall be calculated
on the basis of Cutts's accrued benefit in said plan upon
termination of employment projected to be payable at Cutts's
Normal Retirement Date.
2.04 OPTIONAL FORMS OF PAYMENT. In lieu of the fifteen (15) year certain
payments provided in Section 2.01 above, or whenever a Supplemental Retirement
Benefit is payable under Section 4.01 or 5.01 of this Agreement, Cutts may elect
by written notice to the Corporation in the calendar year prior to the calendar
year in which payments are to begin, an optional form of payment which shall be
the actual equivalent (factors defined in SpecTran's qualified defined benefit
pension plan) of the said fifteen (15) year certain payments. The optional form
of payment shall be any optional form of payment which is provided to Cutts
under the terms of SpecTran's qualified defined benefit pension plan.
2.05 VESTING. Anything to the contrary in this Agreement notwithstanding, Cutts
shall be entitled to one hundred percent (100%) of any benefit payable under
this Agreement under any one or more of Sections 2.01, 3.01, 4.01, 5.01, 10.01
or 10.02 at the date on which his entitlement to such benefit shall be
determined commencing with his original date of hire by the Corporation,
provided that such benefits are subject to forfeiture as described in Sections
5.03 and 5.04, below.
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EXHIBIT 10.71
ARTICLE THREE
3.01 DEATH OF CUTTS.
(a) If Cutts dies while employed by the Corporation but prior
to the commencement of the payment of the Supplemental
Retirement Benefit under Section 2.01, 4.01 or 5.01, SpecTran
will pay to the designated beneficiaries of Cutts, a total
annual amount equal to the Supplemental Benefit earned by
Cutts as of the date of death, payable over a period of
fifteen (15) years certain commencing on the first day of the
month next following the delivery to the Corporation of a
death certificate and on a monthly basis thereafter.
(b) If Cutts dies following the commencement of the payment of
the Supplemental Retirement Benefit under Section 2.01, 4.01
or 5.01, such payments shall continue to the designated
beneficiaries of Cutts until all of the Supplemental
Retirement Benefit has been paid.
(c) If Cutts dies following the termination of his employment
with the Corporation and prior to the commencement of the
payment of the Supplemental Retirement Benefit under Section
2.01, 4.01 or 5.01, SpecTran shall pay to Cutts's named
beneficiaries an annual benefit which shall be Cutts's
Supplemental Retirement Benefit as of the date of the
termination of his employment. Such benefits shall be payable
monthly, commencing on the first day of the month following
the Normal Retirement Date, or any date prior to the Normal
Retirement Date approved by the Corporation, and continuing
for fifteen (15) years; provided, however, that Cutts's
designated beneficiaries shall be entitled to accelerated
payments of such benefits if and to the same extent Cutts
would have been entitled to an accelerated payment of the
Supplemental Retirement Benefit had he survived.
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EXHIBIT 10.71
3.02 BENEFICIARIES. Cutts shall designate, in writing to the Corporation, on the
form titled "Designation of Beneficiary" attached hereto as Schedule A, one or
more beneficiaries. Cutts from time to time may change his designated
beneficiaries by delivering to the Corporation a dated, revised Designation of
Beneficiary form, revoking the prior designation. If no beneficiary is so named
or if no named beneficiary is living at the time a payment is due, benefit
payments shall be made, when due, to Cutts's estate. If payments of benefits to
a beneficiary commences and such beneficiary dies before all amounts to which
such beneficiary is entitled have been paid, the remaining benefits shall be
paid to the successive beneficiary or beneficiaries, if any, designated by
Cutts, or if none, to the beneficiary's estate.
ARTICLE FOUR
4.01 DISABILITY PRIOR TO RETIREMENT. In the event Cutts shall become disabled,
mentally or physically, which disability prevents him from performing the
material aspects of his duties, the Corporation will pay no disability benefits
hereunder. Disability benefits (if any) will be paid to Cutts through such
insurance programs as may be sponsored by the Corporation. Upon the later of
termination of such other disability benefits (if any), or Cutts's attainment of
the Normal Retirement Date, Cutts shall commence receiving payment of his
Accrued Benefit determined as of the date of the disability. The Supplemental
Retirement Benefit shall be paid in equal monthly installments, for fifteen (15)
years certain commencing on the first day of the month following the later of
the termination of such benefits or the Normal Retirement Date, or in the manner
provided in Section 2.04.
4.02 RE-EMPLOYMENT FOLLOWING DISABILITY. In the event Cutts returns to work with
the Corporation after terminating employment because of disability, this
Agreement shall continue in full force and effect as though such disability had
not occurred. Under such circumstances, Cutts will receive credit towards
determining the Annual Percentage Amount for service prior to terminating his
employment because of disability and for service after resuming employment
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EXHIBIT 10.71
with the Corporation, but will not receive credit for the interim prior during
which he was not employed by the Corporation.
ARTICLE FIVE
5.01 EARLY RETIREMENT, TERMINATION OF SERVICE OR DISCHARGE. Except to the extent
otherwise provided in Sections 5.03 and 5.04, in the event that Cutts's
employment with the Corporation is terminated, voluntarily or involuntarily,
before Cutts attains the Normal Retirement Date, for reasons other than death or
disability, Cutts shall be entitled to a Supplemental Retirement Benefit,
determined as of the date of his termination of employment. Such benefit shall
be payable in equal monthly installments, commencing on the first day of the
month next following the later of the Normal Retirement Date or the date of
Cutts's actual retirement, and continuing for fifteen (15) years (except as set
forth in Sections 10.01 and 10.02); provided, however, that Cutts may elect by
execution and delivery to the Corporation of the form attached hereto as
Schedule B to have the monthly payments of the Supplemental Retirement Benefit
commence prior to the Normal Retirement Date at any date between age 60 and the
Normal Retirement Date. Cutts understands that such election is being made
prospectively and is irrevocable.
5.02 OPTIONAL FORMS OF PAYMENT. In lieu of the fifteen (15) years certain
payments provided in Section 5.01, the Supplemental Retirement Benefit payable
under such Section may be payable in the manner provided in Section 2.04.
5.03 EMPLOYMENT BY COMPETITION. In the event that during the two year period
immediately following the termination of Cutts's employment for any reason,
Cutts shall compete with the business of the Corporation, then the Supplemental
Retirement Benefit which might otherwise be due and payable hereunder shall be
immediately forfeited and all rights of Cutts and his beneficiaries hereunder
shall become void; provided, however, that if (a) Cutts
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EXHIBIT 10.71
does not remain employed by the Corporation for any reason during the twelve
(12) month period following a Change in Control or (b) an event described in
Section 10.01 occurs and either such other corporation, firm or person (as
described in Section 10.01) does not agree that Cutts shall continue in the
employ of the Corporation for any reason following such event or the
Corporation's successor does not assume its obligations hereunder, the
provisions of Section 5.03 shall not apply, but the provisions of Sections 10.01
and 10.02 shall govern. Cutts will be deemed to have competed with the business
of the Corporation if, during the two year period following termination of his
employment with the Corporation, he either (a) engages, directly or indirectly,
or by stock interest exceeding five percent (5%), or otherwise in any way, in
any business in which the Corporation was engaged during the term of his
employment or which the Corporation planned, during the term of his employment
to enter, (b) solicits any past, present or future customers of the Corporation
in any way relating to any business in which the Corporation was engaged during
the term of his employment, or which the Corporation planned during the term of
his employment, to enter, or (c) induces or actively attempt to influence any
other employee or consultant of the Corporation to terminate his or her
employment or consultancy with the Corporation.
5.04 FORFEITURE. Anything to the contrary in this Agreement notwithstanding
(other than Sections 10.01 and 10.02), the Supplemental Retirement Benefits
shall be immediately forfeited and all rights of Cutts and his beneficiaries
hereunder shall become null and void, if Cutts's employment with the Corporation
is terminated for Cause. For this purpose, a termination shall be a termination
for "Cause" only if the termination if for one or more of the following: (i) the
conviction of Cutts for committing any felony, (ii) stealing from the
Corporation, (iii) a willful breach by Cutts of a material provision of this
Agreement and (iv) if Cutts engages in gross misconduct, such as fraud,
dishonesty, gross negligence or insubordination.
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EXHIBIT 10.71
If (a) Cutts does not remain employed by the Corporation for any reason within
one year following a Change in Control or (b) an event described in Section
10.01 occurs and either such other corporation, firm or person (as described in
Section 10.01) does not agree that Cutts does not continue in the employ of the
Corporation for any reason following such event or the Corporation's successor
does not agree to assume its obligation hereunder, the provisions of this
Section 5.04 shall not apply, but the provisions of Sections 10.01 and 10.02
shall govern.
5.05 AVAILABILITY TO CONSULT. For so long as Cutts is receiving benefits
pursuant to this Agreement, Cutts will keep himself available to consult with,
and respond to inquiries from, the Corporation relating to its business affairs,
at reasonable time(s) and to reasonable extent.
ARTICLE SIX
6.01 INTEREST. Any payment that is required to be made hereunder that is delayed
beyond the date specified in this Agreement shall bear interest at a variable
rate which shall be the rate of interest on one year U.S. Treasury Bills
determined at the first auction of each calendar year or part thereof during the
period of which interest is to be applied to any obligation hereunder.
ARTICLE SEVEN
7.01 ALIENABILITY. Neither Cutts, nor any beneficiary under this Agreement shall
have any power or right to transfer, assign, anticipate, hypothecate, mortgage,
commute, modify, or otherwise encumber in advance any of the benefits payable
hereunder, and any attempt to do so shall be deemed null and void. The seizure
of the benefits payable hereunder for the payment of any debts, judgments,
alimony or separate maintenance, owed by Cutts or his beneficiary or any of
them, or the transfer of such benefit by operation of law in the event of
bankruptcy, or otherwise, shall be deemed to be a transfer prohibited by this
Agreement, and will result in the immediate termination of all benefits payable
hereunder.
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EXHIBIT 10.71
ARTICLE EIGHT
8.01 PARTICIPATION IN OTHER PLANS. Nothing contained in this Agreement shall
be construed to alter, abridge, or in any manner affect the rights and
privileges of Cutts to participate in and be covered by any pension, profit
sharing, group insurance, bonus or any other employee plan or plans which the
Corporation may have or hereafter have.
ARTICLE NINE
9.01 FUNDING.
(a) The Corporation reserves the right at its sole and exclusive discretion
to insure or otherwise provide for the obligations of the Corporation
undertaken by this Agreement or to refrain from same, and to determine
the extent, nature and method thereof, including the establishment of
one or more trusts. Should the Corporation elect to insure this
Agreement, in whole or in part, through the medium of insurance or
annuities, or both, the Corporation shall be the owner and beneficiary
of the policy or annuity. At no time shall Cutts be deemed to have any
right, title or interest in or to any specified asset or assets of the
Corporation, or any trust or escrow arrangement, including, but not by
way of restriction, any insurance or annuity contracts or the proceeds
therefrom.
(b) Any such policy, contract or asset shall not in any way be considered
to be security for the performance of the obligations of this
Agreement.
(c) If the Corporation purchases a life insurance or annuity policy on the
life of Cutts, Cutts agrees to sign any papers that may be required for
that purpose and to undergo any medical examination or tests (at the
Corporation's expense) which may be necessary, and generally cooperate
with the Corporation in securing such policy.
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EXHIBIT 10.71
(d) To the extent Cutts acquires a right to receive benefits under this
Agreement, such right shall be equivalent to the right of an unsecured
general creditor of the Corporation.
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EXHIBIT 10.71
ARTICLE TEN
10.01 REORGANIZATION. SpecTran shall not merge or consolidate into or with
another corporation if such merger or consolidation shall result in the other
corporation being the survivor corporation, nor shall it sell substantially all
of its assets to another corporation, firm or person, unless and until Cutts and
such other corporation, firm or person agree that Cutts shall continue in the
employ of the succeeding, continuing or acquiring corporation, firm or person
and such other corporation, firm or person agrees in writing without further
qualification to assume and discharge the obligations of SpecTran under this
Agreement. If Cutts and such corporation, firm or person do not agree that Cutts
shall continue in the employ of such corporation, firm or person, or such
corporation, firm or person does not so agree to assume and discharge such
obligations, SpecTran shall pay to Cutts, in one lump sum, his Supplemental
Retirement Benefit as of the date of such merger, consolidation or sale. All
calculations of the Supplemental Retirement Benefit, for purposes of this
Section 10.01, shall be discounted to present value in accordance with the
actuarial tables used in SpecTran's defined benefit pension plan.
For the purpose of clarification, any transaction between SpecTran and any of
its Affiliates is not intended to be covered by this Section 10.01.
