SPECTRAN CORP, DEF 14A, 1999-04-26

SPECTRAN CORP
DEF 14A, 1999-04-26
GLASS & GLASSWARE, PRESSED OR BLOWN

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<PAGE> 1

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>

SPECTRAN CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

------------------------------------------------------------------------

(5) Total fee paid:

------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

------------------------------------------------------------------------

(3) Filing Party:

------------------------------------------------------------------------

(4) Date Filed:

------------------------------------------------------------------------
<PAGE> 2

SPECTRAN CORPORATION
SPECTRAN INDUSTRIAL PARK
50 HALL ROAD
STURBRIDGE, MASSACHUSETTS 01566
------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------

TO THE STOCKHOLDERS:

Notice is hereby given that the Annual Meeting of the Stockholders of
SpecTran Corporation (the "Company") will be held at The Fairmont Copley Plaza
Hotel, 138 St. James Avenue, Boston, Massachusetts, on May 28, 1999, at 10:00
a.m. (local time), for the following purposes:

1. To elect three Directors of the Company to hold office for a three-year
term;

2. To consider and vote upon the ratification of the reservation of
345,000 additional shares of the Company's authorized but unissued
shares of Common Stock for issuance under the Company's Incentive Stock
Option Plan;

3. To consider and vote upon the ratification of the appointment of KPMG
Peat Marwick, LLP as independent certified public accountants for the
Company for the year January 1, 1999 through December 31, 1999; and

4. To consider and to transact such other business as may properly come
before the meeting or any adjournments thereof.

A Proxy Statement describing matters to be considered at the meeting is
attached to this Notice. Stockholders of record at the close of business on
April 9, 1999 will be entitled to notice of and to vote at said meeting or any
adjournments thereof.

To ensure your representation at the meeting, please sign, date and return
the enclosed form of Proxy in the envelope provided.

By order of the Board of Directors,

George J. Roberts
Secretary

April 27, 1999
<PAGE> 3

SPECTRAN CORPORATION
SPECTRAN INDUSTRIAL PARK
50 HALL ROAD
STURBRIDGE, MASSACHUSETTS 01566
------------------------

PROXY STATEMENT

------------------------

This Proxy Statement is being furnished in connection with the solicitation
by the Board of Directors of SpecTran Corporation (the "Company") of Proxies of
the stockholders to be voted at the Annual Meeting of Stockholders to be held on
May 28, 1999 or at any adjournments thereof (the "Annual Meeting"). The
approximate date of mailing this Proxy Statement is April 27, 1999.

Only holders of shares of voting Common Stock, $.10 par value ("Common
Stock"), of record at the close of business on April 9, 1999 will be entitled to
vote at the Annual Meeting. The Common Stock is the Company's only voting
security outstanding. On that date there were 7,003,850 outstanding shares of
Common Stock, each of which is entitled to one vote.

The Company also has an authorized class of Non-Voting Common Stock, $.10
par value. Except with respect to voting rights, shares of Non-Voting Common
Stock are identical in all respects to shares of voting Common Stock. On April
9, 1999 there were no outstanding shares of Non-Voting Common Stock.

Where a choice has been specified in a Proxy, the Proxy will be voted as
specified. Each Proxy will be voted FOR each matter unless a contrary choice is
specified as to that matter. If the accompanying Proxy is executed and returned,
the stockholder may nevertheless revoke it at any time before the proxy is voted
by timely delivery of a properly executed later-dated Proxy, delivering written
notice of revocation to the Company's Secretary, or voting in person at the
Annual Meeting.

Proxies are being solicited by mail directly and through brokerage and
banking institutions. The Company will pay all expenses in connection with the
solicitation of Proxies. In addition to the use of the mails, Proxies may be
solicited by Directors, officers, and employees of the Company, personally or by
telephone, telegraph, facsimile machine or e-mail. The Company may reimburse
brokers and other persons holding shares of the Company in their names, or in
the names of nominees, for their reasonable expenses in sending materials to
stockholders and obtaining their Proxies.

ELECTION OF DIRECTORS

The Company currently has seven Directors in three classes serving
staggered three-year terms. Class I, Class II and Class III currently have two,
three and two Directors, respectively. Three Class II Directors are to be
elected at the Annual Meeting to serve until the 2002 Annual Meeting of
Stockholders and until their respective successors are duly elected and
qualified. Directors will be elected by a majority of the votes cast by the
holders of the shares of voting Common Stock of the Company voting in person or
by proxy at the Annual Meeting.

The persons listed below have been nominated by the present Board of
Directors. All the nominees are presently members of the Board of Directors of
the Company and the Board of Directors knows of no reason why any of the
nominees will be unable to serve. The persons named as Proxies in the
accompanying Proxy intend to vote for these nominees or, if any of them will be
unable to serve (the Board has no present knowledge of such fact), will vote for
substitute nominees which the Board of Directors may propose.

INFORMATION WITH RESPECT TO NOMINEES FOR ELECTION AS DIRECTORS AND DIRECTORS
WHOSE TERMS ARE NOT EXPIRING.

Set forth below are the names and ages of the nominees for Class II
Directors and the continuing Directors of Class III and Class I whose terms are
not expiring, their principal occupations at present and for
<PAGE> 4

at least the past five years and certain Directorships held by each. The terms
of the Class III and Class I Directors expire in 2000 and 2001, respectively.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE THREE NOMINEES
LISTED BELOW.

<TABLE>
<CAPTION>
NAME, PRESENT POSITION WITH THE
COMPANY, AND BUSINESS EXPERIENCE AGE DIRECTOR SINCE
- -------------------------------- --- --------------
<S> <C> <C>
CLASS II -- (TERM EXPIRES IN 1999)
LILY K. LAI, Ph.D........................................... 57 March 1995
Director
Dr. Lai is President and Chief Executive Officer of
First American Development Corporation, a management
consulting and international business development company,
and a Board member of several companies and universities.
Previously, Dr. Lai headed the Corporate Planning and
Development Department at Pitney Bowes, Inc. from 1989 to
1993. She was the Chief Financial and Planning Officer and
the Vice President of Asia/Pacific Operations at U.S. West
International from 1987 to 1989. Dr. Lai worked for AT&T
from 1971 to 1987 in various management positions including
Director of Corporate Strategy and Development (1983-1986)
responsible for AT&T's global business development
activities, and Director of International Public Affairs and
Public Relations (1986-1987) responsible for managing AT&T's
relationships with all international constituents
(governments, partners, trade associations, press,
advertising agencies, employees, etc.). Dr. Lai is also a
Director of the Company's wholly-owned subsidiaries,
SpecTran Specialty Optics Company and SpecTran Communication
Fiber Technologies, Inc. Dr. Lai is an MIT Sloan Fellow and
holds a Ph.D. and an M.A. in Economics from the University
of Wisconsin-Madison, as well as a B.S. and a M.S. in
Agricultural Economics from the National Taiwan University
and the University of Kentucky, respectively.
IRA S. NORDLICHT............................................ 50 February 1986
Director
Mr. Nordlicht is a founding partner of the law firm of
Nordlicht & Hand, which provides legal services to the
Company. See "Compensation Committee Interlocks and Insider
Participation." Prior to entering the private practice of
law, Mr. Nordlicht served as Counsel and Foreign Policy
Advisor to the Chairman, U.S. Senate Foreign Relations
Committee, counsel to the U.S. Senate Foreign Relations
Subcommittee on Foreign Economic Policy and Senior Trial
Attorney for the Federal Trade Commission. From 1980-1982 he
served as a Secretary of Energy appointee to the National
Petroleum Council. Mr. Nordlicht is also a Director of the
Company's wholly owned subsidiaries, SpecTran Specialty
Optics Company and SpecTran Communication Fiber
Technologies, Inc. He holds a B.A. in Economics from Harpur
College (State University of New York at Binghamton) and a
J.D. from New York University School of Law. In June 1997,
Mr. Nordlicht was named Legal Advocate of the Year by the
U.S. Small Business Administration for his work in helping
to create the Angel Capital Electronic Network, a means of
financing small businesses using the Internet. Mr. Nordlicht
is also a Director of The Fund for Peace, a non-profit
foreign policy association.
</TABLE>

2
<PAGE> 5

<TABLE>
<CAPTION>
NAME, PRESENT POSITION WITH THE
COMPANY, AND BUSINESS EXPERIENCE AGE DIRECTOR SINCE
- -------------------------------- --- --------------
<S> <C> <C>
ROBERT A. SCHMITZ........................................... 58 July 1998
Director
Prior to forming his own private investment firm in
early 1998, Mr. Schmitz was a managing director of Trust
Company of the West, one of the nation's largest investment
counseling firms, serving five years as a senior partner of
TCW Capital, the firm's private equity group. In this
capacity, Mr. Schmitz was directly responsible for several
new investments, led two successful build-ups of existing
portfolio companies and orchestrated several restructurings
and turnarounds. He also provided administrative oversight
for an investment portfolio of 22 companies. Mr. Schmitz
served on the Board of Directors of eleven companies at TCW
Capital. Mr. Schmitz has also been an advisor to a
specialized investment firm that co-invests with Soros Fund
Management and as such helped the firm's founder identify
and evaluate investment opportunities in public and private
companies. From 1983 to 1989, Mr. Schmitz was chairman and
chief executive officer of Richard D. Irwin, Inc. a
wholly-owned textbook publishing subsidiary of Dow Jones &
Co. He also served as a vice president of Dow Jones and a
member of its management committee. At McKinsey & Company
from 1970 to 1982, Mr. Schmitz directed strategy,
organization and diversification assignments for CEOs of
large companies in the U.S. and overseas, and managed the
firm's worldwide financial strategy practice. He was elected
a principal of the firm in 1976. Mr. Schmitz is also a
Director of the Company's wholly-owned subsidiary, SpecTran
Specialty Optics Company. Mr. Schmitz graduated from the
University of Michigan in 1963 with a B.A. in Economics and
earned an M.S. in Business from the Sloan School of
Management at the Massachusetts Institute of Technology in
1965.
CLASS III -- (TERM EXPIRES IN 2000)
JOHN E. CHAPMAN............................................. 44 January 1994
President, SpecTran Communication Fiber Technologies,
Inc., Senior Vice President -- Technology, SpecTran
Corporation and Director
Mr. Chapman, appointed in October 1995 President of
SpecTran Communication Fiber Technologies, Inc., a
wholly-owned subsidiary of the Company, is also Senior Vice
President -- Technology, SpecTran Corporation. Mr. Chapman
joined the Company in July 1983 as a Project Leader working
on the development of automated test equipment. In July 1985
he assumed the position of Director of Equipment Technology
and in October 1986 became Director of Quality Assurance and
Management Information Systems. Mr. Chapman was appointed
Director of Manufacturing and then Vice President of
Manufacturing and Engineering in December 1987, and in May
1990 was appointed Senior Vice President of Manufacturing
and Technology. Mr. Chapman was appointed Chief Operating
Officer, Executive Vice President and Director of the
Company in January 1994. After the reorganization of the
Company in 1995, Mr. Chapman was appointed to the positions
he holds presently. Mr. Chapman is also a Director of the
Company's wholly-owned subsidiaries, SpecTran Specialty
Optics Company and SpecTran Communication Fiber
Technologies, Inc. Prior to joining the Company he was
employed by Valtec Corporation, an optical fiber
manufacturer and cabler, from March 1979 in various
engineering positions related to the design of optical fiber
and the development of special optical measurement
equipment. Mr. Chapman holds a B.S. degree in Physics from
the University of Lowell and an M.S. degree in Electrical
Engineering from Northeastern University.
</TABLE>

