<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission file number 0-12489
SPECTRAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-2729372
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 Hall Road, Sturbridge, Massachusetts 01566
- --------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (508) 347-2261
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No __ .
The number of shares of the registrant's Common Stock outstanding as of
April 30, 1999, was 7,004,850.
1
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SPECTRAN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Dollars in thousands except per share amounts
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1999 1998
----- ----
<S> <C> <C>
Net Sales $ 20,380 $ 15,112
Cost of Sales 15,059 10,001
-------- ---------
Gross Profit 5,321 5,111
Selling and Administrative Expenses 3,082 3,134
Research and Development Costs 755 1,176
-------- ---------
Income from Operations 1,484 801
-------- ---------
Other Income (Expense):
Interest Income 28 114
Interest Expense (736) (124)
Other, Net (Note 5) (12) 842
-------- ---------
Other Income (Expense), net (720) 832
-------- ---------
Income before Income Taxes and Equity in Joint 764 1,633
Venture
Loss from Joint Venture (382) (252)
-------- ----------
Income before Income Taxes 382 1,381
Income Tax Expense 149 517
-------- ---------
Net Income 233 864
-------- ---------
Other Comprehensive Income,
Net of Tax:
Unrealized Gains on Securities: -- --
Unrealized Holdings Gains
Arising During the Period -- 1
Less Reclassification Adjustment
For (Gains)/Losses Included
In Net Income -- (12)
-------- ---------
Other Comprehensive Income Loss -- (11)
-------- ---------
Comprehensive Income $ 233 $ 853
======= =========
Net Earnings per Common Share:
Basic $.03 $.12
==== ====
Diluted $.03 $.12
==== ====
Weighted Average Number of
Common Shares Outstanding:
Basic 7,004 7,002
===== =====
Diluted 7,099 7,192
===== =====
</TABLE>
See accompanying notes to these consolidated financial statements.
2
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SPECTRAN CORPORATION
CONSOLIDATED BALANCE SHEETS
Dollars in thousands
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
-------------- -----------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 4,767 $ 1,690
Trade Accounts Receivable, net 14,052 12,568
Inventories 8,054 8,279
Income Taxes Receivable -- 644
Deferred Income Taxes 1,889 1,889
Prepaid Expenses and Other Current Assets 1,439 1,036
---------- ----------
Total Current Assets 30,201 26,106
---------- ----------
Investment in Joint Venture 2,857 3,239
Property, Plant and Equipment, net 67,851 68,495
Other Assets:
License Agreements, net 4,185 4,335
Goodwill, net 774 793
Other Long-term Assets 2,366 2,451
---------- ----------
Total Other Assets 7,325 7,579
---------- ----------
Total Assets $ 108,234 $ 105,419
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current Maturities of Long-term Debt $ 3,200 $ 3,200
Current Portion of License Fees Payable 1,000 1,250
Accounts Payable 5,065 4,410
Income Taxes Payable 521 --
Accrued Defined Benefit Pension Liability 2,123 1,902
Deferred Income Taxes 478 478
Accrued Liabilities 4,252 3,317
---------- ----------
Total Current Liabilities 16,639 14,557
---------- ----------
Long-term Portion of License Fee Payable 2,250 2,750
Long-term Debt (Note 4) 31,800 30,800
---------- ----------
Stockholders' Equity:
Common Stock, voting, $.10 par value; authorized
20,000,000 shares; outstanding 7,003,850 shares and
7,003,850 shares in 1999 and 1998, respectively 700 700
Common Stock, non-voting, $.10 par value;
authorized 250,000 shares; no shares outstanding -- --
Paid-in Capital 50,252 50,252
Retained Earnings 6,593 6,360
---------- ---------
Total Stockholders' Equity 57,545 57,312
---------- ---------
Total Liabilities & Stockholders' Equity $ 108,234 $ 105,419
========== =========
</TABLE>
See accompanying notes to these consolidated financial statements.