10.02 CHANGE IN CONTROL. In the event that a Change in Control occurs prior to
the Normal Retirement Date and either (a) Cutts is dismissed without Cause from
employment by the Corporation up to and including twelve (12) months from such
Change in Control or (b) Cutts voluntarily leaves the employ of the Corporation
up to and including twelve (12) months from such Change in Control, then in
either case SpecTran shall pay to Cutts, in one lump sum, his Supplemental
Retirement Benefit as of the date of the termination of Cutts's employment. All
calculations of the Supplemental Retirement Benefit, for purposes of this
Section 10.02, shall be discounted to present value in
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EXHIBIT 10.71
accordance with the actuarial tables used in SpecTran's defined benefit pension
plan. For the purposes of this Agreement, "Change in Control" shall mean (a) the
date of public announcement that a person has become, without the approval of
SpecTran's Board of Directors, the beneficial owner of 20% or more of the voting
power of all securities of SpecTran then outstanding; (b) the date of the
commencement of a tender offer or tender exchange by any person, without the
approval of SpecTran's Board of Directors, if upon the consummation thereof such
person would be the beneficial owner of 20% or more of the voting power of all
securities of SpecTran then outstanding; or (c) the date on which individuals
who constituted the Board of Directors of SpecTran on the date this Agreement
was adopted cease for any reason to constitute a majority thereof, provided that
any person becoming a director subsequent to such date whose election or
nomination was approved by at least three quarters of such incumbent Board of
Directors shall be considered as though such person were an incumbent director.
ARTICLE ELEVEN
11.01 BENEFITS AND BURDENS. This Agreement shall be binding upon and inure to
the benefit of Cutts and his personal representatives, the Corporation, and any
successor organization which shall succeed to substantially all of the
Corporation's assets and business without regard to the form of such succession.
ARTICLE TWELVE
12.01 COMMUNICATIONS. Any notice or communication required of either party with
respect to this Agreement shall be made in writing and may either be delivered
personally or sent by certified mail, return receipt requested, as the case may
be:
To the Corporation:
c/o President of the Corporation
SpecTran Corporation
50 Hall Road
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EXHIBIT 10.71
Sturbridge, MA 01566
To Cutts:
Crawford L. Cutts
1 High Street
Southborough, MA 01772-1423
Each party shall have the right by written notice to change the place to which
any notice may be addressed.
ARTICLE THIRTEEN
13.01 CLAIMS PROCEDURE. In the event that benefits under this Agreement are not
paid to Cutts (or his beneficiary in the case of Cutts's death), and such person
feels entitled to receive them, a claim shall be made in writing to the
Corporation within sixty (60) days after written notice from the Corporation to
Cutts or his beneficiary or personal representative that payments are not being
made or are not to be made under this Agreement. Such claim shall be reviewed by
the Corporation. If the claim is approved or denied, in full or in part, the
Corporation shall provide a written notice of approval or denial within sixty
(60) days from the date of receipt of the claim setting forth the specific
reason for denial, specific reference to the provision of this Agreement upon
which the denial is based, and any additional material or information necessary
to perfect the claim, if any. Also, such written notice shall indicate the steps
to be taken if a review of the denial is desired. If a claim is denied (a claim
shall be deemed denied if the Corporation does not take action within the
aforesaid sixty (60) day period) and a review is desired, Cutts (or beneficiary
in the case of Cutts's death), shall notify the Corporation in writing within
twenty (20) days. In requesting a review, Cutts or his beneficiary may review
this Agreement or any document relating to it and submit any written issues and
comments he or she may feel appropriate. In its sole discretion the Corporation
shall then review the claim and provide a written decision within sixty (60)
days. This
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EXHIBIT 10.71
decision likewise shall state the specific reasons for the decision and shall
include reference to specific provisions of this Agreement on which the decision
is based.
Any decision of the Corporation shall not be binding on Cutts, his personal
representative, or any beneficiary without consent, nor shall it preclude
further action by Cutts, his personal representatives or beneficiary.
13.02 ARBITRATION. All claims, disputes and other matters in question between
the parties hereto arising out of or relating to this Agreement or the breach
thereof shall be decided by arbitration in accordance with the Rules of the
American Arbitration Association then obtaining, subject to the limitations and
restrictions stated below.
Neither party will be permitted to submit a dispute to arbitration without first
following the procedures set forth in Section 13.01. Notice of demand for
arbitration must be filed in writing with the other party to this Agreement and
with the American Arbitration Association. The demand must be made within a
reasonable time after the claim, dispute or other matter in question has arisen.
In no event may the demand for arbitration be made if the institution of legal
or equitable proceedings based on such claim, dispute or other matter in
question would be barred by the applicable statute of limitations.
Arbitrations hereunder will be held in the English language in Boston,
Massachusetts or such other place as the parties may agree. The award rendered
by the arbitrators will be final, not subject to appeal and judgment may be
entered upon it in any court having jurisdiction thereof. Each party will bear
all of his or its own costs and expenses associated with the arbitration, and
the parties shall equally share the administrative costs of the arbitration.
ARTICLE FOURTEEN
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EXHIBIT 10.71
14.01 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof, and supersedes all prior
agreements, written or verbal, with respect to such subject matter. This
instrument may be altered or amended only by written agreement signed by the
parties hereto.
14.02 GENDER. Any reference in this Agreement to the masculine shall be deemed
to include the feminine where the context so requires.
14.03 OPERATION OF LAW ON CORPORATION'S OBLIGATIONS. In the event that any
governmental entity promulgates any statute, rule, regulation, policy or order
which restricts or prohibits the Corporation from making payments to Cutts under
this Agreement, then the Corporation's obligations to make payments to Cutts (or
his beneficiary) hereunder shall terminate or be restricted or suspended
(consistent with such law or binding regulation, policy or order) for so long as
such restriction or prohibition applies to the Corporation. Nothing in this
Agreement is intended to require or shall be construed as requiring the
Corporation to do or fail to do any act in violation of any applicable law or
binding regulation, policy or order.
14.04 COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be considered an original, but together shall constitute one
and the same document.
14.05 SEVERANCE. In the event any provision of this Agreement is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Agreement shall remain in full force and effect and will not be affected by
such invalid or unenforceable provisions.
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EXHIBIT 10.71
14.06 JURISDICTION, GOVERNING LAW. The parties, terms and conditions of this
Agreement are subject to and shall be governed by the laws of the Commonwealth
of Massachusetts without giving effect to the principles of conflicts of law.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
duly executed by its duly authorized officer and its Corporate Seal affixed at
Sturbridge, Massachusetts the day and year first above written.
SPECTRAN CORPORATION
By
- -------------------------- -----------------------------------
Witness Name:
Title:
- -------------------------- -------------------------------------
Witness Crawford L. Cutts
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EXHIBIT 10.71
SCHEDULE A
DESIGNATION OF BENEFICIARY
Gentlemen:
In accordance with the provisions of the Supplemental Retirement Agreement dated
May 8, 1996, between SpecTran Corporation and the undersigned, I hereby
designate ____________________, residing at ________________________,* as my
beneficiary to receive payments thereunder in the event of my death before
payments in full thereunder have been made. In the event said beneficiary
predeceases me, I hereby designate _________________, residing at
___________________________,* as beneficiary in his/her stead.
Very truly yours,
_________________________
*If more than one beneficiary is to be designated, add a page listing the
beneficiaries and specify the percentage of each payment to be received by each
beneficiary.
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EXHIBIT 10.71
SCHEDULE B
Gentlemen:
In accordance with Section 5.01 of the Supplemental Retirement Agreement dated
May 8, 1996, between SpecTran Corporation and the undersigned, I hereby
prospectively and irrevocably make the election indicated below with respect to
the payment of benefits:
[CHECK ONE]
______ I elect to commence receiving benefits prior to age 65
if I retire before the Normal Retirement Age, with the benefits to commence at
age ____ [Specify age between 60 and 65].
OR
______ I elect to commence receiving benefits after the Normal
Retirement Date and forego my right to receive benefits prior to the Normal
Retirement Age.
Very truly yours,
_______________________
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<PAGE> 1
EXHIBIT 10.72
SUPPLEMENTAL RETIREMENT AGREEMENT
THIS AGREEMENT is made and entered into this 8th day of May, 1996 by
and between SpecTran Corporation ("SpecTran"), a Delaware corporation, and
William B. Beck (hereinafter called "Beck").
PURPOSE AND INTENT
This agreement (the "Agreement") is designed to recognize Beck's
contribution to the Corporation(1) and encourage Beck to remain in the
Corporation's employ by providing supplemental retirement benefits, keyed to a
specified percentage of his compensation, so that Beck's percentage of spendable
retirement income will approximate the percentage of spendable retirement income
available to less compensated employees who also participate in the
Corporation's retirement plans. Due to restrictions presently imposed by the
Internal Revenue Code on benefits for highly compensated employees, the
percentage of spendable retirement income Beck would receive under the
Corporation's current benefit plans relative to his current compensation would
be less than that of employees at lower salary levels. The benefits provided in
this Agreement are designed to be entirely supplemental to the Corporation's
other retirement benefits payable to Beck; if Beck receives the specified
percentage of compensation through pension plans and other benefits (as
described below) provided by the Corporation, no benefits will be paid out under
this Agreement. While any benefits are paid under this Agreement Beck will be
available to consult for the Corporation. Further, these benefits are subject to
forfeiture if Beck is terminated for Cause (as defined herein) or, as described
below, competes with the Corporation.
Beck has been employed by the Corporation since 1994, and currently
holds the position of President of SpecTran Specialty Optics Company, Inc., a
wholly owned subsidiary
- ------------------------
(1) Initial capitalized words may be defined below under the heading "Certain
Definitions".
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EXHIBIT 10.72
of SpecTran. The Board of Directors of SpecTran voted on May 8, 1996 to
authorize the Corporation to enter into this Agreement with Beck.
CERTAIN DEFINITIONS
(a) "Accrued Benefit" shall have the meaning set forth in
Section 2.01 of this Agreement.
(b) "Affiliate" shall mean any person or entity which controls, is controlled by
or is under common control with the Corporation. For the purpose of this
Agreement, control shall mean ownership of fifty percent (50%) or more of the
voting stock of any entity.
(c) "Benefit Computation Base" shall mean the average of Beck's annual
compensation (defined as base salary, eligible bonus(2) and any salary reduction
amounts pursuant to Sections
- -----------------------
(2) To the extent that the average annual bonus paid to Beck during the 36 month
period in which the Benefit Computation Base is calculated is greater than fifty
percent (50%) of Beck's average base salary over such period, the excess bonus
payments shall be considered ineligible for the purpose of calculating the
Benefit Computation Base. For example, assume that Beck's base salary and
bonuses over the 36 month period are as shown in the following two examples:
1.
<TABLE>
<CAPTION>
Base Salary Bonus
----------- -----
<S> <C> <C>
Months 1-12 $200,000 $200,000
Months 13-24 $210,000 $100,000
Months 25-36 $220,000 $ 90,000
Average $210,000 $130,000
</TABLE>
In this example, fifty percent (50%) of Beck's average annual base
salary over the 36 month period is $105,000. Accordingly, of Beck's average
annual bonus of $130,000 paid over that period, $25,000 will be deemed
ineligible for the purpose of calculating the Benefit Computation Base,
resulting in $105,000 of the average bonus being considered eligible.
2.
<TABLE>
<CAPTION>
Base Salary Bonus
----------- -----
<S> <C> <C>
Months 1-12 $200,000 $200,000
Months 13-24 $210,000 $ 10,000
Months 25-36 $220,000 $ 30,000
Average $210,000 $ 80,000
</TABLE>
In this example, fifty percent (50%) percent of Beck's average
annual base salary over the 36 month period is $105,000. Beck's average annual
bonus over that period of $80,000 is less than the average annual base salary,
and accordingly the entire average annual bonus will be eligible in determining
the Benefit Computation Base.
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EXHIBIT 10.72
401(k) or 125 of the Code) paid during the thirty-six (36) consecutive calendar
months during Beck's period of employment by the Corporation in which such
compensation is the highest.
(d) "Change in Control" shall have the meaning set forth in Section 10.02 of
this Agreement.
(e) The "Corporation" shall mean SpecTran, its successors and assigns, including
but not limited to any corporation, firm or person which is the survivor of a
merger or consolidation with SpecTran or which acquires substantially all of the
assets of SpecTran, and any of SpecTran's Affiliates.
(f) "Normal Retirement Date" shall mean Beck's sixty-fifth birthday.
(g) "Offsetting Benefits" shall have the meaning set forth in Section 2.03 of
this Agreement.
(h) "Supplemental Retirement Benefit" shall have the meaning set forth in
Section 2.01 of this Agreement.
ARTICLE ONE
1.01 EMPLOYMENT. The Corporation may employ Beck in such capacity as the
Corporation may from time to time determine. Notwithstanding anything contained
herein, this Agreement
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EXHIBIT 10.72
is not an agreement of employment, a guaranty of continuing employment or of
employment in any particular position and nothing herein shall restrict the
Corporation concerning the terms and conditions of Beck's employment. The
benefits provided by this Agreement are not part of any salary reduction plan or
an arrangement deferring a bonus or a salary increase. Beck has no option to
take any current payment or bonus in lieu of these salary continuation benefits.