3
<PAGE> 6

<TABLE>
<CAPTION>
NAME, PRESENT POSITION WITH THE
COMPANY, AND BUSINESS EXPERIENCE AGE DIRECTOR SINCE
- -------------------------------- --- --------------
<S> <C> <C>
RICHARD M. DONOFRIO......................................... 60 May 1993
Director
Mr. Donofrio is a retired Senior Vice President of
Southern New England Telecommunications Corporation (SNET)
based in New Haven, Connecticut. During his 32 year career
with SNET, as part of the Bell System, he served in
increasingly responsible operating and executive positions
at SNET and AT&T Corp until his retirement in May 1993. At
SNET, Mr. Donofrio served as Vice President of Revenue
Requirements and Regulatory, as well as Vice President of
Human Resources. During more recent years, he held a number
of Senior and Group Vice President positions, and served as
President of SNET Diversified Group. He also served a term
as President of LIGHTNET, an SNET and CSX Corp. joint
venture which constructed and operated an extensive fiber
optics telecom network in the eastern half of the U.S. While
at AT&T Corporate headquarters in New York, he was a
Division head in the Marketing Plans Dept. and in the
Federal Relations Dept. His other affiliations include: Past
President of United Way of New Haven, Board of Directors of
the University of New Haven, Griffin Health Services Corp.
and National Engineering Consortium. Mr. Donofrio is also a
Director of the Company's wholly-owned subsidiaries,
SpecTran Specialty Optics Company and SpecTran Communication
Fiber Technologies, Inc., and General Photonics, LLC, the
Company's joint venture with General Cable Corp. Mr.
Donofrio holds a B.S. degree in Economics from Norwich
University, and attended the M.B.A. program at the
University of Hartford.
CLASS I -- (TERM EXPIRES IN 2001)
CHARLES B. HARRISON......................................... 61 July 1997
President, Chief Executive Officer and Chairman of the
Board or Directors
Mr. Harrison was appointed President and Chief
Executive Officer of the Company April 13, 1998 and is also
Chief Executive Officer of each of the Company's
wholly-owned subsidiaries. Mr. Harrison is a Director of
each of its wholly-owned subsidiaries and of General
Photonics, LLC, the Company's joint venture with General
Cable Corporation, and became Chairman of the Board of
Directors of the Company on January 1, 1999. Previously, Mr.
Harrison served as an Engineering and Management Consultant
to Rockwell International on a number of programs. Among
other consulting assignments for Rockwell, he served in
Moscow from December 1995 to July 1996 as Senior Executive
of CIS affairs. Mr. Harrison retired from Rockwell
International as Corporate Vice President Engineering in
April 1995. In the two years preceding his retirement, Mr.
Harrison served as Corporate Vice President Engineering,
having primary responsibility for engineering and research
activities across Rockwell's Aerospace and Defense
operations with a special focus on identifying opportunities
and establishing joint U.S./Russian defense conversion
projects. From 1991 to 1993, he served as Vice President of
Advanced Technology and Engineering for Defense Electronics
responsible for research, product development, and large
systems engineering contracts in Rockwell's five defense
related divisions. During this time, he also had the senior
executive responsibility for Rockwell's Electro Optics
Center. From 1984-1991, he served as Chief Technology
Officer and as Vice President of the Network for Southern
New England Telephone (SNET) directing the conversion to all
electronic switching and fiber optic backbone and local
transmission systems. He also served for two years as
President of Sonecor Systems for SNET. From 1968-1984 he
held increasingly responsible positions with Collins
Radio/Rockwell International concluding as Vice President
and General Manager Switching Systems Division. Mr. Harrison
received a B.S. degree in Electrical Engineering from
Oklahoma State University, and a M.S. degree in Engineering
from Southern Methodist University.
</TABLE>

4
<PAGE> 7

<TABLE>
<CAPTION>
NAME, PRESENT POSITION WITH THE
COMPANY, AND BUSINESS EXPERIENCE AGE DIRECTOR SINCE
- -------------------------------- --- --------------
<S> <C> <C>
PAUL D. LAZAY, Ph.D......................................... 59 March 1987
Director
Dr. Lazay is currently an advisor to and investor in
technology based companies. Prior to September 1997 he was
the CEO and Director of Advanced Telecommunications Modules,
Ltd. of Cambridge, UK and Santa Clara, CA. From April 1995
to December 1996 he was General Manager and Vice President
of Cisco Systems, responsible for its ATM Switching Division
in Chelmsford, MA. Dr. Lazay was a consultant to technology
companies from October 1993 to April 1995. Prior to this he
served as President, Chief Executive Officer and Director of
Telco Systems, Inc., a designer of high speed digital fiber
optic transmission terminals and multiplexing equipment,
until October 1993. Prior to joining Telco Systems in May
1986 as Vice President of Engineering, Dr. Lazay spent four
years with ITT's Electro-Optical Products Division, first as
Director of Fiber Optic Development and then as Vice
President, Director of Engineering. From 1969 until 1982 he
worked for Bell Telephone Laboratories, assuming a number of
increasingly responsible positions at its Material Research
Laboratory. Dr. Lazay is also a Director of the Company's
wholly-owned subsidiaries, SpecTran Specialty Optics Company
and SpecTran Communication Fiber Technologies, Inc. He holds
a B.S. degree from Trinity College and a Ph.D. degree in
Physics from the Massachusetts Institute of Technology.
</TABLE>

Information concerning ownership of the Company's equity securities by the
nominees, as well as the other Directors, is contained below under the caption
"Principal Stockholders and Other Information."

COMMITTEES OF THE BOARD OF DIRECTORS; MEETINGS

There are three standing committees of the Board of Directors: the Audit
and Finance Committee, the Compensation and Incentive Stock Option Committee,
and the Nominating Committee.(1) The Audit and Finance Committee, composed of
all of the Company's current outside Directors, Dr. Lazay, Chair of the
Committee, Dr. Lai and Messrs. Nordlicht, Donofrio, and Schmitz, confers with
KPMG Peat Marwick, LLP, the Company's external auditors, regarding the scope and
results of their audits and any recommendations they may have with respect to
internal accounting controls and other matters related to accounting and
auditing, and advises the Board of Directors with regard to financial matters
referred to it from time to time by the Directors. The Company's outside
Directors, with Mr. Donofrio serving as Chair of the Committee, also comprise
the Compensation and Incentive Stock Option Committee which administers the
Company's Incentive Stock Option Plan, reviews and recommends executive
compensation and administers the Company's executive compensation plans.(2) The
Nominating Committee, the members of which are Drs. Lazay and Lai and Mr.
Donofrio(3), recommends persons for nomination by the Board of Directors for

- ---------------

(1) On May 29, 1998, the Finance Committee, composed of Dr. Raymond E. Jaeger
and Dr. Lily K. Lai, and Messrs. Bruce A. Cannon and Richard M. Donofrio,
and the Audit Committee, composed of all of the Company's outside Directors
(Drs. Lazay and Lai, and Messrs. Nordlicht and Donofrio), were consolidated
into the Audit and Finance Committee, composed solely of the outside
directors. Mr. Harrison had served on the Audit Committee until his
appointment as President and Chief Executive Officer of the Company on April
13, 1998. Mr. Schmitz became a member of the Audit and Finance Committee in
July 1998 after his appointment as a Director of the Company.

(2) Mr. Harrison served on the Compensation and Incentive Stock Option
Committees until his appointment as President and Chief Executive Officer of
the Company on April 13, 1998. Mr. Schmitz became a member of the
Compensation and Incentive Stock Option Committee in July 1998 after his
appointment as a Director of the Company.

(3) Mr. Nordlicht served on the Nominating Committee until July 23, 1998.
5
<PAGE> 8

Directorships. The Nominating Committee will consider candidates proposed by
security holders. Generally, candidates must be highly qualified and be both
willing and affirmatively desirous of serving on the Board. They should
represent the interests of all security holders and not those of a special
interest group. A security holder wishing to nominate a candidate should forward
the candidate's name and a detailed background of the candidate's qualifications
to the Secretary of the Company during the Company's last fiscal quarter.

During the year ended December 31, 1998, the Board of Directors met
thirteen times, the Audit Committee met once, the Finance Committee did not
meet, the Audit and Finance Committee met three times, the Nominating Committee
did not meet, and the Compensation and Incentive Stock Option Committee met
eight times. During 1998 each Director attended at least seventy-five percent of
the aggregate of (1) the total number of meetings of the Board of Directors and
(2) the total number of meetings held by all committees of the Board on which he
or she served.

EXECUTIVE OFFICERS OF THE COMPANY NOT A
DIRECTOR OR NOMINEE FOR DIRECTOR

The following table sets forth certain information about the executive
officers of the Company or its subsidiaries who are not a Director or nominee
for Director.

<TABLE>
<CAPTION>
AGE
---
<S> <C>
GEORGE J. ROBERTS........................................... 53
Senior Vice President, Chief Financial Officer, Secretary
and Treasurer
Mr. Roberts joined the Company as Senior Vice
President, Chief Financial Officer, Secretary and Treasurer
as of April 1, 1999. From 1996 to that time he served as
Senior Vice President, Chief Financial Officer, Treasurer
and Chief Operation Officer for the Microelectronics &
Computer Technology Corporation, a unique consortium of 10
major U.S. corporations cooperating in the areas of
information technology to gain a sustainable competitive
advantage over foreign competition. For the preceding 30
years Mr. Roberts held a number of positions at the General
Electric Company, with his last position being Vice
President, Finance and Controller of Systems Support
Services of GE Capital's Technology Management Services
Business. He has a B.S., Finance from Siena College and
completed Graduate Studies in Global Business Management at
Insead Institute, France.
MARTIN V. SEIFERT........................................... 40
Vice President of the Company and President of SpecTran
Specialty Optics Company
Mr. Seifert joined the Company and SpecTran Specialty
Optics Company in his current positions as of August 25,
1998. Most recently, Mr. Seifert served as Chief Operating
Officer of Schweitzer Engineering Labs, a privately owned
company that designs and makes relays, controls, software
and communications equipment for the electric power
industry. Prior to joining Schweitzer in 1997, he served
with Rockwell International as Manager of Rockwell
Automation's Power Quality & Automation business and Global
Marketing Manager of Rockwell's Allen-Bradley Drives
Division. Earlier in his business career, he was Manager of
Drives and Power Systems for Bucyrus-Erie Co., a mining
equipment producer. He graduated from the University of
British Columbia in 1982 and speaks several languages,
including his native German.
</TABLE>

6
<PAGE> 9

PRINCIPAL STOCKHOLDERS AND OTHER INFORMATION

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock on April 9, 1999 with respect to (a)
each person or group known to the Company to be the beneficial owner of more
than 5% of the outstanding shares of Common Stock, (b) each Director of the
Company, (c) each executive officer of the Company named in the following
section entitled "Compensation of Executive Officers and Directors" and (d) all
such named executive officers and Directors of the Company as a group. Except as
set forth below, all of such shares are held of record and beneficially.