3
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SPECTRAN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in thousands
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 233 $ 864
Reconciliation of net income to net cash provided by
operating activities:
Depreciation and Amortization 2,021 1,386
Gain on sale of marketable securities -- (18)
Loss on disposition of equipment 2 60
Changes in valuation accounts 437 (25)
Investment in joint venture 382 132
Change in other long-term assets 55 --
Changes in operating assets and liabilities:
Accounts receivable (1,441) (3,908)
Inventories (255) (1,956)
Prepaid expenses and other current assets (404) (172)
Income taxes payable/receivable 1,166 162
Accounts payable and accrued liabilities 1,061 1,076
--------- --------
Net Cash Provided by (Used in) Operating Activities 3,257 (2,399)
--------- --------
Cash Flows from Investing Activities:
Acquisition of property, plant and equipment (1,180) (7,313)
Purchase of marketable securities -- (9,652)
Proceeds from sale/maturity of marketable securities -- 16,202
--------- --------
Net Cash Used in Investing Activities (1,180) (763)
--------- --------
Cash Flows from Financing Activities:
Borrowings of long-term debt 1,000 4,000
Proceeds from exercise of stock options and warrants -- 16
--------- --------
Net Cash Provided by Financing Activities 1,000 4,016
Increase in Cash and Cash Equivalents 3,077 854
Cash and Cash Equivalents at Beginning of Period 1,690 445
--------- --------
Cash and Cash Equivalents at End of Period $ 4,767 $ 1,299
========= ========
</TABLE>
See accompanying notes to these consolidated financial statements.
4
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SPECTRAN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The financial information for the three months ended March 31, 1999 and
1998 is unaudited but reflects all adjustments (consisting solely of normal
recurring adjustments) which the Company considers necessary for a fair
statement of results for the interim period. The results of operations for the
three months ended March 31, 1999 are not necessarily indicative of the results
for the entire year.
The consolidated results for the three months ended March 31, 1999 and 1998
include the accounts of SpecTran Corporation (the "Company") and its
wholly-owned subsidiaries: SpecTran Communication Fiber Technologies, Inc.
("SpecTran Communication"), SpecTran Specialty Optics Company ("SpecTran
Specialty"), and Applied Photonic Devices, Inc. ("APD"), which holds the
Company's investment in General Photonics, LLC, a 50-50 joint venture between
the Company and General Cable Corporation ("General Cable"). In December 1996,
the Company sold certain of the assets of APD to General Cable and then
contributed the remaining non-cash assets of APD to General Photonics for a 50%
equity interest. The investment in General Photonics is accounted under the
equity method of accounting pursuant to which the Company records its 50%
interest in General Photonics' net operating results. Prior to the formation of
General Photonics, APD's results of operations, including net sales and
expenses, were consolidated with those of the Company. All significant
intercompany balances and transactions have been eliminated.
These financial statements supplement, and should be read in conjunction
with, the Company's audited financial statements for the year ended December 31,
1998 as contained in the Company's Form 10-K filed with the United States
Securities and Exchange Commission.
2. INVENTORIES
Inventories consisted of (in thousands):
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
-------------- -----------------
<S> <C> <C>
Raw Materials $ 2,245 $ 3,096
Work in Process 2,220 1,277
Finished Goods 3,589 3,906
--------------- ---------------
$ 8,054 $ 8,279
=============== ===============
</TABLE>
5
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3. PROPERTY, PLANT & EQUIPMENT
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
-------------- -----------------
<S> <C> <C>
Property, plant and equipment consisted of (in thousands):
Land and Land Improvements $ 978 $ 978
Buildings and Improvements 24,951 24,909
Machinery and Equipment 50,934 48,983
Construction in Progress 15,341 16,220
------------ -----------
92,204 91,090
Less Accumulated Depreciation and Amortization 24,353 22,595
------------ -----------
Property, Plant and Equipment, net $ 67,851 $ 68,495
============ ===========
</TABLE>
4. LONG-TERM DEBT
Long-term debt consisted of (in thousands):
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
-------------- -----------------
<S> <C> <C>
Revolving Credit Loan Facility at the Lower of
Prime or LIBOR plus 1.5% $ 11,000 $ 10,000
Series A Senior Secured Notes at 9.24% Interest 16,000 16,000
Series B Senior Secured Notes at 9.39% Interest 8,000 8,000
----------- -----------
Total 35,000 34,000
Less current maturities 3,200 3,200
----------- -----------
$ 31,800 $ 30,800
=========== ===========
</TABLE>
In December 1996, the Company sold to a limited number of selected
institutional investors an aggregate principal amount of $24.0 million of senior
secured notes consisting of $16.0 million of 9.24% interest Series A Senior
Secured Notes due December 26, 2003 and $8.0 million of 9.39% interest Series B
Senior Secured Notes due December 26, 2004. The Company also has a $20.0 million
revolving credit agreement with its principal bank, maturing on April 1, 2000.