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ARTICLE TWO
2.01 SUPPLEMENTAL RETIREMENT BENEFIT. Depending upon how many years Beck has
been continuously in the employ of the Corporation, Beck will be entitled to a
retirement benefit determined as of the effective date of his leaving the
Corporation's employment for whatever reason except Cause (as defined below),
including whether by (i) death, (ii) disability, (iii) termination of employment
or (iv) early retirement. The retirement benefit (also known as the "Accrued
Benefit") shall be an annual amount equal to Beck's Benefit Computation Base
multiplied by the Annual Percentage Amount (as determined pursuant to Section
2.02, below). Beck will receive a supplemental retirement benefit (the
"Supplemental Retirement Benefit") equal to (i) the amount of the Accrued
Benefit reduced by (ii) the sum of the benefits described in Subsections (1),
(2), (3) and (4) of Section 2.03, below (such benefits are referred to herein as
the "Offsetting Benefits"). The Supplemental Retirement Benefit, if any, to be
paid out under this Agreement, shall continue for fifteen (15) years, and be
paid in equal monthly installments commencing on the first day of the month
immediately following the later of Beck's actual retirement or the Normal
Retirement Date (unless payment is accelerated in accordance with Sections 10.01
and 10.02 below). No payment will be made under this Agreement if the Offsetting
Benefits are equal to or greater than the Accrued Benefit.
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EXHIBIT 10.72
2.02 ANNUAL PERCENTAGE AMOUNT.
(a) The Annual Percentage Amount shall be determined (subject to
subsection (b), below) by the number of years Beck has been
continuously employed by the Corporation as follows:
<TABLE>
<CAPTION>
================================================================================
YEARS OF CONTINUOUS SERVICE ANNUAL PERCENTAGE AMOUNT
- --------------------------------------------------------------------------------
<S> <C>
25 or more 65%
20-24 60%
15-19 40%
less than 15 0% (No Supplemental Retirement Benefit)
================================================================================
</TABLE>
(b) Notwithstanding the provisions of Subsection (a) of this Section 2.02,
in the event (a) Beck does not remain employed by the Corporation for
any reason during the twelve (12) month period following a Change in
Control (as defined in Section 10.01, below) or (b) an event described
in Section 10.01 occurs and either such other corporation, firm or
person (as described in Section 10.01) does not agree that Beck shall
continue in the employ of the Corporation for any reason following
such event or the Corporation's successor does not assume its
obligations hereunder, Beck will be deemed eligible to receive a
Supplemental Retirement Benefit under this Agreement if at the time of
the termination of his employment he will have completed at least five
full years of service to the Corporation. In this case, the Annual
Percentage Amount shall be determined by the number of years Beck has
been continuously employed by the Corporation as follows:
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EXHIBIT 10.72
<TABLE>
<CAPTION>
================================================================================
YEARS OF SERVICE ANNUAL PERCENTAGE AMOUNT
- --------------------------------------------------------------------------------
<S> <C>
25 or more 65%
20-24 60%
15-19 40%
14 36%
13 32%
12 28%
11 24%
10 20%
9 16%
8 12%
7 8%
6 4%
less than 6 0% (No Supplemental Retirement Benefit)
================================================================================
</TABLE>
(c) Anything else to the contrary in this Agreement notwithstanding, in
the event of either (a) Beck does not remain employed by the
Corporation for any reason during the twelve month period following a
Change in Control or (b) an event described in Section 10.01 occurs
and either such other corporation, firm or person (as described in
Section 10.01) does not agree that Beck shall continue in the employ
of the Corporation for any reason following such event or the
Corporation's successor does not assume its obligations hereunder, and
(c) in either case, the payment of the Supplementary Retirement
Benefit
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EXHIBIT 10.72
hereunder is considered a Parachute Payment and when combined with all
other payments considered to be Parachute Payments from the
Corporation to Beck due to the events described in (a) and (b) above,
result in an Excess Parachute Payment, as defined by Section 280G of
the Internal Revenue Code of 1986, as amended, then the amount of the
Supplementary Retirement Benefit shall be reduced so that the total
Parachute Payments received by Beck from the Corporation do not
constitute an Excess Parachute Payment; provided, however, that this
Section 2.02(c) shall not apply if the total Parachute Payments from
the Corporation to Beck due to the events described in (a) and (b)
above exceed one hundred twenty percent (120%) of the amount of all
Parachute Payments, not including any amount that would be considered
an Excess Parachute Payment.
2.03 OFFSETTING BENEFITS.
(a) The following are the Offsetting Benefits, which reduce the Accrued
Benefit for the purpose of calculating the Supplemental Retirement
Benefit:
1. Fifty percent (50%) of Beck's (actual or
projected) annual primary social security retirement benefit
projected as of Beck's social security normal retirement age
based on his Benefit Computation Base in effect on the date of
termination of Beck's employment with the Corporation;
2. The annual amount of benefits payable to Beck (or
his beneficiaries) at the Normal Retirement Date calculated on
a single life annuity basis from any qualified defined benefit
pension plan maintained and funded by the Corporation as of
the date of this Agreement, or their successors, as such plan
or plans may be amended or modified from time to time;
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EXHIBIT 10.72
3. The annual amount of benefits payable at the
Normal Retirement Date on a single life annuity basis
attributable to the portion of the account balances of Beck
arising from employer contributions (but excluding the portion
of such balances arising from employee salary reduction and
elective contributions) at the date of determination from the
Corporation's 401(k) and other defined contribution retirement
plans maintained by the Corporation as of the date of this
Agreement, or their successors, as such plan or plans may be
modified from time to time;
4. The annual amount of benefits payable to Beck at
the Normal Retirement Date calculated on a single life annuity
basis from any other non-qualified supplemental retirement
plan maintained and funded by the Corporation as of the date
of this Agreement, or their successors, as such plan or plans
may be amended or modified from time to time.
(b) The Corporation's obligation to pay the Offsetting Benefits shall not
be affected by the termination of this Agreement and the Supplemental
Retirement Benefit payable hereunder for any reason whatsoever.
(c) All calculations of the Supplemental Retirement Agreement payable to
Beck under this Agreement will be made assuming that Beck participates
in the Offsetting Benefits to the full extent permitted by law and the
terms of those plans.
(d) If Beck terminates his employment prior to his Normal Retirement Date,
in calculating his Accrued Benefit, (i) the offset of primary social
security retirement benefit shall be calculated on the basis of the
amount projected to be payable at Beck's social security normal
retirement age assuming continued
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<PAGE> 10
earnings by Beck at the rate in effect at termination of employment
until Beck's social security normal retirement age; (ii) the offset
for any qualified defined benefit plan shall be calculated on the
basis of Beck's accrued benefit in said plan upon termination of
employment projected to be payable at Beck's Normal Retirement Date;
(iii) the offset for any benefits arising from employer contributions
attributable to the account balances of Beck arising from the
Corporation's 401(k) plan or any other defined contribution retirement
plan shall also be calculated on the basis of Beck's accrued benefit
in such plan(s) upon termination of employment projected to be payable
at Beck's Normal Retirement Date; and (iv) the offset for any
non-qualified supplemental retirement plan shall be calculated on the
basis of Beck's accrued benefit in said plan upon termination of
employment projected to be payable at Beck's Normal Retirement Date.
2.04 OPTIONAL FORMS OF PAYMENT. In lieu of the fifteen (15) year certain
payments provided in Section 2.01 above, or whenever a Supplemental Retirement
Benefit is payable under Section 4.01 or 5.01 of this Agreement, Beck may elect
by written notice to the Corporation in the calendar year prior to the calendar
year in which payments are to begin, an optional form of payment which shall be
the actual equivalent (factors defined in SpecTran's qualified defined benefit
pension plan) of the said fifteen (15) year certain payments. The optional form
of payment shall be any optional form of payment which is provided to Beck under
the terms of SpecTran's qualified defined benefit pension plan.
2.05 VESTING. Anything to the contrary in this Agreement notwithstanding, Beck
shall be entitled to one hundred percent (100%) of any benefit payable under
this Agreement under any one or more of Sections 2.01, 3.01, 4.01, 5.01, 10.01
or 10.02 at the date on which his entitlement to such benefit shall be
determined commencing with his original date of hire by
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EXHIBIT 10.72
the Corporation, provided that such benefits are subject to forfeiture as
described in Sections 5.03 and 5.04, below.
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EXHIBIT 10.72
ARTICLE THREE
3.01 DEATH OF BECK.
(a) If Beck dies while employed by the Corporation but prior to the
commencement of the payment of the Supplemental Retirement Benefit
under Section 2.01, 4.01 or 5.01, SpecTran will pay to the designated
beneficiaries of Beck, a total annual amount equal to the Supplemental
Benefit earned by Beck as of the date of death, payable over a period
of fifteen (15) years certain commencing on the first day of the month
next following the delivery to the Corporation of a death certificate
and on a monthly basis thereafter.
(b) If Beck dies following the commencement of the payment of the
Supplemental Retirement Benefit under Section 2.01, 4.01 or 5.01, such
payments shall continue to the designated beneficiaries of Beck until
all of the Supplemental Retirement Benefit has been paid.
(c) If Beck dies following the termination of his employment with the
Corporation and prior to the commencement of the payment of the
Supplemental Retirement Benefit under Section 2.01, 4.01 or 5.01,
SpecTran shall pay to Beck's named beneficiaries an annual benefit
which shall be Beck's Supplemental Retirement Benefit as of the date
of the termination of his employment. Such benefits shall be payable
monthly, commencing on the first day of the month following the Normal
Retirement Date, or any date prior to the Normal Retirement Date
approved by the Corporation, and continuing for fifteen (15) years;
provided, however, that Beck's designated beneficiaries shall be
entitled to accelerated payments of such benefits if and to the same
extent Beck would have been entitled to an accelerated payment of the
Supplemental Retirement Benefit had he survived.
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EXHIBIT 10.72
3.02 BENEFICIARIES. Beck shall designate, in writing to the Corporation, on the
form titled "Designation of Beneficiary" attached hereto as Schedule A, one or
more beneficiaries. Beck from time to time may change his designated
beneficiaries by delivering to the Corporation a dated, revised Designation of
Beneficiary form, revoking the prior designation. If no beneficiary is so named
or if no named beneficiary is living at the time a payment is due, benefit
payments shall be made, when due, to Beck's estate. If payments of benefits to a
beneficiary commences and such beneficiary dies before all amounts to which such
beneficiary is entitled have been paid, the remaining benefits shall be paid to
the successive beneficiary or beneficiaries, if any, designated by Beck, or if
none, to the beneficiary's estate.
ARTICLE FOUR
4.01 DISABILITY PRIOR TO RETIREMENT. In the event Beck shall become disabled,
mentally or physically, which disability prevents him from performing the
material aspects of his duties, the Corporation will pay no disability benefits
hereunder. Disability benefits (if any) will be paid to Beck through such
insurance programs as may be sponsored by the Corporation. Upon the later of
termination of such other disability benefits (if any), or Beck's attainment of
the Normal Retirement Date, Beck shall commence receiving payment of his Accrued
Benefit determined as of the date of the disability. The Supplemental Retirement
Benefit shall be paid in equal monthly installments, for fifteen (15) years
certain commencing on the first day of the month following the later of the
termination of such benefits or the Normal Retirement Date, or in the manner
provided in Section 2.04.
4.02 RE-EMPLOYMENT FOLLOWING DISABILITY. In the event Beck returns to work with
the Corporation after terminating employment because of disability, this
Agreement shall continue in full force and effect as though such disability had
not occurred. Under such circumstances, Beck will receive credit towards
determining the Annual Percentage Amount for service prior to terminating his
employment because of disability and for service after resuming employment
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EXHIBIT 10.72
with the Corporation, but will not receive credit for the interim prior during
which he was not employed by the Corporation.
ARTICLE FIVE
5.01 EARLY RETIREMENT, TERMINATION OF SERVICE OR DISCHARGE. Except to the extent
otherwise provided in Sections 5.03 and 5.04, in the event that Beck's
employment with the Corporation is terminated, voluntarily or involuntarily,
before Beck attains the Normal Retirement Date, for reasons other than death or
disability, Beck shall be entitled to a Supplemental Retirement Benefit,
determined as of the date of his termination of employment. Such benefit shall
be payable in equal monthly installments, commencing on the first day of the
month next following the later of the Normal Retirement Date or the date of
Beck's actual retirement, and continuing for fifteen (15) years (except as set
forth in Sections 10.01 and 10.02); provided, however, that Beck may elect by
execution and delivery to the Corporation of the form attached hereto as
Schedule B to have the monthly payments of the Supplemental Retirement Benefit
commence prior to the Normal Retirement Date at any date between age 60 and the
Normal Retirement Date. Beck understands that such election is being made
prospectively and is irrevocable.
5.02 OPTIONAL FORMS OF PAYMENT. In lieu of the fifteen (15) years certain
payments provided in Section 5.01, the Supplemental Retirement Benefit payable
under such Section may be payable in the manner provided in Section 2.04.