<TABLE>
<CAPTION>
BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP COMMON STOCK(1)
- ---------------- ---------- ---------------
<S> <C> <C>
Wellington Management Company, LLP.......................... 685,000(2) 9.78%
75 State Street
Boston, Massachusetts 02109
Wellington Trust Company, N.A............................... 465,000(3) 6.64%
75 State Street
Boston, Massachusetts 02109
EQSF Advisers, Inc.
and Martin J. Whitman..................................... 490,600(4) 7.00%
767 Third Avenue
New York, New York 10017-2023
Dimensional Fund Advisors Inc. ............................. 402,500(5) 5.75%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Dana H. and Doris B. Dalton................................. 368,100(6) 5.26%
11800 Sunrise Valley Drive, 6th Floor
Reston, Virginia 20191
Raymond E. Jaeger........................................... 217,931(7) 3.11%
25 Old Village Road
Sturbridge, Massachusetts 01566
Charles B. Harrison......................................... 27,000(8) *
SpecTran Industrial Park
50 Hall Road
Sturbridge, Massachusetts 01566
Ira S. Nordlicht............................................ 17,332(9) *
645 Fifth Avenue
New York, New York 10022
Paul D. Lazay............................................... 11,000(10) *
52 Whiley Road
Groton, Massachusetts 01450
Bruce A. Cannon............................................. 68,414(11) *
125 Adam Street
Holliston, Massachusetts 01746
Richard M. Donofrio......................................... 9,500(12) *
93 Ansonia Road
Woodbridge, Connecticut 06525
John E. Chapman............................................. 99,883(13) 1.43%
SpecTran Industrial Park
50 Hall Road
Sturbridge, Massachusetts 01566
</TABLE>

7
<PAGE> 10

<TABLE>
<CAPTION>
BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP COMMON STOCK(1)
- ---------------- ---------- ---------------
<S> <C> <C>
Lily K. Lai................................................. 7,000(14) *
50 Stonebridge Road
Summit, New Jersey 07901
Robert A. Schmitz........................................... 0(15) 0
Quest Capital
One Dock Street
Stamford, Connecticut 06902
John Rogers................................................. 0 0
SpecTran Industrial Park
50 Hall Road
Sturbridge, Massachusetts 01566
All Directors and executive officers as a group (ten
persons).................................................. 458,060(16) 6.54%
</TABLE>

- ---------------
* Less than 1%

(1) Percentage of beneficial ownership is based on the 7,003,850 of Common
Stock outstanding on April 9, 1999. Shares of Common Stock subject to stock
options and warrants that are exercisable within 60 days of April 9, 1999
are deemed outstanding for computing the percentage of the person or group
holding such options or warrants, but are not deemed outstanding for
computing the percentage of any other person or group.

(2) This information is based upon information reported by Wellington
Management Company, LLP ("WMC") on a Schedule 13G dated December 31, 1998
and filed with the U.S. Securities and Exchange Commission as of February
10, 1999. WMC states that in its capacity as an investment adviser, it may
be deemed to have beneficial ownership of 685,000 shares of Common Stock
which are owned of record by its clients, including Wellington Trust
Company, NA.

(3) This information is based upon information reported by Wellington Trust
Company, NA ("WTC") on a Schedule 13G dated December 31, 1998 and filed
with the U.S. Securities and Exchange Commission as of February 11, 1999.
WTC states that in its capacity as an investment adviser, it may be deemed
to have beneficial ownership of 465,000 shares of Common Stock which are
owned of record by its clients, including Wellington Management Company,
LLP.

(4) This information is based upon information reported by EQSF Advisers, Inc.
("EQSF") and Martin J. Whitman (the Schedule is considered a joint filing
of both EQSF and Mr. Whitman) on a Schedule 13G dated February 12, 1999 and
filed with the U.S. Securities and Exchange Commission as of February 16,
1999. EQSF states that it beneficially owns 490,600 shares of Common Stock.
Martin J. Whitman, the Chief Executive Officer and controlling person of
EQSF, disclaims beneficial ownership of all such shares. Third Avenue
Small-Cap Fund has the right to receive dividends from and the proceeds
from the sale of these 490,600 shares.

(5) This information is based upon information reported by Dimensional Fund
Advisors Inc. ("Dimensional") on a Schedule 13G dated February 12, 1999 and
filed with the U.S. Securities and Exchange Commission as of February 11,
1999. Dimensional states that in its role as investment advisor and
investment manager it possesses both voting and investment power over
402,500 shares of Common Stock, but disclaims beneficial ownership of such
securities.

(6) This information is based upon information reported by Dana H. and Doris B.
Dalton on a Schedule 13G dated March 25, 1999 and filed with the U.S.
Securities and Exchange Commission as of March 29, 1999.

(7) Includes 111,416 shares subject to options exercisable within 60 days. Does
not include 54,831 shares subject to options not exercisable within 60
days.

(8) Includes 17,000 shares subject to options exercisable within 60 days. Does
not include 84,000 shares subject to options not exercisable within 60
days. Does not include 30,000 shares subject to options

8
<PAGE> 11

which become exercisable only if and when the Company meets its lenders'
covenants during the last quarter of 1998 and the first two quarters of
1999. If the Company fails to meet those covenants in any of those quarters
these options are forfeit.

(9) Includes 11,000 shares subject to options exercisable within 60 days. Does
not include 2,000 shares subject to options not exercisable within 60 days.

(10) Includes 11,000 shares subject to options exercisable within 60 days. Does
not include 2,000 shares subject to options not exercisable within 60 days.

(11) Includes 65,414 shares subject to options exercisable within 60 days. Does
not include 14,828 shares subject to options not exercisable within 60
days.

(12) Includes 9,000 shares subject to options exercisable within 60 days. Does
not include 2,000 shares subject to options not exercisable within 60 days.

(13) Includes 99,883 shares subject to options exercisable within 60 days. Does
not include 25,767 shares subject to options not exercisable within 60
days. Does not include 15,000 shares subject to options which become
exercisable only if and when the Company meets its lenders' covenants
during the last quarter of 1998 and the first two quarters of 1999. If the
Company fails to meet those covenants in any of those quarters these
options are forfeit.

(14) Includes 7,000 shares subject to options exercisable within 60 days. Does
not include 2,000 shares subject to options not exercisable within 60 days.

(15) Does not include 1,000 shares subject to options not exercisable within 60
days.

(16) Includes 331,713 shares subject to options exercisable within 60 days. Does
not include 233,426 shares subject to options not exercisable within 60
days or exercisable only if lenders' covenants are met as described above.

The persons referenced in the foregoing chart constitute all of the persons
who are Directors, executive officers named in the following section entitled
"Compensation of Executive Officers and Directors," or as of April 9, 1999 were
beneficial owners of more than five percent of the Company's Common Stock. Based
solely on a review of Forms 3 and 4, and all amendments thereto, furnished to
the Company during fiscal year 1998, Forms 5 and amendments thereto furnished to
the Company with respect to fiscal year 1998, and all written representations
received by the Company from persons with reporting obligations, the Company
believes that none of such persons filed a late report during, or with respect
to, the year.

9
<PAGE> 12

COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

EXECUTIVE COMPENSATION

Set forth below is the remuneration for all services in all capacities to
the Company for the fiscal year ended December 31, 1998 of (a) all individuals
serving as the Company's Chief Executive Officer or acting in a similar capacity
during the fiscal year ended December 31, 1998, regardless of compensation
level, and the two other most highly compensated executive officers of the
Company and its Subsidiaries who were serving as executive officers as of
December 31, 1998 and whose total annual salary and bonus exceeded $100,000, and
(b) one additional individual who, although no longer serving as an executive
officer of the Company or its Subsidiaries as of December 31, 1998, received an
annual salary and bonus in excess of $100,000 for the year and for whom
disclosure would have been provided had he been serving as an executive officer
as of December 31, 1998.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS(4)
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
NAME AND ----------------------- OTHER ANNUAL UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) COMPENSATION($) OPTIONS(#) ($)
- ------------------ ---- ------------ -------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Charles B. Harrison......... 1998 173,418 0 30,000(9) 100,000 0
Chairman of the Board 1997 N/A N/A N/A N/A N/A
Chief Executive Officer 1996 N/A N/A N/A N/A N/A
and President(5)
Raymond E. Jaeger,.......... 1998 241,785 0 (3) 74,247 0(2)
Chairman of the Board 1997 212,792 92,860(6) (3) 16,000 9,034(2)
Chief Executive Officer 1996 198,967 123,388 (3) 16,000 6,000(2)
and President,
Consultant(5)
Bruce A. Cannon............. 1998 141,452 0 (3) 17,242 0(2)
Chief Financial Officer, 1997 134,743 38,457(6) (3) 10,000 5,801(2)
Consultant SpecTran 1996 122,122 59,102 (3) 8,000 5,394(2)
Corporation(7)
John E. Chapman............. 1998 192,567 8,652 (3) 31,650 0(2)
President, SpecTran 1997 182,786 77,080(6) (3) 14,000 8,051(2)
Communication Fiber 1996 166,112 100,932 (3) 10,000 6,000(2)
Technologies, Inc.
John Rogers................. 1998 145,168 0 (3) 0 0
Acting Chief Financial 1997 N/A N/A N/A N/A N/A
Officer SpecTran 1996 N/A N/A N/A N/A N/A
Corporation(8)
</TABLE>

- ---------------
(1) Included amounts deferred at officer's election pursuant to section 401(k)
of the Internal Revenue Code accrued during 1998, 1997 and 1996,
respectively, as follows: Mr. Harrison, $10,000, $0 and $0; Dr. Jaeger,
$10,000, $9,360 and $9,360; Mr. Cannon, $9,660, $9,500 and $9,500; and Mr.
Chapman, $9,480, $9,480, and $9,480.

(2) Company contributions to 401(k) and the defined contribution plan.

(3) The aggregate amount of perquisites and other personal benefits did not
exceed the lesser of either $50,000 or 10% of the total of annual salary and
bonus reported for the named executive officer, and the named executive
officer had no additional "other annual compensation."

(4) As of December 31, 1998, none of the individuals named in the Summary
Compensation Table were awarded any shares of restricted stock of the
Company.

(5) Dr. Jaeger served as Chief Executive Officer and President until April 1998,
when Mr. Harrison assumed those positions. At that time Dr. Jaeger became a
consultant to the Company. Dr. Jaeger served as

10
<PAGE> 13

Chairman of the Board during 1998; Mr. Harrison became Chairman effective
January 1, 1999. In March 1999, Dr. Jaeger resigned as a director of the
Company and its subsidiaries, while remaining a consultant to the Company.

(6) As per agreement with the Compensation and Incentive Stock Option Committee,
half of the bonus earned under the Key Employee Incentive Plan otherwise
payable in cash was instead paid in the form of a grant of incentive stock
options made in 1998.

(7) Mr. Cannon, who had previously resigned from his executive positions,
entered into an agreement with the Company during the first quarter of 1999,
effective as of December 1, 1998, memorializing his resignation as an
officer and a director of the Company and its subsidiaries. Mr. Cannon
remains a consultant to the Company.

(8) Mr. Rogers served as Acting Chief Financial Officer of the Company from
November 1, 1998 through March 31, 1999 and had previously during 1998
provided financial consulting services to the Company. Mr. Rogers is an
employee of Primary, The One For Solutions ("Primary"), a consultant to the
Company. His services were provided pursuant to an agreement between the
Company and Primary. All payments attributed to Mr. Rogers in the Summary
Compensation Table were paid to Primary.

(9) Includes $30,000 in relocation expenses reimbursed by the Company.

OPTION GRANTS IN LAST FISCAL YEAR

The following table shows information regarding stock options granted
during the fiscal year ended December 31, 1998 with respect to (a) all
individuals serving as the Company's Chief Executive Officer or acting in a
similar capacity during the fiscal year ended December 31, 1998, regardless of
compensation level, and the two other most highly compensated executive officers
of the Company and its Subsidiaries who were serving as executive officers as of
December 31, 1998 and whose total annual salary and bonus exceeded $100,000, and
(b) one additional individual who, although no longer serving as an executive
officer of the Company or its Subsidiaries as of December 31, 1998, received an
annual salary and bonus in excess of $100,000 for the year and for whom
disclosure would have been provided had he been serving as an executive officer
as of December 31, 1998. The Company has never granted any stock appreciation
rights.