As of March 31, 1999 the Company had borrowed $11.0 million against the
revolving agreement.
5. CORNING SETTLEMENT
On March 13, 1998, the Company announced the settlement of Corning's
obligation to purchase multimode fiber from the Company under a multiyear supply
contract the companies entered into on January 1, 1996. Corning terminated its
purchase of multimode fiber from the Company in exchange for a series of cash
payments to the Company totaling $4.1 million. In the March 31, 1998 quarter the
Company recognized income on the settlement of approximately $900,000.
6
<PAGE>
6. COMPUTATION OF EARNINGS PER COMMON SHARE
Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128 "Earnings per Share" (SFAS 128) which has changed
the method of computing and presenting earnings per common share. All prior
periods presented have been restated in accordance with SFAS 128. This
restatement had an immaterial impact on prior periods' earnings per common share
amounts calculated under the previous method.
Under SFAS 128, primary earnings per common share has been replaced
with basic earnings per common share. The basic earnings per share computation
is based on the earnings applicable to common stock divided by the weighted
average number of shares of common stock outstanding at March 31, 1999 and March
31, 1998.
Fully diluted earnings per common share has been replaced with diluted
earnings per common share. The diluted earnings per common share computation
include the common stock equivalency of options granted to employees under the
stock incentive plan. Excluded from the diluted earnings per common share
calculation are options granted to employees that are anti-dilutive based on the
average stock price for the year.
(dollars and shares in thousands)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Earnings per common share-basic
Earnings applicable to common stock $ 233 $ 864
====== ======
Weighted average shares outstanding 7,004 7002
====== ======
Earnings per common share-basic $ .03 $ .12
====== ======
Earnings per common share-diluted
Earnings applicable to common share $ 233 $ 864
====== ======
Weighted average shares outstanding 7,004 7,002
Plus shares issuable on:
Exercise of dilutive options 95 190
----- ------
Weighted average shares outstanding
assuming conversion 7,099 7,192
====== ======
Earnings per common share-diluted $ .03 $ .12
====== ======
</TABLE>
7. BUSINESS SEGMENTS
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 131 (SFAS 131), "Disclosures about Segments of an
Enterprise and Related Information" which has changed the method of reporting
information about its businesses. Based upon the criteria described in SFAS 131,
the Company now reports three business segments, Optical Fiber, Specialty
Products and Cable. All prior periods presented have been restated in accordance
with SFAS 131.
The Company conducts its operations through two business segments -
7
<PAGE>
Optical Fiber and Specialty Products. A third segment, Cable, was sold in
December 1996 in conjunction with the formation of General Photonics. SpecTran
retains a 50% equity interest in General Photonics and SpecTran's share of
General Photonics for 1997 and 1998 is reported on the equity method.
Optical Fiber develops, manufactures and markets multimode and single-mode
fiber for data communications and telecommunications applications.
Specialty Products develops, manufactures and markets multimode and
single-mode fiber and value-added fiber optic products for industrial,
transportation, communication, medical applications and geophysical.
Cable develops, manufactures and markets communications-grade fiber optic
cable primarily for the customer premises market.
Summarized Financial information by business segment for the three months
ended March 31 is as follows (in thousands):
REVENUES
<TABLE>
1999 1998
---- ----
<S> <C> <C>
Optical Fiber (see A) $ 13,278 $ 10,756
Specialty Products 7,102 4,356
------------ ---------
$ 20,380 $ 15,112
============ =========
</TABLE>
INCOME (LOSS) FROM OPERATIONS
<TABLE>
1999 1998
---- ----
<S> <C> <C>
Optical Fiber $ 1,094 $ 1,416
Specialty Products 1,438 320
Corporate (1,048) (935)
---------- ---------
$ 1,484 $ 801
========= ========
</TABLE>
ASSETS
<TABLE>
1999 1998
---- ----
<S> <C> <C>
Optical Fiber $ 72,204 $ 72,447
Specialty Products 20,266 19,953
Cable (Investment in JV) 3,205 3,458
Corporate 12,559 9,561
----------- ---------
$ 108,234 $ 105,419
=========== =========
</TABLE>
DEPRECIATION
<TABLE>
1999 1998
---- ----
<S> <C> <C>
Optical Fiber $ 1,232 $ 725
Specialty Products 385 401
Corporate 203 160
------------ -----------
$ 1,820 $ 1,286
=========== ===========
</TABLE>
8
<PAGE>
CAPITAL EXPENDITURES
<TABLE>
1999 1998
---- ----
<S> <C> <C>
Optical Fiber $ 865 $ 6,250
Specialty Products 17 963
Cable -- --
Corporate 298 100
------------ -------------
$ 1,180 $ 7,313
============ ============
</TABLE>
A) Due to a change in accounting treatment of certain fiber sales, sales and
cost of sales for the first quarter of 1998 was reduced by $115,000. This
change had no effect on previously reported net income or earnings per
share.