5.03 EMPLOYMENT BY COMPETITION. In the event that during the two year period
immediately following the termination of Beck's employment for any reason, Beck
shall compete with the business of the Corporation, then the Supplemental
Retirement Benefit which might otherwise be due and payable hereunder shall be
immediately forfeited and all rights of Beck and his beneficiaries hereunder
shall become void; provided, however, that if (a) Beck
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EXHIBIT 10.72
does not remain employed by the Corporation for any reason during the twelve
(12) month period following a Change in Control or (b) an event described in
Section 10.01 occurs and either such other corporation, firm or person (as
described in Section 10.01) does not agree that Beck shall continue in the
employ of the Corporation for any reason following such event or the
Corporation's successor does not assume its obligations hereunder, the
provisions of Section 5.03 shall not apply, but the provisions of Sections 10.01
and 10.02 shall govern. Beck will be deemed to have competed with the business
of the Corporation if, during the two year period following termination of his
employment with the Corporation, he either (a) engages, directly or indirectly,
or by stock interest exceeding five percent (5%), or otherwise in any way, in
any business in which the Corporation was engaged during the term of his
employment or which the Corporation planned, during the term of his employment
to enter, (b) solicits any past, present or future customers of the Corporation
in any way relating to any business in which the Corporation was engaged during
the term of his employment, or which the Corporation planned during the term of
his employment, to enter, or (c) induces or actively attempt to influence any
other employee or consultant of the Corporation to terminate his or her
employment or consultancy with the Corporation.
5.04 FORFEITURE. Anything to the contrary in this Agreement notwithstanding
(other than Sections 10.01 and 10.02), the Supplemental Retirement Benefits
shall be immediately forfeited and all rights of Beck and his beneficiaries
hereunder shall become null and void, if Beck's employment with the Corporation
is terminated for Cause. For this purpose, a termination shall be a termination
for "Cause" only if the termination if for one or more of the following: (i) the
conviction of Beck for committing any felony, (ii) stealing from the
Corporation, (iii) a willful breach by Beck of a material provision of this
Agreement and (iv) if Beck engages in gross misconduct, such as fraud,
dishonesty, gross negligence or insubordination.
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EXHIBIT 10.72
If (a) Beck does not remain employed by the Corporation for any reason within
one year following a Change in Control or (b) an event described in Section
10.01 occurs and either such other corporation, firm or person (as described in
Section 10.01) does not agree that Beck shall continue in the employ of the
Corporation for any reason following such event or the Corporation's successor
does not agree to assume its obligation hereunder, the provisions of this
Section 5.04 shall not apply, but the provisions of Sections 10.01 and 10.02
shall govern.
5.05 AVAILABILITY TO CONSULT. For so long as Beck is receiving benefits pursuant
to this Agreement, Beck will keep himself available to consult with, and respond
to inquiries from, the Corporation relating to its business affairs, at
reasonable time(s) and to reasonable extent.
ARTICLE SIX
6.01 INTEREST. Any payment that is required to be made hereunder that is delayed
beyond the date specified in this Agreement shall bear interest at a variable
rate which shall be the rate of interest on one year U.S. Treasury Bills
determined at the first auction of each calendar year or part thereof during the
period of which interest is to be applied to any obligation hereunder.
ARTICLE SEVEN
7.01 ALIENABILITY. Neither Beck, nor any beneficiary under this Agreement shall
have any power or right to transfer, assign, anticipate, hypothecate, mortgage,
commute, modify, or otherwise encumber in advance any of the benefits payable
hereunder, and any attempt to do so shall be deemed null and void. The seizure
of the benefits payable hereunder for the payment of any debts, judgments,
alimony or separate maintenance, owed by Beck or his beneficiary or any of them,
or the transfer of such benefit by operation of law in the event of bankruptcy,
or otherwise, shall be deemed to be a transfer prohibited by this Agreement, and
will result in the immediate termination of all benefits payable hereunder.
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EXHIBIT 10.72
ARTICLE EIGHT
8.01 PARTICIPATION IN OTHER PLANS. Nothing contained in this Agreement shall be
construed to alter, abridge, or in any manner affect the rights and privileges
of Beck to participate in and be covered by any pension, profit sharing, group
insurance, bonus or any other employee plan or plans which the Corporation may
have or hereafter have.
ARTICLE NINE
9.01 FUNDING.
(a) The Corporation reserves the right at its sole and exclusive
discretion to insure or otherwise provide for the obligations of the
Corporation undertaken by this Agreement or to refrain from same, and
to determine the extent, nature and method thereof, including the
establishment of one or more trusts. Should the Corporation elect to
insure this Agreement, in whole or in part, through the medium of
insurance or annuities, or both, the Corporation shall be the owner
and beneficiary of the policy or annuity. At no time shall Beck be
deemed to have any right, title or interest in or to any specified
asset or assets of the Corporation, or any trust or escrow
arrangement, including, but not by way of restriction, any insurance
or annuity contracts or the proceeds therefrom.
(b) Any such policy, contract or asset shall not in any way be considered
to be security for the performance of the obligations of this
Agreement.
(c) If the Corporation purchases a life insurance or annuity policy on the
life of Beck, Beck agrees to sign any papers that may be required for
that purpose and to undergo any medical examination or tests (at the
Corporation's expense) which may be necessary, and generally cooperate
with the Corporation in securing such policy.
(d) To the extent Beck acquires a right to receive benefits under this
Agreement, such right shall be equivalent to the right of an unsecured
general creditor of the Corporation.
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EXHIBIT 10.72
ARTICLE TEN
10.01 REORGANIZATION. SpecTran shall not merge or consolidate into or with
another corporation if such merger or consolidation shall result in the other
corporation being the survivor corporation, nor shall it sell substantially all
of its assets to another corporation, firm or person, unless and until Beck and
such other corporation, firm or person agree that Beck shall continue in the
employ of the succeeding, continuing or acquiring corporation, firm or person
and such other corporation, firm or person agrees in writing without further
qualification to assume and discharge the obligations of SpecTran under this
Agreement. If Beck and such corporation, firm or person do not agree that Beck
shall continue in the employ of such corporation, firm or person, or such
corporation, firm or person does not so agree to assume and discharge such
obligations, SpecTran shall pay to Beck, in one lump sum, his Supplemental
Retirement Benefit as of the date of such merger, consolidation or sale. All
calculations of the Supplemental Retirement Benefit, for purposes of this
Section 10.01, shall be discounted to present value in accordance with the
actuarial tables used in SpecTran's defined benefit pension plan.
For the purpose of clarification, any transaction between SpecTran and any of
its Affiliates is not intended to be covered by this Section 10.01.
10.02 CHANGE IN CONTROL. In the event that a Change in Control occurs prior to
the Normal Retirement Date and either (a) Beck is dismissed without Cause from
employment by the Corporation up to and including twelve (12) months from such
Change in Control or (b) Beck voluntarily leaves the employ of the Corporation
up to and including twelve (12) months from such Change in Control, then in
either case SpecTran shall pay to Beck, in one lump sum, his Supplemental
Retirement Benefit as of the date of the termination of Beck's employment. All
calculations of the Supplemental Retirement Benefit, for purposes of this
Section 10.02, shall be discounted to present value in accordance with the
actuarial tables used in SpecTran's defined benefit pension plan. For the
purposes of this Agreement, "Change in Control" shall mean (a) the date of
public announcement that a person has become, without the approval of SpecTran's
Board of Directors, the beneficial owner of 20% or more of the voting power of
all securities of SpecTran then outstanding; (b) the date of the commencement of
a tender offer or tender
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EXHIBIT 10.72
exchange by any person, without the approval of SpecTran's Board of Directors,
if upon the consummation thereof such person would be the beneficial owner of
20% or more of the voting power of all securities of SpecTran then outstanding;
or (c) the date on which individuals who constituted the Board of Directors of
SpecTran on the date this Agreement was adopted cease for any reason to
constitute a majority thereof, provided that any person becoming a director
subsequent to such date whose election or nomination was approved by at least
three quarters of such incumbent Board of Directors shall be considered as
though such person were an incumbent director.
ARTICLE ELEVEN
11.01 BENEFITS AND BURDENS. This Agreement shall be binding upon and inure to
the benefit of Beck and his personal representatives, the Corporation, and any
successor organization which shall succeed to substantially all of the
Corporation's assets and business without regard to the form of such
succession.
ARTICLE TWELVE
12.01 COMMUNICATIONS. Any notice or communication required of either party with
respect to this Agreement shall be made in writing and may either be delivered
personally or sent by certified mail, return receipt requested, as the case may
be:
To the Corporation:
c/o President of the Corporation
SpecTran Corporation
50 Hall Road
Sturbridge, MA 01566
To Beck:
William B. Beck
33 Loveland Road
North Granby, CT 06060
Each party shall have the right by written notice to change the place to which
any notice may be addressed.
ARTICLE THIRTEEN
13.01 CLAIMS PROCEDURE. In the event that benefits under this Agreement are not
paid to Beck (or his beneficiary in the case of Beck's death), and such person
feels entitled to receive them, a claim shall be made in writing to the
Corporation within sixty (60) days after written notice from the Corporation to
Beck or his beneficiary or personal representative that payments are not being
made or are not to be made under this Agreement. Such claim shall be reviewed by
the Corporation. If the claim is approved or denied, in full or in part, the
Corporation shall provide a written notice of approval or denial within sixty
(60) days from the date of receipt of the claim setting forth the specific
reason for denial, specific reference to the provision of this Agreement upon
which the denial is based, and any additional material or information necessary
to perfect the claim, if any. Also, such written notice shall indicate the steps
to be taken if a review of the denial is desired. If a claim is denied (a claim
shall be deemed denied if the Corporation does not take action within the
aforesaid sixty (60) day period) and a review is desired, Beck (or beneficiary
in the case of Beck's death), shall notify the Corporation in writing within
twenty (20) days. In requesting a review, Beck or his beneficiary may review
this Agreement or any document relating to it and submit any written issues and
comments he or she may feel appropriate. In its sole discretion the Corporation
shall then review the claim and provide a written decision within sixty (60)
days. This decision likewise shall state the specific reasons for the decision
and shall include reference to specific provisions of this Agreement on which
the decision is based.
Any decision of the Corporation shall not be binding on Beck, his personal
representative, or any beneficiary without consent, nor shall it preclude
further action by Beck, his personal representatives or beneficiary.
13.02 ARBITRATION. All claims, disputes and other matters in question between
the parties hereto arising out of or relating to this Agreement or the breach
thereof shall be decided by arbitration in accordance with the Rules of the
American Arbitration Association then obtaining, subject to the limitations and
restrictions stated below.
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EXHIBIT 10.72
Neither party will be permitted to submit a dispute to arbitration without first
following the procedures set forth in Section 13.01. Notice of demand for
arbitration must be filed in writing with the other party to this Agreement and
with the American Arbitration Association. The demand must be made within a
reasonable time after the claim, dispute or other matter in question has arisen.
In no event may the demand for arbitration be made if the institution of legal
or equitable proceedings based on such claim, dispute or other matter in
question would be barred by the applicable statute of limitations. Arbitrations
hereunder will be held in the English language in Boston, Massachusetts or such
other place as the parties may agree. The award rendered by the arbitrators will
be final, not subject to appeal and judgment may be entered upon it in any court
having jurisdiction thereof.
Each party will bear all of his or its own costs and expenses associated with
the arbitration, and the parties shall equally share the administrative costs of
the arbitration.
ARTICLE FOURTEEN
14.01 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof, and supersedes all prior
agreements, written or verbal, with respect to such subject matter. This
instrument may be altered or amended only by written agreement signed by the
parties hereto.
14.02 GENDER. Any reference in this Agreement to the masculine shall be deemed
to include the feminine where the context so requires.
14.03 OPERATION OF LAW ON CORPORATION'S OBLIGATIONS. In the event that any
governmental entity promulgates any statute, rule, regulation, policy or order
which restricts or prohibits the Corporation from making payments to Beck under
this Agreement, then the Corporation's obligations to make payments to Beck (or
his beneficiary) hereunder shall terminate or be restricted or suspended
(consistent with such law or binding regulation, policy or order) for so long as
such restriction or prohibition applies to the Corporation. Nothing in this
Agreement is intended to require or shall be construed as requiring the
Corporation to do or fail to do any act in violation of any applicable law or
binding regulation, policy or order.
14.04 COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be considered an original, but together shall constitute one
and the same document.
14.05 SEVERANCE. In the event any provision of this Agreement is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Agreement shall remain in full force and effect and will not be affected by
such invalid or unenforceable provisions.
14.06 JURISDICTION, GOVERNING LAW. The parties, terms and conditions of this
Agreement are subject to and shall be governed by the laws of the Commonwealth
of Massachusetts without giving effect to the principles of conflicts of law.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed by its duly authorized officer and its Corporate Seal affixed at
Sturbridge, Massachusetts the day and year first above written.