INDIVIDUAL GRANTS

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF ANNUAL RATES
NUMBER OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM**
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ---------------------
NAME GRANTED* FISCAL YEAR PRICE($/SH) DATE 5%($) 10%($)
- ---- ----------- ------------ ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Charles B. Harrison........... 50,000 12.86% 7.25 4-13-08 199,850 492,250
25,000 6.43% 6.0465 10-13-08 5,163 86,463
25,000 6.43% 20.00 10-13-08 (343,675) (262,375)
Raymond E. Jaeger(1).......... 50,000 12.86% 8.125 6-1-08 223,950 551,650
24,247 6.24% 8.125 3-13-08 108,602 267,517
Bruce A. Cannon(2)............ 8,000 2.06% 8.125 6-1-08 35,832 88,264
9,242 2.40% 8.125 3-13-08 41,395 101,967
John E. Chapman............... 14,000 3.60% 8.125 6-1-08 62,706 154,462
17,650 4.54% 8.125 3-13-08 79,054 194,732
John Rogers(3)................ 0 0% N/A N/A N/A N/A
</TABLE>

- ---------------
(1) Dr. Jaeger served as Chief Executive Officer and President until April 1998,
when Mr. Harrison assumed those positions. At that time Dr. Jaeger became a
consultant to the Company. Dr. Jaeger served as Chairman of the Board during
1998; Mr. Harrison became Chairman effective January 1, 1999. In March 1999,
Dr. Jaeger resigned as a director of the Company and its subsidiaries, while
remaining a consultant to the Company.
11
<PAGE> 14

(2) Mr. Cannon, who had previously resigned from his executive positions,
entered into an agreement with the Company during the first quarter of 1999,
effective as of December 1, 1998, memorializing his resignation as an
officer and a director of the Company and its subsidiaries. Mr. Cannon
remains a consultant to the Company.

(3) Mr. Rogers served as Acting Chief Financial Officer of the Company from
November 1, 1998 through March 31, 1999 and had previously during 1998
provided financial consulting services to the Company. Mr. Rogers is an
employee of Primary, The One For Solutions ("Primary"), a consultant to the
Company. His services were provided pursuant to an agreement between the
Company and Primary. All payments attributed to Mr. Rogers in the Summary
Compensation Table were paid to Primary.

* Except for the 25,000 options granted to Mr. Harrison at 150% of fair market
value and the 25,000 options granted to Mr. Harrison at an exercise price of
$20.00 per share shown above, all options set forth were granted under the
Company's Incentive Stock Option Plan at 100% of the fair market value of
the shares at the time the options were granted and are intended to be, and
with few exceptions will be, incentive stock options. All options are
exercisable in full three years from the date of grant in cumulative annual
installments of 33 1/3% commencing one year after the date of grant, and
expire ten years after the date of grant.

** The dollar gains under these columns result from calculations assuming 5%
and 10% growth rates as set by the Securities and Exchange Commission and
are not intended to forecast future price appreciation of the Common Stock
of the Company. The gains reflect a future value based upon growth at these
prescribed rates. The Company did not use an alternative formula for a grant
date valuation, an approach which would state gains at present, and
therefore lower, value. The Company is not aware of any formula which will
determine with reasonable accuracy a present value based on future unknown
or volatile factors.

Options have value to the listed executives and to all option recipients
only if the stock price advances beyond the grant date price shown in the table
during the effective option period.

AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE

The following table shows information regarding stock options exercised
during the fiscal year ended December 31, 1998 with respect to (a) all
individuals serving as the Company's Chief Executive Officer or acting in a
similar capacity during the fiscal year ended December 31, 1998, regardless of
compensation level, and the two other most highly compensated executive officers
of the Company and its Subsidiaries who were serving as executive officers as of
December 31, 1998 and whose total annual salary and bonus exceeded $100,000, and
(b) one additional individual who, although no longer serving as an executive
officer of the Company or its Subsidiaries as of December 31, 1998, received an
annual salary and bonus in excess of $100,000 for the year and for whom
disclosure would have been provided had he been serving as an executive officer
as of December 31, 1998.

12
<PAGE> 15

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FY-END AT FY-END($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles B. Harrison......... 0 0 333 100,667 0 0
Raymond E. Jaeger(1)........ 0 0 76,000 90,247 0 0
Bruce A. Cannon(2).......... 0 0 53,667 26,575 0 0
John E. Chapman............. 0 0 81,333 44,317 0 0
John Rogers(3).............. 0 0 0 0 0 0
</TABLE>

PENSION PLAN TABLE

The Company has in effect a career average defined benefit plan (the
"Defined Benefit Plan") for employees of the Company and its subsidiaries.
Generally, after completing five years of participation in the Defined Benefit
Plan or upon normal retirement at age 65, whichever is earlier, a participant is
entitled to a pension under the Defined Benefit Plan based on the average annual
compensation received during the ten consecutive highest paid years in which he
was a plan participant, or such shorter period as he was employed by the
Company. The following table shows, as of December 31, 1998, estimated annual
benefits payable upon retirement under the Company's Defined Benefit Plan
(including amounts attributable to any defined benefit supplementary or excess
pension award plan) in specified compensation and years of service
classifications:

<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
125,000 20,517 27,356 34,195 34,195 34,195
150,000 25,767 34,356 42,945 42,945 42,945
175,000 27,867 37,156 46,445 46,445 46,445
200,000 27,867 37,156 46,445 46,445 46,445
225,000 27,867 37,156 46,445 46,445 46,445
250,000 27,867 37,156 46,445 46,445 46,445
275,000 27,867 37,156 46,445 46,445 46,445
300,000 27,867 37,156 46,445 46,445 46,445
400,000 27,867 37,156 46,445 46,445 46,445
450,000 27,867 37,156 46,445 46,445 46,445
500,000 27,867 37,156 46,445 46,445 46,445
</TABLE>

13
<PAGE> 16

A participant's eligible compensation for purposes of the Defined Benefit
Plan generally includes all of his annual cash compensation including amounts
deferred by the participant pursuant to the Company's 401(k) plan. The only
difference between the compensation covered by the Defined Benefit Plan and the
annual compensation reported in the Summary Compensation Table is the timing of
bonus payments.

The benefits listed in the table have been computed on a straight life
annuity basis and are not subject to any deduction for social security or other
offset amounts. As of December 31, 1998, Mr. Harrison, Dr. Jaeger and Messrs.
Cannon and Chapman had 1, 17, 15 and 14 years of credited service respectively.

In addition to the Company's Defined Benefit Plan, the Company has a
defined contribution plan under which annual contributions may be authorized by
the Compensation and Incentive Stock Option Committee of the Board for all
employees with at least one year of service (the "Defined Contribution Plan").
Contributions of 3% of annualized salary were authorized for 1996, including
$4,500 for Dr. Jaeger, $4,046 for Mr. Cannon and $4,500 for Mr. Chapman.
Contributions of 2% of annualized salary were authorized for 1997, including
$6,694 for Dr. Jaeger, $3,867 for Mr. Cannon and $5,681 for Mr. Chapman. No
contributions were authorized for any executive officers for 1998.

Mr. Rogers, who served as Acting Chief Financial Officer from November 1,
1998 through March 31, 1999, is an employee of Primary, The One For Solutions, a
consultant to the Company, and is not eligible for participation in the Defined
Benefit Plan or the Defined Contribution Plan.

SUPPLEMENTAL RETIREMENT BENEFITS

The Company has agreements with Dr. Jaeger, Mr. Cannon and Mr. Chapman
which provide retirement benefits designed to be supplemental to other
retirement benefits payable to them. These payments are intended to compensate
these executives for restrictions imposed on highly compensated executives by
the Internal Revenue Code, the result of which is that the percentage of
spendable retirement income these executives are eligible to receive under the
Company's retirement programs relative to their current levels of compensation
is less then that of employees at lower salary levels. The amount of the
supplemental retirement benefit is calculated by multiplying the Executive's
average annual compensation (including 401(k) payments and bonus payments up to
a certain limitation) over a three year period when his compensation is highest
by a percentage based on the number of years the executive is employed by the
Company (the "Annual Percentage Amount"). The product is reduced by the amount
of other retirement benefits payable to the executive, resulting in the annual
supplemental retirement benefit payable to the executive. Under the agreements
with Messrs. Cannon and Chapman, the Annual Percentage Amount is 40% if the
executive works for the Company for 15-19 years; 60% if the executive works for
the Company for 20 to 24 years and 65% if the executive works for the Company
for 25 years or more. Under the agreement with Dr. Jaeger, the Annual Percentage
Amount is 60% if Dr. Jaeger works for the Company for 15 years with the Annual
Percentage Amount increasing two percent for each additional year he works for
the Company up to a maximum of 70% for 20 or more years of service. In April
1999, in connection with the appointment of Mr. Harrison as President and CEO of
the Company, Dr. Jaeger's Supplemental Retirement Agreement was amended to
provide that a bonus paid in stock options as opposed to cash, will be
considered as if paid in cash for the purpose of determining the amount of bonus
payments he received in calculating his supplemental retirement benefit. No
benefit is payable under any of the agreements if the executive works for the
Company for less than 15 years, except as described below. Under each of the
agreements, the supplemental retirement benefits are payable over 15 years in
equal monthly installments after the executive's retirement, which will normally
occur upon his 65th birthday. However, the executives, upon commencement of the
agreements, have been given the option to prospectively elect to have benefits
commence upon their 60th birthday if they elect early retirement. The
supplemental retirement benefit is subject to forfeiture if the executive is
terminated for cause or competes with the Company.

The Company has obtained corporate owned variable universal life insurance
policies on each of the executives which are being used to fund the supplemental
retirement benefits.

14
<PAGE> 17

The following table shows for each executive the percentage of average
annual compensation, assuming bonus payments up to the limitation, that would be
paid under all retirement programs (including the Supplemental Retirement
Agreement) and under the Supplemental Retirement Agreements alone:

<TABLE>
<CAPTION>
AT AGE 60 AT AGE 65
------------------------------------- -------------------------------------
YEARS TOTAL SUPPLEMENTAL YEARS TOTAL SUPPLEMENTAL
OF RETIREMENT RETIREMENT OF RETIREMENT RETIREMENT
SERVICE % % SERVICE % %
------- ---------- ------------ ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Jaeger(1)............. 17 64.0% 39.0% 20 70.0% 51.7%
Mr. Cannon(2)............. 17 40.0% 9.4% 17 40.0% 9.4%
Mr. Chapman............... 32 65.0% 46.0% 37 65.0% 39.9%
</TABLE>

- ---------------
(1) Dr. Jaeger has entered into a Restated Employment Agreement with the Company
which provides, among other things, for him to render services through June
12, 2001 at which date Dr. Jaeger would have a total of twenty years of
service with the Company. That agreement is described more fully below in
the section entitled "Employment Agreements (including arrangements
regarding termination and Change in Control)."

(2) Mr. Cannon has entered an agreement with the Company dated as of December 1,
1998 which provides, among other things, for him to render consulting
services through December 1, 2000 at which date Mr. Cannon would have a
total of seventeen full years of service with the Company. That agreement is
described more fully below in the section entitled "Employment Agreements
(including arrangements regarding termination and Change in Control)."