8. SUBSEQUENT EVENTS
George J. Roberts was appointed Senior Vice President, Chief Financial
Officer, Secretary and Treasurer of the Company as of April 1999, succeeding
John Rogers who had been the Acting Chief Financial Officer since November 1998.
9. CONTINGENCIES
On November 6, 1998, the Company announced that it would contest a
complaint filed in the United States District Court in Boston, MA on October 2,
1998, purportedly as a class action suit. Titled Cruise v. Cannon, et al., the
complaint alleges that the Company and three of its current or former officers
and directors violated securities laws by misrepresenting the Company's
financial condition and financial results during 1998. The suit purports to be a
class action on behalf of all individuals who purchased the Company's stock on
the open market from February 25, 1998 to July 17, 1998. The suit alleges, among
other things, that there were public misrepresentations or failures to disclose
material facts during that period which allegedly artificially inflated the
price of the Company's common stock in the marketplace. The complaint seeks an
undisclosed amount of compensatory damages and costs and expenses, including
plaintiff's attorney's fees and such further relief as the Court may deem just
and proper. The Company believes the action is totally without merit, believes
that it has highly meritorious defenses and it intends to defend itself
vigorously.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31,
1998
Overview for the Results of the March 1999 Quarter
- --------------------------------------------------
First quarter net income was $233,000 or $.03 per diluted share compared
with earnings of $864,000 or $.12 per diluted share for the same period last
year. The Company recognized record sales of $20.4 million, up 35% from the
quarter ended March 1998.
As compared to the same period last year, in summary, the lower earnings
were attributable to a lower overall margin as a percentage of sales, the loss
of income from the multi-year Corning settlement and increased interest expense
as a result of the Company's outstanding long-term debt.
Sales and income from operations at SpecTran Specialty improved over last
year's results attributable in large part to strong demand for specialty optics
products and improved margins. The improved margins resulted from management and
operational changes implemented in the second half of 1998.
Sales volume was up at SpecTran Communication with fiber production
increasing 54% as compared to the same period in 1998 primarily due to added
capacity and continued yield improvements. Income from operations for the first
quarter continued to be adversely affected by price erosion for standard
communication fibers and remaining costs associated with the new hybrid vapor
deposition (HVD) process coming on line.
General Photonics, the Company's cabling joint venture with General
Cable, incurred a loss for the quarter due to continued pricing pressures and
lack of volume. General Photonics is continuing to implement cost control
measures.
Results of Operations
The following table sets forth, for the periods indicated, certain
financial data as a percentage of net sales:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1999 1998
---- ----
<S> <C> <C>
Net Sales 100.0% 100.0%
Cost of Sales 73.9 66.2
---- ----
Gross Profit 26.1 33.8
Selling and Administrative Expenses 15.1 20.7
Research and Development Cost 3.7 7.8
--- ---
Income from Operations 7.3 5.3
Other income (Expense), net (3.5) 5.5
---- ---
Income before Income Taxes and Equity in Joint Venture 3.8 10.8
Loss from Joint Venture (1.9) (1.7)
---- ----
Income before Income Taxes 1.9 9.1
Income Tax Expense (0.7) (3.4)
----- ----
Net Income 1.2% 5.7%
==== ====
</TABLE>
10
<PAGE>
Net Sales
Net sales increased $5.3 million, or 35% from $15.1 million for the three
months ended March 31, 1998, to $20.4 million for the three months ended March
31, 1999. Sales volume for both SpecTran Communication and SpecTran Specialty
achieved record growth over the same period last year. Sales of the Company's
multimode products increased significantly, while there was moderate growth in
its single-mode product line. Sales growth continued to be adversely affected by
lower unit selling prices for both single-mode and multimode fiber due to the
highly competitive market conditions caused by an industry-wide oversupply
condition. Although the rate of price erosion for optical fiber has slowed in
the last few months, some further deterioration is possible during the remainder
of 1999. Additionally, sales of the Company's specialty optics products,
including fiber cable and assembly, experienced significant growth as compared
to the same period last year.