SPECTRAN CORPORATION
By
- ----------------------------- -------------------------------------
Witness Name:
Title:
- ----------------------------- ---------------------------------------
Witness William B. Beck
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EXHIBIT 10.72
SCHEDULE A
DESIGNATION OF BENEFICIARY
Gentlemen: In accordance with the provisions of the Supplemental Retirement
Agreement dated May 8, 1996, between SpecTran Corporation and the undersigned, I
hereby designate ____________________, residing at ________________________,* as
my beneficiary to receive payments thereunder in the event of my death before
payments in full thereunder have been made. In the event said beneficiary
predeceases me, I hereby designate _________________, residing at
___________________________,* as beneficiary in his/her stead.
Very truly yours,
_________________________
*If more than one beneficiary is to be designated, add a page listing the
beneficiaries and specify the percentage of each payment to be received by each
beneficiary.
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EXHIBIT 10.72
SCHEDULE B
Gentlemen:
In accordance with Section 5.01 of the Supplemental Retirement Agreement dated
May 8, 1996, between SpecTran Corporation and the undersigned, I hereby
prospectively and irrevocably make the election indicated below with respect to
the payment of benefits:
[CHECK ONE]
______ I elect to commence receiving benefits prior to age 65 if I retire before
the Normal Retirement Age, with the benefits to commence at age ____ [Specify
age between 60 and 65].
OR
______ I elect to commence receiving benefits after the Normal Retirement Date
and forego my right to receive benefits prior to the Normal Retirement Age.
Very truly yours,
_________________________
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<PAGE> 1
EXHIBIT 10.73
SUPPLEMENTAL RETIREMENT AGREEMENT
THIS AGREEMENT is made and entered into this 8th day of May, 1996 by
and between SpecTran Corporation ("SpecTran"), a Delaware corporation, and John
E. Chapman (hereinafter called "Chapman").
PURPOSE AND INTENT
This agreement (the "Agreement") is designed to recognize Chapman's
contribution to the Corporation(1) and encourage Chapman to remain in the
Corporation's employ by providing supplemental retirement benefits, keyed to a
specified percentage of his compensation, so that Chapman's percentage of
spendable retirement income will approximate the percentage of spendable
retirement income available to less compensated employees who also participate
in the Corporation's retirement plans. Due to restrictions presently imposed by
the Internal Revenue Code on benefits for highly compensated employees, the
percentage of spendable retirement income Chapman would receive under the
Corporation's current benefit plans relative to his current compensation would
be less than that of employees at lower salary levels. The benefits provided in
this Agreement are designed to be entirely supplemental to the Corporation's
other retirement benefits payable to Chapman; if Chapman receives the specified
percentage of compensation through pension plans and other benefits (as
described below) provided by the Corporation, no benefits will be paid out under
this Agreement. While any benefits are paid under this Agreement Chapman will be
available to consult for the Corporation. Further, these benefits are subject to
forfeiture if Chapman is terminated for Cause (as defined herein) or, as
described below, competes with the Corporation.
Chapman has been employed by the Corporation since 1983, is now
serving SpecTran as its Senior Vice President-Technology and currently holds the
position of President of
- ------------------------
(1) Initial capitalized words may be defined below under the heading "Certain
Definitions".
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<PAGE> 2
SpecTran Communication Fiber Technologies, Inc., a wholly owned subsidiary of
SpecTran. The Board of Directors of SpecTran voted on May 8, 1996 to authorize
the Corporation to enter into this Agreement with Chapman.
CERTAIN DEFINITIONS(a) "Accrued Benefit" shall have the meaning set forth in
Section 2.01 of this Agreement.
(b) "Affiliate" shall mean any person or entity which controls, is controlled by
or is under common control with the Corporation. For the purpose of this
Agreement, control shall mean ownership of fifty percent (50%) or more of the
voting stock of any entity.
(c) "Benefit Computation Base" shall mean the average of Chapman's annual
compensation (defined as base salary, eligible bonus(2) and any salary reduction
amounts pursuant to Sections
- ------------------------------
(2) To the extent that the average annual bonus paid to Chapman during the 36
month period in which the Benefit Computation Base is calculated is greater than
fifty percent (50%) of Chapman's average base salary over such period, the
excess bonus payments shall be considered ineligible for the purpose of
calculating the Benefit Computation Base. For example, assume that Chapman's
base salary and bonuses over the 36 month period are as shown in the following
two examples:
1.
<TABLE>
<CAPTION>
Base Salary Bonus
----------- -----
<S> <C> <C>
Months 1-12 $200,000 $200,000
Months 13-24 $210,000 $100,000
Months 25-36 $220,000 $ 90,000
Average $210,000 $130,000
</TABLE>
In this example, fifty percent (50%) of Chapman's average annual
base salary over the 36 month period is $105,000. Accordingly, of Chapman's
average annual bonus of $130,000 paid over that period, $25,000 will be deemed
ineligible for the purpose of calculating the Benefit Computation Base,
resulting in $105,000 of the average bonus being considered eligible.
2.
<TABLE>
<CAPTION>
Base Salary Bonus
----------- -----
<S> <C> <C>
Months 1-12 $200,000 $200,000
Months 13-24 $210,000 $ 10,000
Months 25-36 $220,000 $ 30,000
Average $210,000 $ 80,000
</TABLE>
In this example, fifty percent (50%) percent of Chapman's average
annual base salary over the 36 month period is $105,000. Chapman's average
annual bonus over that period of $80,000 is less than the average annual base
salary, and accordingly the entire average annual bonus will be eligible in
determining the Benefit Computation Base.
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<PAGE> 3
401(k) or 125 of the Code) paid during the thirty-six (36) consecutive calendar
months during Chapman's period of employment by the Corporation in which such
compensation is the highest.
(d) "Change in Control" shall have the meaning set forth in Section 10.02 of
this Agreement.
(e) The "Corporation" shall mean SpecTran, its successors and assigns, including
but not limited to any corporation, firm or person which is the survivor of a
merger or consolidation with SpecTran or which acquires substantially all of the
assets of SpecTran, and any of SpecTran's Affiliates.
(f) "Normal Retirement Date" shall mean Chapman's sixty-fifth birthday.
(g) "Offsetting Benefits" shall have the meaning set forth in Section 2.03 of
this Agreement.
(h) "Supplemental Retirement Benefit" shall have the meaning set forth in
Section 2.01 of this Agreement.
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ARTICLE ONE
1.01 EMPLOYMENT. The Corporation may employ Chapman in such capacity as the
Corporation may from time to time determine. Notwithstanding anything contained
herein, this Agreement is not an agreement of employment, a guaranty of
continuing employment or of employment in any particular position and nothing
herein shall restrict the Corporation concerning the terms and conditions of
Chapman's employment. The benefits provided by this Agreement are not part of
any salary reduction plan or an arrangement deferring a bonus or a salary
increase. Chapman has no option to take any current payment or bonus in lieu of
these salary continuation benefits.
ARTICLE TWO
2.01 SUPPLEMENTAL RETIREMENT BENEFIT. Depending upon how many years Chapman has
been continuously in the employ of the Corporation, Chapman will be entitled to
a retirement benefit determined as of the effective date of his leaving the
Corporation's employment for whatever reason except Cause (as defined below),
including whether by (i) death, (ii) disability, (iii) termination of employment
or (iv) early retirement. The retirement benefit (also known as the "Accrued
Benefit") shall be an annual amount equal to Chapman's Benefit Computation Base
multiplied by the Annual Percentage Amount (as determined pursuant to Section
2.02, below). Chapman will receive a supplemental retirement benefit (the
"Supplemental Retirement Benefit") equal to (i) the amount of the Accrued
Benefit reduced by (ii) the sum of the benefits described in Subsections (1),
(2), (3) and (4) of Section 2.03, below (such benefits are referred to herein as
the "Offsetting Benefits"). The Supplemental Retirement Benefit, if any, to be
paid out under this Agreement, shall continue for fifteen (15) years, and be
paid in equal monthly installments commencing on the first day of the month
immediately following the later of Chapman's actual retirement or the Normal
Retirement Date (unless payment is accelerated in accordance with Sections 10.01
and 10.02 below). No
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payment will be made under this Agreement if the Offsetting Benefits are equal
to or greater than the Accrued Benefit.
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2.02 ANNUAL PERCENTAGE AMOUNT.
(a) The Annual Percentage Amount shall be determined (subject to
subsection (b), below) by the number of years Chapman has been
continuously employed by the Corporation as follows:
<TABLE>
<CAPTION>
================================================================================
YEARS OF CONTINUOUS SERVICE ANNUAL PERCENTAGE AMOUNT
- --------------------------------------------------------------------------------
<S> <C>
25 or more 65%
20-24 60%
15-19 40%
less than 15 0% (No Supplemental Retirement Benefit)
================================================================================
</TABLE>
(b) Notwithstanding the provisions of Subsection (a) of this Section 2.02,
in the event (a) Chapman does not remain employed by the Corporation
for any reason during the twelve (12) month period following a Change
in Control (as defined in Section 10.01, below) or (b) an event
described in Section 10.01 occurs and either such other corporation,
firm or person (as described in Section 10.01) does not agree that
Chapman shall continue in the employ of the Corporation for any reason
following such event or the Corporation's successor does not assume
its obligations hereunder, Chapman will be deemed eligible to receive
a Supplemental Retirement Benefit under this Agreement if at the time
of the termination of his employment he will have completed at least
five full years of service to the Corporation. In this case, the
Annual Percentage Amount shall be determined by the number of years
Chapman has been continuously employed by the Corporation as follows:
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<TABLE>
<CAPTION>
================================================================================
YEARS OF SERVICE ANNUAL PERCENTAGE AMOUNT
- --------------------------------------------------------------------------------
<S> <C>
25 or more 65%
20 -24 60%
15-19 40%
14 36%
13 32%
12 28%
11 24%
10 20%
9 16%
8 12%
7 8%
6 4%
less than 6 0% (No Supplemental Retirement Benefit)
================================================================================
</TABLE>
(c) Anything else to the contrary in this Agreement notwithstanding, in
the event of either (a) Chapman does not remain employed by the
Corporation for any reason during the twelve month period following a
Change in Control or (b) an event described in Section 10.01 occurs
and either such other corporation, firm or person (as described in
Section 10.01) does not agree that Chapman shall continue in the
employ of the Corporation for any reason following such event or the
Corporation's successor does not assume its obligations hereunder, and
(c) in either case, the payment of the Supplementary Retirement
Benefit
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hereunder is considered a Parachute Payment and when combined with all
other payments considered to be Parachute Payments from the
Corporation to Chapman due to the events described in (a) and (b)
above, result in an Excess Parachute Payment, as defined by Section
280G of the Internal Revenue Code of 1986, as amended, then the amount
of the Supplementary Retirement Benefit shall be reduced so that the
total Parachute Payments received by Chapman from the Corporation do
not constitute an Excess Parachute Payment; provided, however, that
this Section 2.02(c) shall not apply if the total Parachute Payments
from the Corporation to Chapman due to the events described in (a) and
(b) above exceed one hundred twenty percent (120%) of the amount of
all Parachute Payments, not including any amount that would be
considered an Excess Parachute Payment.
2.03 OFFSETTING BENEFITS.
(a) The following are the Offsetting Benefits, which reduce the Accrued
Benefit for the purpose of calculating the Supplemental Retirement
Benefit:
1. Fifty percent (50%) of Chapman's (actual or projected)
annual primary social security retirement benefit projected as of
Chapman's social security normal retirement age based on his
Benefit Computation Base in effect on the date of termination of
Chapman's employment with the Corporation;
2. The annual amount of benefits payable to Chapman (or his
beneficiaries) at the Normal Retirement Date calculated on a
single life annuity basis from any qualified defined benefit
pension plan maintained and funded by the Corporation as of the
date of this Agreement, or their successors, as such plan or
plans may be amended or modified from time to time;
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<PAGE> 9
3. The annual amount of benefits payable at the Normal
Retirement Date on a single life annuity basis attributable to
the portion of the account balances of Chapman arising from
employer contributions (but excluding the portion of such
balances arising from employee salary reduction and elective
contributions) at the date of determination from the
Corporation's 401(k) and other defined contribution retirement
plans maintained by the Corporation as of the date of this
Agreement, or their successors, as such plan or plans may be
modified from time to time;
4. The annual amount of benefits payable to Chapman at the
Normal Retirement Date calculated on a single life annuity basis
from any other non-qualified supplemental retirement plan
maintained and funded by the Corporation as of the date of this
Agreement, or their successors, as such plan or plans may be
amended or modified from time to time.
(b) The Corporation's obligation to pay the Offsetting Benefits shall not
be affected by the termination of this Agreement and the Supplemental
Retirement Benefit payable hereunder for any reason whatsoever.
(c) All calculations of the Supplemental Retirement Agreement payable to
Chapman under this Agreement will be made assuming that Chapman
participates in the Offsetting Benefits to the full extent permitted
by law and the terms of those plans.