Under each of the Supplemental Retirement Agreements, if the executive
leaves the Company in the 12 month period after a Change in Control, or an
entity which acquires the Company, through merger, consolidation or the purchase
of assets either does not retain the executive or does not agree to assume the
Company's obligations under these agreements, the executives who have at least
six years of service to the Company will be entitled to a supplemental
retirement benefit, with the Annual Percentage Amount to be 4% for six years of
service and increasing in increments of 4% for each additional year of service
up to 15 years, at which point the normal method of calculating the Annual
Percentage Amount is applied. In such circumstances, the payment of the
supplemental retirement benefit is accelerated and paid in a lump sum, subject
to a discount for the then present value of the benefit. Moreover, if the
supplemental retirement benefit paid under these circumstances is considered to
be a "Parachute Payment" and when combined with all other payments to be made to
the executive by the Company considered to be a Parachute Payment would result
in an Excess Parachute Payment under the Internal Revenue Code, the amount of
the supplemental retirement benefit will be reduced so that the total of all
Parachute Payments to the executive do not constitute an Excess Parachute
Payment; provided, however, that if the total Parachute Payments received by the
executive from the Company exceed 120% of the amount of all Parachute Payments
not including any amount that would be considered an Excess Parachute Payment,
the supplemental retirement will not be reduced. Under IRS regulations, an
Excess Parachute Payment results in the Company being prohibited from taking a
deduction for all Parachute Payments and an excise tax of 20% of the payment is
imposed upon the recipient of the Parachute Payment.

COMPENSATION OF DIRECTORS

Each Director who is not an employee of the Company receives an annual
retainer of $6,000, payable quarterly, a fee of $300 for each Board meeting
attended and a fee of $400 for each committee meeting attended (except that no
fee is paid for those meetings of the Incentive Stock Option Committee or
Compensation and Incentive Stock Option Committee ("CISOC") relating solely to
the issuance of stock options) in addition to being reimbursed for reasonable
out-of-pocket travel expenses in connection with attendance at those meetings.
Each outside member of the Board of Directors on May 21, 1991 was automatically
granted a nonqualified option to purchase 5,000 shares at a per share purchase
price equal to the fair market value of the stock on that day. Thereafter, every
person who becomes an outside member of the Board of Directors, without any
action of the CISOC, receives an initial grant of a nonqualified option to

15
<PAGE> 18

purchase, at the fair market value of the stock on the date the option is
granted, 5,000 shares on the last business day in December in the year in which
the outside Director was elected a Director by the stockholders for the first
time. Each such nonqualified option to purchase 5,000 shares becomes exercisable
one year after the date of grant, and continues in effect for ten years. In
addition, on the last business day of December in each year, each outside
Director then in office is granted, without any action by the CISOC, a
nonqualified option to purchase 1,000 shares at the fair market value of the
stock on that day. Such nonqualified options to purchase 1,000 shares become
exercisable in three equal annual installments beginning one year after the date
of grant and continue in effect for ten years from the date of the grant. All
options granted to an outside Director become exercisable (a) upon the
occurrence of a Change in Control of the Company (as defined in the Company's
Incentive Stock Option Plan) or (b) when such Director ceases to serve as a
Director for any reason, except termination for cause, as long as such Director
has then served as a Director of the Company for two consecutive years,
including, for this purpose, time served as a Director before the adoption of
this Plan.

RETIREMENT PLAN FOR OUTSIDE DIRECTORS

To attract and retain experienced and knowledgeable individuals to serve as
outside Directors of the Company and its affiliates, the Company implemented in
December 1995 a Retirement Plan For Outside Directors (the "Retirement Plan")
under which outside (non-management) Directors, after the completion of five
full calendar years of service as an outside Director, will be entitled to an
annual amount equal to the lesser of $1,000 for each year of service as an
outside Director or $10,000. The benefit is payable for ten years in monthly
installments, commencing upon the later of an outside Director's 65th birthday
or retirement from the Board. While any benefits are paid under the Retirement
Plan the former outside Director will be available to consult for the Company.
The benefit will be accelerated and discounted for present value if the outside
Director leaves the Board within 12 months of a Change in Control (as defined in
the Retirement Plan), or if the Company is acquired through merger or
consolidation or the sale of assets and the acquiring party does not agree to
assume the Corporation's obligations under the Retirement Plan. The benefit is
subject to forfeiture if the outside Director is removed for Cause (as defined
in the Retirement Plan) or, as described in the Retirement Plan, competes with
the Company. The Retirement Plan is not intended to be a Qualified Plan under
the Internal Revenue Code of 1986 as amended.

EMPLOYMENT AGREEMENTS (INCLUDING ARRANGEMENTS REGARDING TERMINATION AND CHANGE
IN CONTROL)

The Company has employment agreements with Mr. Harrison and Mr. Chapman.
Mr. Harrison, effective April 13, 1998, became President and Chief Executive
Officer of the Company and Chief Executive Officer of each of its wholly-owned
subsidiaries. He also became a Director of General Photonics, LLC, and,
effective January 1, 1999, Chairman of the Board of Directors of the Company.
Mr. Chapman is President of SpecTran Communication Fiber Technologies, Inc., a
wholly-owned subsidiary of the Company, and Senior Vice President -- Technology
of the Company. Dr. Jaeger served as President and Chief Executive Officer of
the Company and Chief Executive Officer of each of its wholly owned subsidiaries
until April 13, 1998 when he became a consultant to the Company. He remained
Chairman of the Board of Directors of the Company through December 31, 1998. Dr.
Jaeger resigned from the Board of Directors of the Company and each of its
wholly owned subsidiaries and from the Board of General Photonics, LLC in March
1999. The Company's employment agreement with Dr. Jaeger was superceded on April
13, 1998 by a Restated Employment Agreement. Mr. Cannon was Senior Vice
President, Chief Financial Officer, Secretary and Treasurer of the Company and
Secretary and Treasurer of each of the Company's wholly owned subsidiaries until
he resigned from all of his positions with the Company during the last quarter
of 1998. The Company's employment agreement with Mr. Cannon was superceded by
another agreement entered into during the first quarter of 1999 effective as of
December 1, 1998 memorializing his resignation as an officer and director of the
Company and its subsidiaries.

The employment agreement with Mr. Harrison has a base term of one year from
April 13, 1998 to April 12, 1999. The base term for this agreement is
automatically renewed on a daily basis so that there is always a remaining term
of one year, unless the outside members of the Board of Directors terminate the

16
<PAGE> 19

automatic renewal feature and set a termination date, which must be one year
from the Board's resolution to terminate. The Company has agreed to use its best
efforts to nominate Mr. Harrison for election to the Board of Directors. While
Mr. Harrison's employment agreement provides for an annual salary currently
equal to $250,000, with future increases as determined by the Board of
Directors, during the second half of 1998, Mr. Harrison voluntarily reduced his
salary by 10%, to $225,000 as part of the Company's cost control initiatives. In
accordance with Mr. Harrison's employment agreement, (a) at the first meeting of
the Compensation and Incentive Stock Option Committee after his first day as a
full time employee of the Corporation, he was granted stock options to purchase
fifty thousand shares of Common Stock of the Company at an exercise price equal
to market price on date of grant and, (b) six months later, he was granted
options to purchase up to an additional fifty thousand shares of Common Stock,
twenty five thousand of which to be at a per share exercise price equal to 150%
of the closing price on date of grant, with the second twenty five thousand at a
per share exercise price of $20.00. Mr. Harrison's employment agreement also
provides that at the Company's request, for a one year period following the
termination of his employment, Mr. Harrison, will not engage in any business in
which the Company was engaged or planned during his employment, solicit any
customers of the Company or induce any employee to leave the Company. During
such one year period, Mr. Harrison will receive compensation at 75% of the level
received during the last year of employment with the Company and benefits paid
or maintained in the same fashion and in amounts not less than those received
during his last year of employment and will provide consulting services at the
Company's request. Additional provisions of Mr. Harrison's employment agreement
are described below.

The employment agreement with Mr. Chapman has a base term of one year from
June 1, 1992 to May 31, 1993. The base term for this agreement is automatically
renewed on a daily basis so that there is always a remaining term of one year,
unless the outside members of the Board of Directors terminate the automatic
renewal feature and set a termination date, which must be one year from the
Board's resolution to terminate. Mr. Chapman's employment agreement provides for
an annual salary currently equal to $196,464, with future increases as
determined by the Board of Directors. The employment agreement with Mr. Chapman
provides that for one year following the termination of employment, he will not
solicit any customers of the Company or induce any employee to leave the
Company. Additional provisions of Mr. Chapman's employment agreement are
described below.

Under their employment agreements, Messrs. Harrison and Chapman are
eligible for annual bonuses to be awarded by the Board of Directors in its
discretion and are entitled to participate in any pension, profit-sharing,
insurance or other benefit plan of the Company if eligible under such plan or
program. They have agreed to transfer to the Company any interest in any
inventions developed while employed by the Company. Each of them also agreed not
to disclose any trade secrets of the Company. Each of their employment
agreements further provide that if the executive suffers a partial disability,
or a total disability that has continued for less than six months, that
executive continues to receive salary and benefits until the end of the
employment period. If his total disability continues for six months or more,
then he will be paid at the rate of 75% of his salary for so long during the
employment period as the total disability lasts, or one year, whichever is
longer. If the executive dies, one year's salary will be paid to his spouse or
estate. The employment agreements also provide that if the Company dismisses
either of them without cause, the Company will pay such executive his salary and
maintain his benefits for six months or the balance of the employment period,
whichever is longer and, if said executive takes other employment during the
six-month period, the Company's obligation to him is limited to salary alone for
the remainder of the six months. If either of them takes other employment later
than six months from dismissal by the Company but before the end of the
employment period, the Company's obligations to that executive then cease.

The employment agreements with Messrs. Harrison and Chapman further provide
that if there is a Change in Control and either (i) the executive is dismissed
without cause up to and including twelve months from such Change in Control, or
(ii) the executive voluntarily leaves the employ of the Company up to and
including twelve months from such Change in Control, then in either case the
Company will pay the executive his salary and maintain his benefits for twelve
months from his dismissal or voluntary departure. If, however, the executive
takes other employment during that twelve month period, the Company's obligation
to him is limited to salary alone. A "Change in Control" is defined as [A] the
date of public announcement that a

17
<PAGE> 20

person has become, without the approval of the Company's Board of Directors, the
beneficial owner of 20% or more of the voting power of all securities of the
Company then outstanding; [B] the date of the commencement of a tender offer or
tender exchange by any person, without the approval of the Company'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 the Company then
outstanding; or [C] the date on which individuals who constituted the Board of
Directors of the Company on the date the employment 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.

During 1998 Dr. Jaeger had two different employment agreements with the
Company: an Employment Agreement that had been in effect since 1992 (the
"Employment Agreement") covering the period January 1, 1998 through April 12,
1998; and a Restated Employment Agreement (the "Restated Employment Agreement")
covering the remainder of 1998, entered in conjunction with the appointment of
Mr. Harrison as President and CEO of the Company. The Employment Agreement
provided for an annual salary then equal to $217,000 with Dr. Jaeger being
eligible for annual bonuses to be awarded by the Board of Directors in its
discretion and being entitled to participate in any pension, profit-sharing,
insurance or other benefit plan of the Company if he were eligible under such
plan or program. Dr. Jaeger agreed to transfer to the Company any interest in
any inventions he developed while employed by the Company and agreed not to
disclose any trade secrets of the Company and not to solicit any customers of
the Company or induce any employee to leave the Company for one year following
termination of his employment. The Employment Agreement also had the same
provisions for death, disability, partial disability, dismissal without cause
and Change in Control as the employment agreements (described above) with
Messrs. Harrison and Chapman. Under the Restated Employment Agreement, which
supercedes the Employment Agreement and extends from April 13, 1998 until June
12, 2001, Dr. Jaeger shall provide advice and assistance to the Board of
Directors and the Chief Executive Officer and perform such projects as
reasonably requested and mutually agreed, with it being anticipated that he will
take an active role in providing advice and counsel with respect to the
Company's patent and technology position and licensing arrangements, including
those with Corning Incorporated and Lucent Technologies Inc., as well as
consulting support for partnering and alliances with other firms for strategic
purposes. In addition, Dr. Jaeger will continue to serve as the Company's
representative to the International Wire and Cable Symposium Committee, among
other things. The Restated Employment Agreement provides that Dr. Jaeger will
have the same benefits as provided in the Employment Agreement except that (a)
he will be paid a fixed annual salary of $250,000 and (b) for the 1998 calendar
year only, Dr. Jaeger was eligible to participate in the Company's Employee
Profit Sharing Plan and was eligible for a target bonus of 25% of his base
salary under the Company's Key Employee Incentive Plan, to be awarded at the
discretion of the Board of Directors based upon his performance during 1998.
Thereafter, Dr. Jaeger is not eligible to participate in the all employee Profit
Sharing Plan or the Key Employee Incentive Plan. In accordance with the Restated
Employment Agreement, Dr. Jaeger was also granted options to purchase 50,000
shares of the Company's Common Stock under the Company's Incentive Stock Option
Plan. As in the Employment Agreement, the Restated Employment Agreement provides
that Dr. Jaeger agreed to transfer to the Company any interest in any inventions
he developed while employed by the Company and agreed not to disclose any trade
secrets of the Company and not to solicit any customers of the Company or induce
any employee to leave the Company for one year following termination of his
employment. The Restated Employment Agreement contains the same provisions for
death, disability, partial disability, dismissal without cause and Change in
Control as the employment agreements described above with Messrs. Harrison and
Chapman and also provides that Dr. Jaeger will be covered under the Company's
medical and dental insurance programs, or provided with identical or
substantially similar coverage, until age 65.

During 1998 Mr. Cannon had two different employment agreements with the
Company: an Employment Agreement that had been in effect since 1992 (the "Cannon
Employment Agreement") covering the period January 1, 1998 through November 30,
1998; and an Agreement (the "Cannon Agreement") covering the remainder of 1998.
The Cannon Employment Agreement provided for an annual salary then equal to
$144,300 with Mr. Cannon being eligible for annual bonuses to be awarded by the
Board of Directors in its discretion and being entitled to participate in any
pension, profit-sharing, insurance or other benefit plan of the Company
18
<PAGE> 21

if he were eligible under such plan or program. Mr. Cannon agreed to transfer to
the Company any interest in any inventions he developed while employed by the
Company and agreed not to disclose any trade secrets of the Company and not to
solicit any customers of the Company or induce any employee to leave the Company
for one year following termination of his employment. The Cannon Employment
Agreement also had the same provisions for death, disability, partial
disability, dismissal without cause and Change in Control as the employment
agreements (described above) with Messrs. Harrison and Chapman. Under the Cannon
Agreement, which supercedes the Cannon Employment Agreement and which extends
from December 1, 1998 to December 1, 2000, Mr. Cannon memorialized the terms of
his resignation as an officer and director of the Company and its subsidiaries
and agreed to provide advice and assistance to the Board of Directors, Chief
Executive Officer and/or Chief Financial Officer of the Corporation, to perform
such projects as reasonably requested and mutually agreed and to remain
available to act as a consultant to the Company. Mr. Cannon will be paid annual
compensation at the rate of $86,589 during the term of the Cannon Agreement. Any
options previously granted to Mr. Cannon that have not yet vested will continue
to vest in their normal course, but any options not vested by December 1, 1999
shall expire as of such date. In addition, all options not exercised on or
before March 31, 2001 at 5:00 p.m. shall expire at such time. Mr. Cannon is not
entitled to any automobile allowance pursuant to the agreement, but the Cannon
Agreement otherwise provides for the same benefits contained in the Cannon
Employment Agreement. If Mr. Cannon elects to terminate the Cannon Agreement or
takes other employment on or before November 30, 1999, then Mr. Cannon shall
only be entitled to annual compensation and benefits earned up to the date of
his departure. If Mr. Cannon terminates the Cannon Agreement or takes other
employment on or after December 1, 1999, the Company will continue to pay Mr.
Cannon annual compensation but no benefits through the end of the term. If the
Company terminates the Cannon Agreement without cause, as defined therein, the
Company shall continue to provide Mr. Cannon with full compensation and benefits
for the remainder of the term. The Company may accelerate the payments under the
Cannon Agreement, in its discretion, but such acceleration does not affect Mr.
Cannon's eligibility to receive benefits for the remainder of the term. The
Cannon Agreement also provides that Mr. Cannon not solicit any customers of the
Company or induce any employees to leave the Company. In the event Mr. Cannon
becomes either partially or totally disabled during the term of the Cannon
Agreement the Company shall continue, during the term of the Cannon Agreement,
to pay Mr. Cannon his annual compensation and benefits. If Mr. Cannon dies, the
payments of annual compensation will be made to his spouse or estate. Unlike the
Cannon Employment Agreement, the Cannon Agreement does not contain a provision
relating to a termination of his employment in connection with a Change in
Control of the Company.

INDEPENDENT CONTRACTOR AGREEMENT

The Company was party to an Independent Contractor Agreement with Primary,
The One For Solutions ("Primary"), which, among other things, provided for John
Rogers, an employee of Primary to provide financial consulting services to the
Company and, beginning November 1, 1998, to serve as Acting Chief Financial
Officer of the Company. Mr. Rogers held that position from November 1, 1998
through March 31, 1999, at which time the Independent Contractor Agreement
expired. Under the Independent Contractor Agreement, for weeks in which Primary
provided services of less than 40 man hours, the Company paid Primary at the
rate of $200 per hour for each man hour worked. In weeks in which Primary
provided services in excess of 40 man hours but less than 55 man hours, Primary
was paid a fixed fee of $8,000 for the week. In weeks in which Primary provided
services in excess of 55 man hours, the Company paid Primary $8,000 plus $200
per hour for each hour worked during the week in excess of 55 man hours. In
addition, the Company reimbursed Primary for its reasonable expenses incurred in
connection with services performed for the Company. The Company and Primary each
agreed to treat the other party's proprietary information as confidential. In
addition, the Company and Primary each agreed that during the term of the
Agreement and for a period of two years thereafter it would not solicit, divert,
take away, or attempt to solicit, divert or take away, any of the other party's
clients, customers, employees or independent contractors. Primary will continue
to provide transitional consulting services to the Company on substantially
similar terms as provided in the agreement through all or part of April 1999 and
may provide additional services as requested by the Company and mutually agreed.

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<PAGE> 22

COMPENSATION AND INCENTIVE STOCK COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation and Incentive Stock Option Committee is currently composed
of the Company's outside (i.e., non-employee) Directors, Mr. Donofrio, Chair of
the Committee, Dr. Lazay, Mr. Nordlicht, Dr. Lai and Mr. Schmitz (Mr. Harrison
served on the Compensation and Incentive Stock Option Committee until his
appointment as President and Chief Executive Officer of the Company on April 13,
1998). None of the outside Directors is currently, or has ever been, an officer
or employee of the Company, or has had any relationship, or has been a party to
any transaction, with the Company as to which disclosure is required, except as
set forth in prior proxy statements or below.

Mr. Nordlicht is a member of the law firm of Nordlicht & Hand, which has
provided and continues to provide legal services to the Company. During 1998,
the Company paid Nordlicht & Hand legal fees for services rendered and
disbursements advanced in the amount of $164,960. Mr. Schmitz's Company, Quest
Capital, was paid $40,132.58 by the Company for financial consulting services.

COMPENSATION AND INCENTIVE STOCK OPTION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION

The Compensation and Incentive Stock Option Committee (the "Compensation
Committee") has been delegated responsibility for all matters relating to the
compensation of senior executives of the Company, such as the Chief Executive
Officer, Chief Financial Officer, Senior Vice Presidents and the Presidents of
the Company's operating subsidiaries, including establishing and administering
the Company's policies and plans governing annual and long-term compensation.
The Compensation Committee and its members also become involved in hiring,
retention and performance reviews of this senior executive group. It reports to
the Board of Directors, which periodically reviews and approves or ratifies
committee actions where necessary or appropriate. The Committee is composed of
the Company's outside Directors, currently Mr. Donofrio, Chair of the Committee,
Dr. Lazay, Mr. Nordlicht, Dr. Lai and Mr. Schmitz. Mr. Harrison served on the
Compensation and Incentive Stock Option Committee until his appointment as
President and Chief Executive Officer of the Company on April 13, 1998.

COMPENSATION PHILOSOPHY

The fundamental objective of the Company's executive compensation policy is
to increase shareholder value and to align executives' and shareholders'
interests both in the near and longer terms. Executives are compensated with
cash and stock options. The Company's goal is to pay competitive base salaries
coupled with performance based incentive compensation. Incentive compensation is
a function of three factors: the first and most heavily weighted is growth in
earnings before interest, taxes, depreciation and amortization (EBITDA),
essentially a cash flow calculation, less the Company's cost of capital; the
second and next most significant factor is the achievement of individual goals
and projects (or the achievement of a certain percentage of those goals and
projects if they are more than a year's duration) specifically identified at the
beginning of a year; the third factor is a discretionary element designed to
reward exceptional performance not recognized elsewhere, such as seizing an
unanticipated opportunity which provides substantial benefit to the Company not
foreseen at the beginning of the year. While maintaining primary focus on the
overall, consolidated results of the Company, the Committee believes that there
should be an element of reward for exceptional performance at the operating
subsidiary level under certain circumstances. The underlying philosophy is that
these elements will produce a stronger more economically successful company in
the near and longer-term which in turn will be reflected in the Company's stock
price. The Company has and will continue to grant stock options (at market price
or higher on date of grant); executives benefit only if the stock price rises.

COMPONENTS OF COMPENSATION, PROGRAMS AND PRACTICES

Overview. Executive compensation is composed of three elements: base
salary; incentive cash awards and stock options. The Company attempts to
structure its base salary so that it is competitive, meaning that base salaries
approximate the fiftieth percentile (50%) of the base salaries (not total
compensation) of comparable companies. Incentive cash awards and stock options
are used so that executives' total

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<PAGE> 23

compensation is below the fiftieth percentile for comparable companies if they
have achieved less-than-desired-results, at or about the fiftieth percentile for
expected performance, and above the fiftieth percentile for superior, excellent
or outstanding performance.

Base Salaries. The Company generally attempts to establish annual base
salaries for executives, including the Chief Executive Officer, competitive with
base salaries for executives of similarly situated companies within the
industry. The objective is to pay to an executive who is fully competent and
meets normal expectations for performance in his or her position a base salary
at the fiftieth percentile level of the range of base salaries paid to
executives holding comparable positions at similarly situated companies. Base
salaries at approximately the fiftieth percentile level, in conjunction with the
balance of the compensation package, permits the Company to attract and retain
top quality people while meeting the Company's affordability requirements. In
determining executive compensation, the Company reviewed and analyzed reports
and surveys of executive compensation at comparably sized high technology
companies, including those in the electronics industry.

Incentive Cash Compensation. The Company has developed programs under
which key executives can earn bonus cash compensation, dependent upon
performance, that places them at less than, equal to or greater than the
fiftieth percentile level of compensation paid to similar executives in similar
companies. Key executives participate in two plans: the Employee Profit Sharing
Plan ("EPSP") in which all employees participate and the Key Employee Incentive
Plan ("Key Employee Plan"). Officers and selected director-level employees of
the Company and each of its subsidiaries participate in the Key Employee Plan
(although any employee may be eligible for an award under the discretionary
portion of the Key Employee Plan, as described below).