(d) If Chapman terminates his employment prior to his Normal Retirement
Date, in calculating his Accrued Benefit, (i) the offset of primary
social security retirement benefit shall be calculated on the basis of
the amount projected to be payable at Chapman's social security normal
retirement age assuming continued
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<PAGE> 10
earnings by Chapman at the rate in effect at termination of employment
until Chapman's social security normal retirement age; (ii) the offset
for any qualified defined benefit plan shall be calculated on the
basis of Chapman's accrued benefit in said plan upon termination of
employment projected to be payable at Chapman's Normal Retirement
Date; (iii) the offset for any benefits arising from employer
contributions attributable to the account balances of Chapman arising
from the Corporation's 401(k) plan or any other defined contribution
retirement plan shall also be calculated on the basis of Chapman's
accrued benefit in such plan(s) upon termination of employment
projected to be payable at Chapman's Normal Retirement Date; and (iv)
the offset for any non-qualified supplemental retirement plan shall be
calculated on the basis of Chapman's accrued benefit in said plan upon
termination of employment projected to be payable at Chapman's Normal
Retirement Date.
2.04 OPTIONAL FORMS OF PAYMENT. In lieu of the fifteen (15) year certain
payments provided in Section 2.01 above, or whenever a Supplemental Retirement
Benefit is payable under Section 4.01 or 5.01 of this Agreement, Chapman may
elect by written notice to the Corporation in the calendar year prior to the
calendar year in which payments are to begin, an optional form of payment which
shall be the actual equivalent (factors defined in SpecTran's qualified defined
benefit pension plan) of the said fifteen (15) year certain payments. The
optional form of payment shall be any optional form of payment which is provided
to Chapman under the terms of SpecTran's qualified defined benefit pension plan.
2.05 VESTING. Anything to the contrary in this Agreement notwithstanding,
Chapman shall be entitled to one hundred percent (100%) of any benefit payable
under this Agreement under any one or more of Sections 2.01, 3.01, 4.01, 5.01,
10.01 or 10.02 at the date on which his entitlement to such benefit shall be
determined commencing with his original date of hire by
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the Corporation, provided that such benefits are subject to forfeiture as
described in Sections 5.03 and 5.04, below.
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ARTICLE THREE
3.01 DEATH OF CHAPMAN.
(a) If Chapman dies while employed by the Corporation but prior to the
commencement of the payment of the Supplemental Retirement Benefit
under Section 2.01, 4.01 or 5.01, SpecTran will pay to the designated
beneficiaries of Chapman, a total annual amount equal to the
Supplemental Benefit earned by Chapman as of the date of death,
payable over a period of fifteen (15) years certain commencing on the
first day of the month next following the delivery to the Corporation
of a death certificate and on a monthly basis thereafter.
(b) If Chapman dies following the commencement of the payment of the
Supplemental Retirement Benefit under Section 2.01, 4.01 or 5.01, such
payments shall continue to the designated beneficiaries of Chapman
until all of the Supplemental Retirement Benefit has been paid.
(c) If Chapman dies following the termination of his employment with the
Corporation and prior to the commencement of the payment of the
Supplemental Retirement Benefit under Section 2.01, 4.01 or 5.01,
SpecTran shall pay to Chapman's named beneficiaries an annual benefit
which shall be Chapman's Supplemental Retirement Benefit as of the
date of the termination of his employment. Such benefits shall be
payable monthly, commencing on the first day of the month following
the Normal Retirement Date, or any date prior to the Normal Retirement
Date approved by the Corporation, and continuing for fifteen (15)
years; provided, however, that Chapman's designated beneficiaries
shall be entitled to accelerated payments of such benefits if and to
the same extent Chapman would have been entitled to an accelerated
payment of the Supplemental Retirement Benefit had he survived.
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3.02 BENEFICIARIES. Chapman shall designate, in writing to the Corporation, on
the form titled "Designation of Beneficiary" attached hereto as Schedule A, one
or more beneficiaries. Chapman from time to time may change his designated
beneficiaries by delivering to the Corporation a dated, revised Designation of
Beneficiary form, revoking the prior designation. If no beneficiary is so named
or if no named beneficiary is living at the time a payment is due, benefit
payments shall be made, when due, to Chapman's estate. If payments of benefits
to a beneficiary commences and such beneficiary dies before all amounts to which
such beneficiary is entitled have been paid, the remaining benefits shall be
paid to the successive beneficiary or beneficiaries, if any, designated by
Chapman, or if none, to the beneficiary's estate.
ARTICLE FOUR
4.01 DISABILITY PRIOR TO RETIREMENT. In the event Chapman shall become disabled,
mentally or physically, which disability prevents him from performing the
material aspects of his duties, the Corporation will pay no disability benefits
hereunder. Disability benefits (if any) will be paid to Chapman through such
insurance programs as may be sponsored by the Corporation. Upon the later of
termination of such other disability benefits (if any), or Chapman's attainment
of the Normal Retirement Date, Chapman shall commence receiving payment of his
Accrued Benefit determined as of the date of the disability. The Supplemental
Retirement Benefit shall be paid in equal monthly installments, for fifteen (15)
years certain commencing on the first day of the month following the later of
the termination of such benefits or the Normal Retirement Date, or in the manner
provided in Section 2.04.
4.02 RE-EMPLOYMENT FOLLOWING DISABILITY. In the event Chapman returns to work
with the Corporation after terminating employment because of disability, this
Agreement shall continue in full force and effect as though such disability had
not occurred. Under such circumstances, Chapman will receive credit towards
determining the Annual Percentage Amount for service prior to terminating his
employment because of disability and for service after resuming
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employment with the Corporation, but will not receive credit for the interim
prior during which he was not employed by the Corporation.
ARTICLE FIVE
5.01 EARLY RETIREMENT, TERMINATION OF SERVICE OR DISCHARGE. Except to the extent
otherwise provided in Sections 5.03 and 5.04, in the event that Chapman's
employment with the Corporation is terminated, voluntarily or involuntarily,
before Chapman attains the Normal Retirement Date, for reasons other than death
or disability, Chapman shall be entitled to a Supplemental Retirement Benefit,
determined as of the date of his termination of employment. Such benefit shall
be payable in equal monthly installments, commencing on the first day of the
month next following the later of the Normal Retirement Date or the date of
Chapman's actual retirement, and continuing for fifteen (15) years (except as
set forth in Sections 10.01 and 10.02); provided, however, that Chapman may
elect by execution and delivery to the Corporation of the form attached hereto
as Schedule B to have the monthly payments of the Supplemental Retirement
Benefit commence prior to the Normal Retirement Date at any date between age 60
and the Normal Retirement Date. Chapman understands that such election is being
made prospectively and is irrevocable. [add -election only applies to future
services]
5.02 OPTIONAL FORMS OF PAYMENT. In lieu of the fifteen (15) years certain
payments provided in Section 5.01, the Supplemental Retirement Benefit payable
under such Section may be payable in the manner provided in Section 2.04.
5.03 EMPLOYMENT BY COMPETITION. In the event that during the two year period
immediately following the termination of Chapman's employment for any reason,
Chapman shall compete with the business of the Corporation, then the
Supplemental Retirement Benefit which might otherwise be due and payable
hereunder shall be immediately forfeited and all rights of Chapman and his
beneficiaries hereunder shall become void; provided, however, that
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if (a) Chapman does not remain employed by the Corporation for any reason during
the twelve (12) month period following a Change in Control or (b) an event
described in Section 10.01 occurs and either such other corporation, firm or
person (as described in Section 10.01) does not agree that Chapman shall
continue in the employ of the Corporation for any reason following such event or
the Corporation's successor does not assume its obligations hereunder, the
provisions of Section 5.03 shall not apply, but the provisions of Sections 10.01
and 10.02 shall govern.
Chapman will be deemed to have competed with the business of the Corporation if,
during the two year period following termination of his employment with the
Corporation, he either (a) engages, directly or indirectly, or by stock interest
exceeding five percent (5%), or otherwise in any way, in any business in which
the Corporation was engaged during the term of his employment or which the
Corporation planned, during the term of his employment to enter, (b) solicits
any past, present or future customers of the Corporation in any way relating to
any business in which the Corporation was engaged during the term of his
employment, or which the Corporation planned during the term of his employment,
to enter, or (c) induces or actively attempt to influence any other employee or
consultant of the Corporation to terminate his or her employment or consultancy
with the Corporation.
5.04 FORFEITURE. Anything to the contrary in this Agreement notwithstanding
(other than Sections 10.01 and 10.02), the Supplemental Retirement Benefits
shall be immediately forfeited and all rights of Chapman and his beneficiaries
hereunder shall become null and void, if Chapman's employment with the
Corporation is terminated for Cause. For this purpose, a termination shall be a
termination for "Cause" only if the termination if for one or more of the
following: (i) the conviction of Chapman for committing any felony, (ii)
stealing from the Corporation, (iii) a willful breach by Chapman of a material
provision of this Agreement and (iv) if Chapman engages in gross misconduct,
such as fraud, dishonesty, gross negligence or insubordination.
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<PAGE> 16
If (a) Chapman does not remain employed by the Corporation for any reason within
one year following a Change in Control or (b) an event described in Section
10.01 occurs and either such other corporation, firm or person (as described in
Section 10.01) does not agree that Chapman shall continue in the employ of the
Corporation for any reason following such event or the Corporation's successor
does not agree to assume its obligation hereunder, the provisions of this
Section 5.04 shall not apply, but the provisions of Sections 10.01 and 10.02
shall govern.
5.05 AVAILABILITY TO CONSULT. For so long as Chapman is receiving benefits
pursuant to this Agreement, Chapman will keep himself available to consult with,
and respond to inquiries from, the Corporation relating to its business affairs,
at reasonable time(s) and to reasonable extent.
ARTICLE SIX
6.01 INTEREST. Any payment that is required to be made hereunder that is delayed
beyond the date specified in this Agreement shall bear interest at a variable
rate which shall be the rate of interest on one year U.S. Treasury Bills
determined at the first auction of each calendar year or part thereof during the
period of which interest is to be applied to any obligation hereunder.
ARTICLE SEVEN
7.01 ALIENABILITY. Neither Chapman, nor any beneficiary under this Agreement
shall have any power or right to transfer, assign, anticipate, hypothecate,
mortgage, commute, modify, or otherwise encumber in advance any of the benefits
payable hereunder, and any attempt to do so shall be deemed null and void. The
seizure of the benefits payable hereunder for the payment of any debts,
judgments, alimony or separate maintenance, owed by Chapman or his beneficiary
or any of them, or the transfer of such benefit by operation of law in the event
of
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bankruptcy, or otherwise, shall be deemed to be a transfer prohibited by this
Agreement, and will result in the immediate termination of all benefits payable
hereunder.
ARTICLE EIGHT
8.01 PARTICIPATION IN OTHER PLANS. Nothing contained in this Agreement shall be
construed to alter, abridge, or in any manner affect the rights and privileges
of Chapman to participate in and be covered by any pension, profit sharing,
group insurance, bonus or any other employee plan or plans which the Corporation
may have or hereafter have.
ARTICLE NINE
9.01 FUNDING.
(a) The Corporation reserves the right at its sole and exclusive
discretion to insure or otherwise provide for the obligations of the
Corporation undertaken by this Agreement or to refrain from same, and
to determine the extent, nature and method thereof, including the
establishment of one or more trusts. Should the Corporation elect to
insure this Agreement, in whole or in part, through the medium of
insurance or annuities, or both, the Corporation shall be the owner
and beneficiary of the policy or annuity. At no time shall Chapman be
deemed to have any right, title or interest in or to any specified
asset or assets of the Corporation, or any trust or escrow
arrangement, including, but not by way of restriction, any insurance
or annuity contracts or the proceeds therefrom.
(b) Any such policy, contract or asset shall not in any way be considered
to be security for the performance of the obligations of this
Agreement.
(c) If the Corporation purchases a life insurance or annuity policy on the
life of Chapman, Chapman agrees to sign any papers that may be
required for that purpose and to undergo any medical examination or
tests (at the Corporation's expense) which may be necessary, and
generally cooperate with the Corporation in securing such policy.
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(d) To the extent Chapman acquires a right to receive benefits under this
Agreement, such right shall be equivalent to the right of an unsecured
general creditor of the Corporation.
ARTICLE TEN
10.01 REORGANIZATION. SpecTran shall not merge or consolidate into or with
another corporation if such merger or consolidation shall result in the other
corporation being the survivor corporation, nor shall it sell substantially all
of its assets to another corporation, firm or person, unless and until Chapman
and such other corporation, firm or person agree that Chapman shall continue in
the employ of the succeeding, continuing or acquiring corporation, firm or
person and such other corporation, firm or person agrees in writing without
further qualification to assume and discharge the obligations of SpecTran under
this Agreement. If Chapman and such corporation, firm or person do not agree
that Chapman shall continue in the employ of such corporation, firm or person,
or such corporation, firm or person does not so agree to assume and discharge
such obligations, SpecTran shall pay to Chapman, in one lump sum, his
Supplemental Retirement Benefit as of the date of such merger, consolidation or
sale. All calculations of the Supplemental Retirement Benefit, for purposes of
this Section 10.01, shall be discounted to present value in accordance with the
actuarial tables used in SpecTran's defined benefit pension plan.