The Employee Profit Sharing Plan ("EPSP"). All employees, including key
personnel, participate in the EPSP, which rewards performance for operating
subsidiary employees based upon the results of their operating subsidiary and
for parent company employees based upon consolidated results. The Committee and
the Board believe that it is advisable for key personnel and all other employees
to share certain identical incentives. Employees of an operating subsidiary or
the parent company can earn a bonus equal to one percent (1%) of their salary if
the operating subsidiary that employs that person (or the consolidated corporate
results for parent company employees) produces at least an eight percent (8%)
return on net revenues ("ROR"). A nine percent (9%) ROR will result in a bonus
equal to two percent (2%) of salary. If the relevant entity produces an ROR
greater than nine percent (9%) then half of each additional percent is added to
the two percent (2%), up to a maximum bonus equal to ten percent (10%) of
salary. To achieve the maximum bonus, a subsidiary or the parent company, as
applicable, would need to generate approximately a twenty five percent (25%)
ROR. No bonuses will be paid to employees of an entity if it earns less than an
eight percent (8%) ROR. Bonuses can be paid out under the EPSP to employees of
an operating subsidiary which individually earns at least an eight percent (8%)
ROR, even if the Company's consolidated results or the results of other
subsidiaries produce an ROR of less than eight percent (8%) or a loss; the
underlying philosophical concept is to provide an award for employees for those
results that they can influence and control directly.

Key Employee Incentive Plan ("Key Employee Plan"). Under the Key Employee
Plan, a bonus pool is created by a specified percentage of the excess of the
Company's consolidated earnings before interest, taxes, depreciation and
amortization (EBITDA), essentially a cash flow calculation, over a cost of
capital charge. Participants are high level employees of the Company (currently
the Company's officers, Presidents and Vice Presidents of the operating
subsidiaries, and specified director-level employees of the Company or its
subsidiaries, totaling 15 individuals in 1998), with the exception of the
discretionary portion of the bonus pool (described below) which may be paid out
to any employee as determined by the Compensation Committee. The bonus pool will
be distributed among participants as follows. Seventy percent (70%) is
essentially dependent upon how much EBITDA exceeds the cost of capital. An
additional seventeen and one half percent (17.5%) is based upon the achievement
of individual goals and projects (or the achievement of a certain percentage of
those goals and projects if they are more than a year's duration) specifically
identified at the beginning of the year. The remaining twelve and one half
percent (12.5%) constitutes a pool to be used for discretionary bonuses, to be
awarded or not to any employee, whether a participant in the remainder of the
Key Employee Plan or not, if the Compensation Committee determines that such
employee made an
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<PAGE> 24

exceptional contribution to the Company's performance not recognized elsewhere.
To determine how much each participant may be paid from the bonus pool, he or
she is assigned a target bonus percentage which will be used in determining how
much of the bonus pool is allocated to that individual, which percentage will be
adjusted downwards (including to zero) if specified levels of EBITDA return on
operating assets (for the operating subsidiary or the Company, or a blend of the
two, as appropriate for the individual) are not achieved. While the intent of
the Key Employee Plan is to permit participants to earn total compensation
potentially in excess of the fiftieth percentile when compared to comparable
employees in comparable companies as a result of excellent performance, the Key
Employee Plan establishes a maximum amount that can be paid to any participant
under the non-discretionary portions of the Key Employee Plan to attempt to
avoid excessive awards. The Key Employee Plan also can result in total
compensation at or less than the fiftieth percentile if performance is not
excellent. No payments will be made under the Key Employee Plan unless the
Company is profitable after the payments. There is no obligation to pay out
either the discretionary portion of the bonus pool or any remaining balance if
the total of all bonuses distributed is less than the total bonus pool;
disposition of such amounts will be determined by the Compensation Committee.

Stock Options. Stock option grants are designed to create continued and
long-term incentives for executives and employees to attempt to increase equity
values consistent with the expectations and interests of public shareholders.
All stock option awards are granted under the Company's Incentive Stock Option
Plan. The exercise price of all options so granted is the market price or higher
on the date of grant, with options generally vesting annually in equal amounts
over three years. The amount of grants attempt to place recipients in
approximately the fiftieth percentile (50%) percentile when compared to
comparable employees in comparable companies for long-term compensation.
Recipients benefit only if the stock price rises after the date of grant and
after the options vest.

Chief Executive Officer Compensation. Dr. Raymond E. Jaeger served as
Chief Executive Officer until April 13, 1998 when Mr. Charles B. Harrison
assumed that position.

As described above, Dr. Jaeger had two different employment agreements with
the Company during 1998. Under the Restated Employment Agreement Dr. Jaeger was
eligible to participate in the Company's Employee Profit Sharing Plan and was
eligible for a target bonus of 25% of his base salary under the Company's Key
Employee Incentive Plan, to be awarded at the discretion of the Board of
Directors based upon his performance during 1998. Thereafter, Dr. Jaeger is not
eligible to participate in either of these two plans.

Mr. Harrison became Chief Executive Officer on April 13, 1998 and served in
that capacity through year-end (and currently) in accordance with an employment
agreement described above. While Mr. Harrison's employment agreement provides
for an annual salary currently equal to $250,000, with future increases as
determined by the Board of Directors, during the second half of 1998, Mr.
Harrison voluntarily reduced his salary by 10%, to $225,000 as part of the
Company's cost control initiatives.

In determining Chief Executive Officer compensation for 1998, the
Compensation and Incentive Stock Option Committee determined that the Company's
performance was below expectations and awarded no bonus or other incentive
compensation to either Dr. Jaeger or Mr. Harrison.

Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1,000,000
paid to its chief executive officer and its four other most highly compensated
executives. It is unlikely, at this point in the Company's history, that the
Company will pay executive compensation that might not be deductible under that
Section. Nevertheless, the Company continues to review this matter and whenever
it is advisable will take whatever steps it deems necessary in this regard.

Richard M. Donofrio, Chair
Paul D. Lazay
Ira S. Nordlicht
Lily K. Lai
Robert A. Schmitz

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<PAGE> 25

STOCKHOLDER RETURN

In the graph set forth below, the yearly change for the last five fiscal
years in the Company's cumulative total stockholder return on its Common Stock
is compared with the cumulative total return as shown in the Russell 2000 index,
and in an index of peer issuers selected by the Company.(1)

COMPARATIVE FIVE-YEAR TOTAL RETURN(2)

SPECTRAN CORP., RUSSELL 2000, PEER GROUP
(PERFORMANCE RESULTS THROUGH 12/31/98)

<TABLE>
<CAPTION>
SPTR RUSSELL PEER GROUP
---- ------- ----------
<S> <C> <C> <C>
'1993' 100.00 100.00 100.00
'1994' 41.49 98.18 130.95
'1995' 46.81 126.10 137.59
'1996' 185.11 146.90 147.28
'1997' 81.92 179.75 125.22
'1998' 35.11 175.17 119.57
</TABLE>

Assumes $100 invested at the close of trading on the last trading day preceding
the first day of the fifth preceding fiscal year in the Company's Common Stock,
RUSSELL 2000, and Peer Group.
- ---------------

(1) The peer group selected by the Company includes the following companies
engaged in the sale of optical fiber or related products: ADC
Telecommunications, Corning Incorporated, FiberCore, Inc., Galileo
Electro-Optics, Hitachi, Ltd., OptelCom, Optical Cable Company and Ortel
Corporation.

(2) Cumulative total return assumes reinvestment of dividends.

AMENDMENT TO INCENTIVE STOCK OPTION PLAN

As of April 9, 1999, the Company had only 79,596 shares available for
granting options under its 1991 Incentive Stock Option Plan (the "Plan"),
described below, to new and existing employees and outside directors (53,596 to
employees and 26,000 to outside directors). The Company has historically used
options to attract new highly qualified personnel and to continue to retain its
key employees. At the Annual Meeting, the holders of Common Stock of the Company
will be asked to approve an amendment to the Plan to increase the number of
shares of Common Stock reserved for issuance under the Plan by 345,000. All of
those shares may be made available for incentive stock options for employees or
for nonqualified options as determined by the Compensation and Incentive Stock
Option Committee with no more than 40,000 shares being made available to outside
directors. As of April 9, 1999, the Company had subject to option 1,016,684
shares of Common

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<PAGE> 26

Stock under the Plan (953,864 to employees and 63,000 to outside directors) at
an average per share exercise price of $10.71 and an additional 7,636 shares of
Common Stock (all to employees) at an average per share exercise price of $3.38
under its prior incentive stock option plan (the "Old Plan"), which the Plan
replaced and superseded in 1991 (see below). The options for 1,024,320 shares
already granted under the Plan and the Old Plan combined with the 79,596 shares
currently available for options under the 1991 Plan and the additional 345,000
shares proposed above will total 1,448,916 shares either already subject to
option under the Plan or the Old Plan or available for options as described
above. These numbers do not include 104,379 shares previously reserved for
issuance under the Plan which have been issued upon the exercise of options
granted thereunder. The favorable vote of the holders of a majority of the
shares of Common Stock, represented in person or by Proxy at the meeting, will
be required for such approval. The increase in the number of shares of Common
Stock issuable will enable the Company to attract new highly qualified personnel
and to continue to compensate key employees by the grant of stock options.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
AMENDMENT TO THE COMPANY'S INCENTIVE STOCK OPTION PLAN.

INCENTIVE STOCK OPTION PLAN

Under the Company's 1991 Incentive Stock Option Plan, as amended (the
"Plan"), options to purchase up to 1,200,490 shares of Common Stock may be
granted to key employees of the Company who are deemed to be significant
contributors to the Company's operations or to directors who are not full-time
employees of the Company or any subsidiary ("outside directors"). Of these
shares, no more than 89,000 may be issued as nonqualified options. The
Compensation and Incentive Stock Option Committee (the "CISOC") of the Board of
Directors, which, except as described below with respect to grants to outside
directors, administers the Plan, is composed of Mr. Donofrio, Chair of the
Committee, Mr. Nordlicht, Dr. Lazay, Dr. Lai, and Mr. Schmitz. The award of an
option, when made by the CISOC, is made based in each case on an evaluation of
an employee's past or potential contribution to the Company. Approximately 67
employees of the Company and its subsidiaries are currently eligible to
participate in the Plan.

The stock options granted to key employees by the CISOC under the Plan may
be either incentive stock options conforming to the provisions of Section 422 of
the Internal Revenue Code, or nonqualified options. However, to the extent that
the aggregate fair market value (determined at the time an option is granted) of
stock with respect to which incentive stock options are exercisable for the
first time by an employee during any calendar year exceeds $100,000, such
options shall be treated as non-qualified options. The stock options to be
granted to outside directors must be nonqualified options.

With respect to options granted to key employees, the purchase price for
shares under each option (incentive or nonqualified) is determined by the CISOC,
but will not be less than 100% of the fair market value of the stock on the date
of the grant. Such options become exercisable in the manner determined by the
CISOC, or, if no schedule for exercise is established, in three equal annual
installments, beginning one year after the date of grant and continuing in
effect for ten years. If an employee, at the time the option is granted, owns
more than 10% of the Company's voting stock, the option price for incentive
stock options will be not less than 110% of the fair market value of the Common
Stock on the date of grant, and the option will continue in effect for not more
than five years.

Exercisable options may be exercised at any time an optionee is
continuously employed by the Company and for three months after termination of
employment (unless employment is terminated for cause involving personal
misconduct in the judgement of the CISOC). No options may be granted under the
Plan after ten years from the effective date of the Plan. With respect to all
options which may granted under the Plan, upon exercise of an option, the
exercise price must be paid in full either in cash or in shares of Common Stock
of the Company. Options are nontransferable, except by will or by the laws of
descent and distribution.

Each outside member of the Board of Directors on May 21, 1991 was
automatically granted a nonqualified option to purchase 5,000 shares at a per
share purchase price equal to the fair market value of the stock on that day.
Each person who subsequently becomes an outside member of the Board of
Directors, without any action of the CISOC, shall receive an initial grant of a
nonqualified option at the fair market value
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<PAGE> 27

of the stock on the date the option is granted to purchase 5,000 shares on the
last business day in the year in which the outside director was elected a
director by the stockholders for the first time. Each such nonqualified option
for 5,000 shares becomes exercisable one year after the date of grant, and
continues in effect for ten years. In addition, on the last business day of
December in each year, each outside director then in office is to be granted,
without any action by the CISOC, a nonqualified option to purchase 1,000 shares.
Such nonqualified options to purchase 1,000 shares become exercisable in three
equal annual installments, beginning one year after the date of grant and
continue in effect for ten years. All options granted to an outside director
become exercisable when such director ceases to serve as a director for any
reason, except termination for cause, as long as such director has then served
as a director of the Company for two consecutive years, including, for this
purpose, time served as a director before the adoption of the Plan.

The Plan replaced the Company's prior incentive stock option plan (the "Old
Plan") under which options could no longer be granted after November 11, 1991.
As of April 9, 1999, options to purchase 7,636 shares remained outstanding under
the Old Plan at an average per share price of $3.38, and options to purchase
1,016,684 shares were outstanding under the Plan at an average per share price
of $10.71. As of April 9, 1999, 79,596 shares remained available for grant under
the Plan. As of April 9, 1999, the market value of a share underlying an option
granted under the Plan was $3.50, and the aggregate market value of all shares
reserved for the Plan was $3,836,980 on that date. The number of options to be
granted in 1999 and the value of such options are indeterminable at this time.
The Plan may be amended from time to time by the Board of Directors, subject to
the approval of the stockholders for certain types of amendments.

FEDERAL TAX CONSEQUENCES

The following discussion is a summary of the major Federal income tax
consequences of the Plan. An employee generally will not recognize taxable
income upon the grant or exercise of an incentive stock option. (The employee
may, however, be subject to an alternative minimum tax upon exercise of the
option.) When shares purchased for cash pursuant to the exercise of an incentive
stock option are sold, and the employee has held the shares for more than one
year from the date the shares were transferred to the employee and two years
from the date on which the incentive stock option was granted, the employee will
recognize capital gain (or loss) equal to the difference between the amount
realized on the disposition of the shares and the option price.

If the employee disposes of any of the shares before the end of the
one-year and two-year periods described above, the employee generally has made a
"disqualifying disposition" with respect to those shares. In the event of a
"disqualifying disposition", the employee generally will recognize ordinary
income in the year of the "disqualifying disposition" equal to the excess of the
fair market value of the shares on the date of exercise over the option price.
Any additional gain resulting from such disposition will be treated as capital
gain to the employee. If, however, the amount realized in the "disqualifying
disposition" of the shares is less than the fair market value of the shares on
the date of exercise and if such disposition is a sale or exchange in which a
loss (if sustained) would be recognized, the ordinary income recognized upon
disposition will not exceed the excess (if any) of the amount realized in the
disposition over the option price. If a "disqualifying disposition" is made by
an employee who is subject to Section 16(b) of the Securities Exchange Act of
1934 ("Section 16(b)"), special rules may apply to the computation of gain or
loss resulting from such disposition.

If shares of Company stock are surrendered in full payment of the option
price under an incentive stock option, the employee generally will not recognize
taxable income on the exchange and all of the shares transferred to the employee
will be subject to both the one-year and two-year periods described in the
preceding paragraphs. Special rules may apply, however, in determining an
employee's gain or loss from later dispositions of the shares received,
including "disqualifying dispositions".

The Company will not be entitled to any deduction on the grant or exercise
of an incentive stock option. However, the Company generally will be entitled to
a Federal income tax deduction equal to the amount included by an employee for
tax purposes as ordinary income in connection with a "disqualifying disposition"
of incentive stock option shares, provided that such amount qualifies as an
ordinary and necessary business

25
<PAGE> 28

expense of the Company. Any deduction will be available to the Company for its
taxable year corresponding to the year in which the employee includes ordinary
income from the "disqualifying disposition". The employee will be deemed to have
included an amount as part of income for tax purposes if the Company has timely
complied with any applicable tax reporting requirements with respect to that
income.

No income will be recognized by an optionee at the time a nonqualified
option is granted by the Company. Upon the exercise of a nonqualified option,
the optionee generally will recognize ordinary income equal to the excess of the
fair market value of the shares purchased (as of the exercise date) over the
option price. However, for optionees who are subject to Section 16(b), special
rules may apply to the computation and timing of income resulting from the
exercise of a nonqualified option.

If shares of Company stock are surrendered in full payment of the option
price under a nonqualified option, the optionee will not recognize income upon
such exercise to the extent that the optionee receives shares that are equal in
number to the shares surrendered. To the extent that the optionee receives
shares in excess of the number of shares surrendered (the "additional shares"),
the optionee will recognize ordinary income in the year of exercise equal to the
fair market value of the additional shares, determined as of the date of
exercise. If, however, the optionee is subject to Section 16(b), special rules
may apply to the computation and timing of income resulting from the exercise of
a nonqualified option.

If an optionee disposes of shares acquired by the exercise of a
nonqualified option, the optionee will recognize capital gain (or, under certain
conditions, capital loss) in the year of such disposition equal to the
difference between any amount realized on the disposition and the optionee's tax
basis in the shares (the optionees tax basis generally being the sum of the
option price plus the income recognized upon exercise of the option).

The Company generally will be entitled to a Federal income tax deduction
equal to the amount included by an optionee for tax purposes as ordinary income
in connection with the exercise of a nonqualified stock option, provided that
such amount qualifies as an ordinary and necessary business expense of the
Company. Any deduction will be available to the Company for its taxable year
corresponding to the year in which the optionee includes ordinary income from
the exercise. The optionee will be deemed to have included an amount as part of
income for tax purposes if the Company has timely complied with any applicable
tax reporting requirements with respect to that income.

MATERIAL CHANGES RESULTING FROM THE PROPOSED AMENDMENT

As of April 9, 1999, a total of 1,096,280 shares were reserved for issuance
under the Company's 1991 Incentive Stock Option Plan. Of those shares, options
for 953,684 shares have been granted to employees and options for 63,000 shares
have been granted to outside directors. In addition, 104,379 shares previously
reserved for issuance under the Plan were issued upon the exercise of options
granted thereunder. Accordingly, there remains available for new options only
79,596 shares, of which 53,596 are reserved for employees and 26,000 shares are
reserved for outside directors. If the proposed amendment to the Plan is
approved, the total number of shares reserved under the Plan will be increased
from 1,200,490 to 1,545,490. The total number of shares available for new
options will increase from 79,596 to 424,596, of which 358,596 will be reserved
for employees and 66,000 will be reserved for outside directors. Adoption of the
proposed amendment will assist the Company in its efforts to attract new highly
qualified personnel and to continue to retain its key employees by the grant of
stock options.

If the amendment to the Plan is approved by the stockholders, the first
sentence of paragraph 3 of the Plan will be deleted and replaced with the
following: "Subject to the provisions of paragraph 12 hereof, the number of
shares of the Company's Common Stock of the par value of $.10 per share which
may be issued and sold under the Plan will not exceed 1,545,490 shares, of which
no more than 129,000 shares may be issued pursuant to paragraph 4.2 hereof".

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
PROPOSED AMENDMENT TO THE COMPANY'S INCENTIVE STOCK OPTION PLAN.

26
<PAGE> 29

RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS

Subject to ratification by the stockholders, the Board of Directors has
appointed KPMG Peat Marwick, LLP, as independent certified public accountants
for the Company for the year ending December 31, 1999. Management will present
to the Annual Meeting a proposal that such appointment be ratified. The
favorable vote of the holders of a majority of the shares of Common Stock,
represented in person or by Proxy at the meeting, will be required for such
ratification. A representative of KPMG Peat Marwick, LLP will attend the meeting
with the opportunity to make a statement if he desires to do so. That
representative will be available to respond to appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPOINTMENT OF
KPMG PEAT MARWICK, LLP, AS THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS.

STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING

Stockholder proposals intended to be presented at the next annual meeting
of stockholders must be received by the Company no later than December 28, 1999
in order to be included in the Company's Proxy Statement and form of Proxy
relating to that meeting. Any such proposal should be communicated in writing to
the Secretary of the Company, SpecTran Industrial Park, 50 Hall Road,
Sturbridge, Massachusetts 01566. If a stockholder does not notify the Company by
March 13, 2000 of a proposal, then the persons named as Proxies in the
accompanying Proxy may use their discretionary voting authority if the proposal
is raised at the meeting.

OTHER MATTERS

Management does not know of any other matters to be presented at the Annual
Meeting. If any additional matters are properly presented, the persons named in
the accompanying Proxy will have discretion to vote in accordance with their own
judgment on such matters.

By Order of the Board of Directors,

George J. Roberts
Secretary

April 27, 1999

27
<PAGE> 30
PROXY

SPECTRAN CORPORATION

SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned appoints each of Charles B. Harrison and George J. Roberts (with
power to act without the other and each with full power to appoint his
substitute) as the undersigned's Proxies to vote all shares of Common Stock of
the undersigned in SPECTRAN CORPORATION (the "Company"), a Delaware corporation,
which the undersigned would be entitled to vote at the Annual Meeting of
Stockholders of the Company to be held at The Fairmont Copley Plaza Hotel, 138
St. James Avenue, Boston, Massachusetts, on May 28, 1999, at 10:00 a.m. (local
time) or at any adjournments thereof as follows:

(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
<PAGE> 31

x PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE

<TABLE>
<S> <C> <C> <C>
FOR all nominees listed at WITHHOLD AUTHORITY
right (except as marked to vote for all nominees
contrary to below) listed at right
1. Election of NOMINEES: Dr. Lily K. Lai,
Directors [ ] [ ] Ira S. Nordlicht
Robert A. Schmitz
</TABLE>

(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below).

FOR AGAINST ABSTAIN
2. PROPOSAL TO RATIFY THE RESERVATION OF 345,000
ADDITIONAL SHARES OF THE COMPANY'S AUTHORIZED [ ] [ ] [ ]
BUT UNISSUED SHARES FOR ISSUANCE UNDER THE
COMPANY'S INCENTIVE STOCK OPTION PLAN.

3. PROPOSAL TO RATIFY SELECTION OF KPMG PEAT
MARWICK, LLP AS INDEPENDENT CERTIFIED [ ] [ ] [ ]
PUBLIC ACCOUNTANTS FOR THE YEAR ENDING
DECEMBER 31, 1999.

4. In their discretion, upon such other business as may properly come before the
meeting or any adjournments thereof.

The shares of Common Stock represented by this Proxy will be voted in accordance
with the foregoing instructions. IN THE ABSENCE OF ANY INSTRUCTIONS, SUCH SHARES
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ITEM 1 AND FOR THE
PROPOSALS IN ITEMS 2 AND 3.

The undersigned hereby revokes any Proxy or Proxies to vote shares of Common
Stock of the Company heretofore given by the undersigned.

Signature(s)____________________________________ DATE ____________ , 1999

Please date, sign exactly as your name appears on this Proxy, and promptly
return in the enclosed envelope. When signing as guardian, executor,
administrator, attorney, trustee, custodian, or in any other similar capacity,
please give full title. If a corporation, sign in full corporate name by
president or other authorized officer, giving his title, and affix corporate
seal. If a partnership, sign in partnership name by authorized person. In the
case of joint ownership, each joint owner must sign.