For the purpose of clarification, any transaction between SpecTran and any of
its Affiliates is not intended to be covered by this Section 10.01.
10.02 CHANGE IN CONTROL. In the event that a Change in Control occurs prior to
the Normal Retirement Date and either (a) Chapman is dismissed without Cause
from employment by the Corporation up to and including
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twelve (12) months from such Change in Control or (b) Chapman voluntarily leaves
the employ of the Corporation up to and including twelve (12) months from such
Change in Control, then in either case SpecTran shall pay to Chapman, in one
lump sum, his Supplemental Retirement Benefit as of the date of the termination
of Chapman's employment. All calculations of the Supplemental Retirement
Benefit, for purposes of this Section 10.02, shall be discounted to present
value in accordance with the actuarial tables used in SpecTran's defined benefit
pension plan. For the purposes of this Agreement, "Change in Control" shall mean
(a) the date of public announcement that a person has become, without the
approval of SpecTran's Board of Directors, the beneficial owner of 20% or more
of the voting power of all securities of SpecTran then outstanding; (b) the date
of the commencement of a tender offer or tender exchange by any person, without
the approval of SpecTran's Board of Directors, if upon the consummation thereof
such person would be the beneficial owner of 20% or more of the voting power of
all securities of SpecTran then outstanding; or (c) the date on which
individuals who constituted the Board of Directors of SpecTran on the date this
Agreement was adopted cease for any reason to constitute a majority thereof,
provided that any person becoming a director subsequent to such date whose
election or nomination was approved by at least three quarters of such incumbent
Board of Directors shall be considered as though such person were an incumbent
director.
ARTICLE ELEVEN
11.01 BENEFITS AND BURDENS. This Agreement shall be binding upon and inure to
the benefit of Chapman and his personal representatives, the Corporation, and
any successor organization which shall succeed to substantially all of the
Corporation's assets and business without regard to the form of such succession.
ARTICLE TWELVE
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12.01 COMMUNICATIONS. Any notice or communication required of either party with
respect to this Agreement shall be made in writing and may either be delivered
personally or sent by certified mail, return receipt requested, as the case may
be:
To the Corporation:
c/o President of the Corporation
SpecTran Corporation
50 Hall Road
Sturbridge, MA 01566
To Chapman:
John E. Chapman
11 Valley Forge Drive
Shrewsbury, MA 01545
Each party shall have the right by written notice to change the place to which
any notice may be addressed.
ARTICLE THIRTEEN
13.01 CLAIMS PROCEDURE. In the event that benefits under this Agreement are not
paid to Chapman (or his beneficiary in the case of Chapman's death), and such
person feels entitled to receive them, a claim shall be made in writing to the
Corporation within sixty (60) days after written notice from the Corporation to
Chapman or his beneficiary or personal representative that payments are not
being made or are not to be made under this Agreement. Such claim shall be
reviewed by the Corporation. If the claim is approved or denied, in full or in
part, the Corporation shall provide a written notice of approval or denial
within sixty (60) days from the date of receipt of the claim setting forth the
specific reason for denial, specific reference to the provision of this
Agreement upon which the denial is based, and any additional material or
information necessary to perfect the claim, if any. Also, such written notice
shall indicate the steps to be taken if a review of the denial is desired. If a
claim is denied (a claim shall be deemed denied if the Corporation does not take
action within the
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aforesaid sixty (60) day period) and a review is desired, Chapman (or
beneficiary in the case of Chapman's death), shall notify the Corporation in
writing within twenty (20) days. In requesting a review, Chapman or his
beneficiary may review this Agreement or any document relating to it and submit
any written issues and comments he or she may feel appropriate. In its sole
discretion the Corporation shall then review the claim and provide a written
decision within sixty (60) days. This decision likewise shall state the specific
reasons for the decision and shall include reference to specific provisions of
this Agreement on which the decision is based.
Any decision of the Corporation shall not be binding on Chapman, his personal
representative, or any beneficiary without consent, nor shall it preclude
further action by Chapman, his personal representatives or beneficiary.
13.02 ARBITRATION. All claims, disputes and other matters in question between
the parties hereto arising out of or relating to this Agreement or the breach
thereof shall be decided by arbitration in accordance with the Rules of the
American Arbitration Association then obtaining, subject to the limitations and
restrictions stated below.
Neither party will be permitted to submit a dispute to arbitration without first
following the procedures set forth in Section 13.01. Notice of demand for
arbitration must be filed in writing with the other party to this Agreement and
with the American Arbitration Association. The demand must be made within a
reasonable time after the claim, dispute or other matter in question has arisen.
In no event may the demand for arbitration be made if the institution of legal
or equitable proceedings based on such claim, dispute or other matter in
question would be barred by the applicable statute of limitations.
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Arbitrations hereunder will be held in the English language in Boston,
Massachusetts or such other place as the parties may agree. The award rendered
by the arbitrators will be final, not subject to appeal and judgment may be
entered upon it in any court having jurisdiction thereof. Each party will bear
all of his or its own costs and expenses associated with the arbitration, and
the parties shall equally share the administrative costs of the arbitration.
ARTICLE FOURTEEN
14.01 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof, and supersedes all prior
agreements, written or verbal, with respect to such subject matter. This
instrument may be altered or amended only by written agreement signed by the
parties hereto.
14.02 GENDER. Any reference in this Agreement to the masculine shall be deemed
to include the feminine where the context so requires.
14.03 OPERATION OF LAW ON CORPORATION'S OBLIGATIONS. In the event that any
governmental entity promulgates any statute, rule, regulation, policy or order
which restricts or prohibits the Corporation from making payments to Chapman
under this Agreement, then the Corporation's obligations to make payments to
Chapman (or his beneficiary) hereunder shall terminate or be restricted or
suspended (consistent with such law or binding regulation, policy or order) for
so long as such restriction or prohibition applies to the Corporation. Nothing
in this Agreement is intended to require or shall be construed as requiring the
Corporation to do or fail to do any act in violation of any applicable law or
binding regulation, policy or order.
14.04 COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be considered an original, but together shall constitute one
and the same document.
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14.05 SEVERANCE. In the event any provision of this Agreement is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Agreement shall remain in full force and effect and will not be affected by
such invalid or unenforceable provisions.
14.06 JURISDICTION, GOVERNING LAW. The parties, terms and conditions of this
Agreement are subject to and shall be governed by the laws of the Commonwealth
of Massachusetts without giving effect to the principles of conflicts of law.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
duly executed by its duly authorized officer and its Corporate Seal affixed at
Sturbridge, Massachusetts the day and year first above written.
SPECTRAN CORPORATION
By
- ------------------------- -------------------------------------
Witness Name:
Title:
- ------------------------- --------------------------------------
Witness John E. Chapman
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SCHEDULE A
DESIGNATION OF BENEFICIARY
Gentlemen:
In accordance with the provisions of the Supplemental Retirement Agreement dated
May 8, 1996, between SpecTran Corporation and the undersigned, I hereby
designate ____________________, residing at ________________________,* as my
beneficiary to receive payments thereunder in the event of my death before
payments in full thereunder have been made. In the event said beneficiary
predeceases me, I hereby designate _________________, residing at
___________________________,* as beneficiary in his/her stead.
Very truly yours,
_________________________
*If more than one beneficiary is to be designated, add a page listing the
beneficiaries and specify the percentage of each payment to be received by each
beneficiary.
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SCHEDULE B
Gentlemen:
In accordance with Section 5.01 of the Supplemental Retirement Agreement dated
May 8, 1996, between SpecTran Corporation and the undersigned, I hereby
prospectively and irrevocably make the election indicated below with respect to
the payment of benefits:
[CHECK ONE]
______ I elect to commence receiving benefits prior to age 65 if I
retire before the Normal Retirement Age, with the benefits to commence at age
____ [Specify age between 60 and 65].
OR
______ I elect to commence receiving benefits after the Normal
Retirement Date and forego my right to receive benefits prior to the Normal
Retirement Age.
Very truly yours,
_______________________
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<PAGE> 1
EXHIBIT 10.74
LEASE
THIS AGREEMENT made and entered into this day of June, 1996, by and between
JEFFREY M. CHASSE, LARRY A. JOHNSON and MICHAEL W. ROCHE, AS TRUSTEES OF CRJ
REALTY TRUST of 69 Hall Road, Sturbridge, MA 01 566 (hereinafter ter referred to
as "Lessor") and SPECTRAN COMMUNICATION FIBER TECHNOLOGIES, INC., of 50 Hall
Road, Sturbridge, Massachusetts, 01566, (hereinafter referred to as "Lessee").
WITNESSETH:
In consideration of the mutual promises and premises hereinafter referenced, it
is agreed by and between the parties hereto as follows:
FIRST
The LESSOR hereby agrees to lease and LESSEE hereby agrees to rent from the
LESSOR for office space incidental to Lessee's business, and for no other
purpose without the written consent of the LESSOR, that certain property
described as follows:
The "LOWER SUITE B" of floor space in the building known as "Hall Road
Professional Center" located at 69 Hall Road, Sturbridge, Massachusetts,
consisting of approximately 950 square feet, as set out in floor plans
designed by LESSEE and incorporated herein by reference; together with the
right to use bathrooms and hallways within the common areas of the lower
level of said building in common with others.
SECOND
LESSOR and LESSEE agree to pay for the costs incurred to complete "Lower Suite
B" in accordance with Exhibit "A", herewith incorporated in this Lease.
THIRD
This Lease shall be for a term commencing JULY 1, 1996, and ending JUNE 30,
1997. Since LESSOR is obligated to perform construction pursuant to Exhibit "A"
and LESSOR agrees to use its best efforts to have the premises ready for
occupancy on or before the scheduled term commencement date, should the LESSOR
not have performed the construction pursuant to Exhibit "A" on or before the
commencement date, except in such delay occurred as a result of damages which
may happen by fire, lightning, earthquakes, or other acts of God, or by
abandonment of work by the employees during a general strike, then the
commencement date shall be on the date upon which the premises are ready for
occupancy. This date shall be no later than August 1, 1996. Should the
commencement date be other than the first day of the month, the LESSEE shall pay
on the first rent payment day the pro rata share of rent for that portion of the
month to the f first day of the following month, as the case may be.
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FOURTH
<PAGE> 2
The LESSEE shall pay LESSOR total annual rent of $12,000.00, payable in equal
monthly installments of $1,000.00, on the first day of each and every calendar
month during said term.
A. The LESSEE shall have the right and option to extend the term of this lease
beyond June 30, 1997 as a month-to-month tenant, provided however, such right to
extend shall be subject to the following terms and conditions:
1) No default by LESSEE shall exist or occur for the period from the date
of giving notice to the date of commencement of the extended term.
2) This Lease shall be in full force and effect at the date of notice, and
LESSEE shall not then be in default of any obligation under this Lease.
3) Such right of extension shall be exercised by written notice from the
LESSEE to the LESSOR within not more than ninety (90) days nor less than
thirty (30) days prior to the expiration of the then existing term.
4) If a notice is given pursuant to the preceding sub-paragraph, no
further instrument shall be required to be executed and the term of this
Lease shall thereupon be extended, except that said tenancy shall then be
deemed to be a month-to-month tenancy under Massachusetts law.
FIFTH
The LESSEE shall pay all charges for electricity, heat, telephone and other
utility services furnished to the leased premises. LESSEE agrees to utilize
electric power exclusively from Massachusetts Electric Company.
LESSEE acknowledges that electrical metering for the premises will be billed to
LESSOR. Electric bills generated by Massachusetts Electric will include charges
for space occupied by both Dr. Doctor and LESSEE. LESSEE shall pay only their
pro-rata share of the electric bill for usage of LESSEE's space. Prior to
execution of this lease, LESSOR shall furnish to LESSEE copies of the last
twelve (12) months of electric bills incurred by Dr. Doctor. LESSEE agrees that
Dr. Doctor's share of future electric bills shall be determined by taking the
average of said past twelve months of bills incurred by Dr. Doctor and LESSEE
agrees to pay the additional amount over said average as LESSEE's share of
future electric bills. LESSOR shall provide copies of all future electric bills
to LESSEE prior to requesting payment from LESSEE for said additional amount
representing LESSEE's allocable share of usage, which LESSEE agrees to pay as
additional rent under the terms of this Lease.
LESSEE agrees that LESSEE's share of fuel charges for heating from Tasse Fuel
will be determined in similar fashion as the electric bills, as stated above.
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SIXTH
<PAGE> 3
The LESSEE agrees to utilize no more than six parking spaces on the premises as
designated by LESSOR. On days when Dr. Larry Johnson's office and/or Dr. David
Doctor's office are not being utilized, LESSEE may utilize no more than ten (10)
of said parking spaces on the premises. The LESSOR reserves the right to alter
or vary the size and location of the parking area or spaces, to increase the
parking area, to change the flow of traffic and the arrangement of the parking
area, to mortgage all or any part of the parking and common areas free and clear
of all right, privileges and easements to the LESSEE, provided only, however,
that the LESSOR shall not unreasonably alter or vary the present method of
access to the LESSEE's premises from the street without the written consent of
the LESSEE. LESSOR agrees that it shall not reduce the size of the parking area
by more than ten percent (10%).
SEVENTH
The LESSEE shall pay and be responsible for all of the normal day-to-day repair
and maintenance within the demised premises (excluding structural repairs)
during the term of this Lease and shall maintain the same in good order and
repair as the same is at the commencement of the original term, ordinary wear
and tear excepted. LESSOR will be responsible for maintenance of the common
areas, snow and ice removal, and trash collection on the premises from the
dumpster located thereon. The LESSOR will be responsible for maintaining in good
condition all common areas, building exteriors and the structural integrity of
the demised premises.
All signs placed on the premises by LESSEE shall be paid for by LESSEE and with
the consent of LESSOR.
EIGHTH
Subject to the approval of the LESSOR, which approval shall not be unreasonably
withheld, the LESSEE may make such improvements to the interior and exterior of
the building as the LESSEE deems advisable at LESSEE's sole cost and expense,
provided, however, that LESSEE shall obtain all necessary permits and licenses
therefor, will effect such improvements in a good and workmanlike manner, and
all such improvements affixed to or made a part of the realty shall become the
property of the LESSOR at the expiration of the Lease term, provided, however,
at the written request of the LESSOR, the LESSEE shall, at the expiration of the
term, remove such improvements and restore the premises to their former
condition, all at the sole cost and expense of the LESSEE.
NINTH
The LESSEE shall provide and maintain in full force from the date upon which the
LESSEE first enters the premises for any reason, throughout the term of this
Lease, and thereafter so long as LESSEE is in occupancy of any part of the
premises, a policy of public liability and property damage insurance under which
LESSOR (and such other persons as are in privity of estate with LESSOR as may be
set out in notice from time to time) and LESSEE are named as insured and under
which the insurer agrees to indemnify and hold LESSOR and those in privity of
estate with LESSOR, harmless from and against all costs, expense and/or
liability arising out of or based upon any and
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all claims, accidents, injuries and damages arising from any act, omission or
negligence of LESSEE, or LESSEE's contractors, licensees, agents, servants or
employees, or arising from any accident, injury or damage occurring outside of
the premises but within the building complex, where such accident, damage or
injury results from any act or omission on the part of the LESSEE or LESSEE's
agents or employees or independent contractors. The minimum limits of liability
of such insurance shall be Five Hundred Thousand Dollars ($500,000.00) for
bodily injury (or death) to any one person and One Million Dollars
($1,000,000.00) for bodily injury (or death) to more than one person and Three
Hundred Thousand Dollars ($300,000.00) with respect to damage to property.
LESSEE shall furnish LESSOR with a certificate of insurance evidencing such
coverage at the time of execution of this Lease.
TENTH
The LESSEE shall not sublet or assign its rights to the leased premises or any
part thereof without first obtaining the written consent of the LESSOR. The
LESSEE shall, in the event of subletting or assigning its right to the leased
premises, remain primarily liable on this Lease.
ELEVENTH
In the event that the LESSEE shall file a voluntary petition in bankruptcy or
make an assignment for the benefit of creditors or in the event that a receiver
shall be appointed for the LESSEE, any one of such acts will constitute a breach
of this Lease by the LESSEE and in that occurrence or any such occurrence, the
Lease shall immediately terminate.
TWELFTH
The LESSEE shall not be deemed to be in default hereof in the payment of any
other monies as required by this Agreement unless the LESSOR shall first give to
the LESSEE written notice of such default and the LESSEE fails to cure such
default within the thirty (30) day period following receipt of notice of such
default. In any event, upon such notice as described, and the failure by LESSEE
to cure such default within the prescribed period, the LESSEE shall be deemed to
be in default and shall be subject to the following:
1) The LESSOR shall have the right to immediately terminate this Lease and
relet the premises or any part thereof under any terms and conditions as
the LESSOR shall deem fit, and shall use reasonable efforts to relet.
2) The LESSEE shall be immediately liable to pay LESSOR, in addition to
any indebtedness for rent hereunder and any other monies due hereunder,
the expense of reletting the premises occupied by the LESSEE as well as
the reasonable cost of any attorney's fees as a result of any breach
hereof.
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THIRTEENTH
In the event of the failure on the part of the LESSEE to perform or observe any
of the covenants, terms or conditions imposed upon the LESSEE by this Lease and
the failure to remove and/or cure any breach within thirty (30) days of the
receipt of written notice thereof from the LESSOR pursuant to the terms and
conditions contained herein, then in such event, upon the LESSEE's failure to
cure such breach the LESSEE shall be deemed to be in default and shall be
subject to the provisions of the previous paragraph hereinabove.
FOURTEENTH
A. If the interest of the LESSOR is transferred by conveyance, or should be
taken or repossessed or foreclosed, LESSEE agrees to be bound to the LESSOR's
successor in interest under all of the terms, covenants and conditions of this
Lease for the balance of the term remaining and any extensions or renewals
thereof and LESSEE's attornment hereunder is to be effective and self-operative
without the execution of any further instruments on the part of any parties,
provided however, that LESSEE shall be under no obligation to pay rent to such
successor until the LESSEE has received notice in writing from the LESSOR that
another party has succeeded to the interest of the LESSOR.
B. This Lease shall be subject and subordinate to any and all mortgages, deeds
of trust and other instruments in the nature of mortgages, now or at any time
hereafter placed upon the property of which the leased premises are a part and
LESSEE shall, when requested, promptly execute and deliver such written
instruments as shall be necessary to show subordination of this Lease to said
mortgage, deeds of trust, or other such instruments in the nature of a mortgage.
C. The LESSEE does hereby covenant with the mortgagee in consideration of the
foregoing that, in the event of a foreclosure, the LESSEE will recognize the
mortgagee as its Lessor, for the remainder of the unexpired term of the Lease,
upon the covenants and conditions hereof to be performed and observed by the
LESSEE.
D. As used herein, wherever the context so requires or admits, the word
"mortgagee" shall include any person claiming through or under the mortgagee or
the mortgage, including but not limited to, any purchase at foreclosure sale,
and the word "LESSEE" shall include the LESSEE's successors and assigns.
E. The LESSEE agrees that they will, upon the request of the LESSOR, execute,
acknowledge and deliver any and all instruments which LESSOR may from time to
time desire in order to effect such subordination. As used herein, the term
"mortgage" shall include any modification, consolidation, extension, renewals,
replacement or substitution of any existing or subsequent mortgage on the
property.
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F. The LESSEE acknowledges and agrees that the assignment by the LESSOR of the
LESSOR's interest in this Lease, or in the rent payable under the provisions of
this Lease, whether conditional or otherwise made to the holder of a mortgage
which include the demised premises, shall not be treated as an assumption by
such mortgagee of the obligations and duties of the LESSOR hereunder unless the
mortgagee shall specifically agree with the LESSEE hereunder, and the same shall
not be treated as an assumption by said mortgagee of the LESSOR's obligations
hereunder except under foreclosure and the taking of possession of the demised
premises by the said mortgagee and upon notice by said mortgagee of its
assumption of the duties of such assumption.
FIFTEENTH
A. If the whole or any part of the demised premises shall be taken or condemned
by competent authority for any public or quasi public use, then, and in that
event, the term of this Lease shall cease and terminate from the date when
possession of the portion so taken is required for such use, and without
apportionment of the award to made. The current rental, however, shall be
pro-rated and abated in such case.
B. If the leased premises, or any part thereof, or the whole or any part of the
building of which they are a part, shall be taken by exercise of the power of
eminent domain for any purpose, or shall be destroyed or damaged by fire or
other unavoidable casualty, or shall receive any direct or consequential damage
for which the LESSOR or LESSEE shall be entitled to compensation by reason of
anything lawfully done in pursuance of any public authority, after the execution
hereof and during said term, or any extension or renewal thereof, then this
Lease and said term shall terminate at the option of the LESSOR, and such option
may be exercised in case of any such taking, notwithstanding that the entire
interest of the LESSOR may have been divested by such taking. If this Lease and
said term are not so terminated, then in case of any such taking or destruction
of or damage to the Leased premises, rendering the same or any part thereof
unfit for use and occupancy, a just proportion of the rent hereinbefore
reserved, according to the nature and extent of the injury sustained by the
leased premises, shall be suspended or abated until the leased premises, or in
the case of such taking, what may remain thereof, shall have been put in proper
condition for use and occupancy. The LESSEE hereby assigns to the LESSOR any and
all claims and demands for damages on account of any such taking or for
compensation for anything lawfully done in pursuance of any public authority,
and covenants with the LESSOR that the LESSEE will from time to time execute and
deliver to the LESSOR such further instruments of assignment of any such claims
and demands as the LESSOR shall request.
Page 6
<PAGE> 7
SIXTEENTH
Concurrently with the execution of this Lease, the LESSEE shall deposit with the
LESSOR as a security deposit for the faithful performance of the terms and
conditions of this Lease the sum of $1,000.00. Similarly, LESSEE shall deposit
with LESSOR a like sum of $1, 00.00 as last month's rent under this Lease, The
LESSOR shall not be obligated to pay interest on said amounts so deposited or to
apply the deposit on arrears of rent or other charges, but application thereof
for arrears of rent or other damages shall be at the option of the LESSOR.
LESSOR's right to possession for breach of this Lease shall not be affected by
this security deposit. The security deposit shall be returned to the LESSEE when
this Lease is terminated according to its terms, if not applied to the payment
of rent in arrears or other damages suffered by LESSOR as a result of the
LESSEE's breach of the terms and conditions of this Lease.
SEVENTEENTH
This Lease may be modified only by written agreement signed by the LESSOR and
LESSEE.
EIGHTEENTH
This Lease and the covenants, terms and conditions thereof, shall be binding
upon and inure to the benefit of the heirs, executors, administrators,
successors and assigns of the parties hereto.
NINETEENTH
If any of the terms or provisions of this Lease or the application thereof to
any person or circumstance shall to any extent be invalid or unenforceable, the
remainder of this Lease, or the application of such term or provisions to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term and provision of this
Lease shall be valid and enforceable to the fullest extent permitted by law.
TWENTIETH
The LESSOR covenants that LESSEE, on paying the rent reserved herein and
performing the covenants and agreements hereof, shall peaceably and quietly
have, hold and enjoy the premises and all rights, easements, appurtenances and
privileges thereunto belonging or in anywise appertaining, during the full term
of this Lease, and any extension or renewal, without hindrance from LESSOR or
any other person.
TWENTY-FIRST
Any notice from LESSOR to LESSEE relating to the leased premises or to the
occupancy thereof shall be deemed duly served if mailed to LESSEE at 50 Hall
Road, Sturbridge, MA 01566, registered or certified mail, return receipt
requested, postage prepaid, addressed to the LESSEE, or to such other address
which LESSEE may from time to time give to LESSOR.
Page 7
<PAGE> 8
Any notice from LESSEE to LESSOR relating to the leased premises or to the
occupancy thereof, shall be deemed duly served if mailed to LESSOR by registered
or certified mail, return receipt requested, postage prepaid, addressed to
LESSOR at 69 Hall Road, Sturbridge, MA 01566, or such other address which LESSOR
may from time to time give to LESSEE.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be executed
and their corporate seals, if applicable, to be affixed hereto on the month, day
and year first above written.
Executed in multiple duplicated originals as a sealed instrument, each of which
executed copies shall be deemed to be an original hereof.
Witness:
/s/ Jeffrey M. Chasse
-----------------------------
Jeffrey M. Chasse, Trustee
/s/ Larry A. Johnson
-----------------------------
Larry A. Johnson, Trustee
/s/ Michael W. Roche
-----------------------------
Michael W. Roche, Trustee
SPECTRAN COMMUNICATION FIBER
TECHNOLOGIES, INC.
By: /s/ John E. Chapman
-----------------------------
Page 8
<PAGE> 9
EXHIBIT "A"
LESSOR and LESSEE AGREE THAT substantial completion and responsibility of
payment for "Lower Suite B" will be apportioned as follows:
LESSOR shall pay for construction and completion of:
1) Providing a second means of egress into the LESSEE's rental space,
including all door fixtures and necessary walkways;
2) Floor coverings (to be mid-grade category)
LESSEE shall pay for construction and completion of:
1) Electrical wiring and installation of lighting fixtures as required
by LESSEE for its business. LESSEE agrees that at the conclusion of
its tenancy, all fixtures will be removed at LESSEE's option and
LESSEE agrees to repair/restore the premises to their former
condition prior to modifications by LESSEE.
LESSEE shall be required to utilize a contractor approved by LESSOR for the
completion of all work that is the responsibility of LESSEE.
The parties agree that, at the conclusion of this tenancy, LESSOR may purchase
from LESSEE all telephone fixtures installed by Nynex for LESSEE at LESSEE's
expense, at a price to be then determined by the parties. If no agreement is
reached, LESSEE agrees to remove said fixtures at LESSEE's cost and restore the
premises to their prior condition.
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
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<SECURITIES> 2,339,667
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0
0
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