Gross Profit
Gross Profit increased $210,000, or 4% from $5.1million for the three
months ended March 31, 1998 to $5.3 million for the three months ended March 31,
1999. As a percentage of net sales, the gross profit decreased to 26.1% for the
period ended March 31, 1999 from 33.8% for the three months ended March 31,
1998. The decrease in gross profit, as compared to last year, was largely
impacted by industry-wide pricing pressure for standard communication fiber
products, particularly as it relates to the multimode product line and remaining
costs associated with the HVD process. These factors were partially offset by
improved margins at SpecTran Specialty and lower royalty expenses. As a
percentage of sales, royalty expense decreased from 4.1% for the first quarter
in 1998 to 2.1% for the first quarter in 1999 primarily due to an increase in
first quarter 1999 net sales not subject to royalty.
Selling and Administration
Selling and administrative expenses were essentially flat at $3.1
million on a quarter to quarter comparison. As a percentage of sales, selling
and administrative expenses decreased to 15.1% for the three months ended March
31, 1999 from 20.7% for the same period last year.
Research and Development
Research and development costs decreased by $420,000, or 35.8% from $1.2
million for the three months ended March 31, 1998 to $0.8 million for the three
months ended March 31, 1999 for two main reasons. During 1998 increased levels
of research and development resources were deployed in bringing the HVD
production process on line and during 1999 SpecTran Specialty restructured the
organization resulting in some expenses being realigned to cost of sales from
research and development. As a percentage of sales, research and development
costs decreased from 7.8% for the three months ended March 31, 1998 to 3.7% for
the three months ended March 31, 1999. The Company continues its initiative to
improve manufacturing costs and product performance in both multimode and
single-mode product lines, while developing new special performance fiber
products and alternative process technologies.
Other Income (Expense), net
Other income (expense) decreased unfavorably by $1.6 million for the three
months ended March 31, 1999 compared to the same period for 1998. This was
attributable to the absence of approximately $900,000 of other income from the
Company's 1998 settlement of a multi-year supply contract with Corning, which is
non-recurring for 1999. Additionally, the Company's interest expense increased
by $612,000, or 492% as compared to the same period last year, due to an
increase of $165,000, or 29% for the interest expense on the Company's long-term
debt and the lack of $447,000 of capitalized interest, which offsets interest
expense, associated with the Company's capacity expansion programs. Interest
income decreased by $86,000, or 75% for the current period as compared to the
same period last year.
11
<PAGE>
Income Taxes
A tax provision of 39.0% of pre-tax income was provided for the three
months ended March 31, 1999 compared to a tax provision of 37.4% of pre-tax
income for the comparable period in 1998. The lower effective tax rate for the
1998 period was due to the Company benefiting from a reduction in valuation
allowance.
Loss from Equity in Joint Venture
The Company realized a loss of $382,000 and $252,000, for the three
months ended March 31, 1999 and 1998 respectively, from its equity in General
Photonics, the joint venture formed in December 1996 with General Cable. The
loss was due to continued pricing pressures and lack of volume.
Net Income
Net income for the three months ended March 31, 1999 decreased $631,000 or
73% as compared to the same period in 1998. Reduced net income was primarily
because of higher interest expense, the loss of income associated with the
Corning settlement, and increased loss incurred from the Company's joint
venture.
Liquidity and Capital Resources
As of March 31, 1999, the Company had approximately $4.8 million of
cash. Additionally, the Company has a $20.0 million revolving credit agreement
with its principal bank maturing in April 2000. As of March 31, 1999 the
Company had borrowed $11.0 million against the revolving credit agreement.
The Company has a scheduled debt principal repayment of $3.2 million on
December 26, 1999.
The Company's working capital position at March 31, 1999 was $13.6
million with a current ratio of 1.82 to 1.
During the first three months of 1999 the Company generated $3.2
million in positive cash flow from operating activities and borrowed $1.0
million under its revolving credit agreement. The Company invested $1.2 million
in the acquisition of machinery and equipment.
The Company is continuing its capacity expansion, which will require
approximately $2.0 million in capital expenditures during 1999, resulting in
total expenditures for capacity expansion since 1996 of approximately $45.0
million for SpecTran Communication and approximately $12.0 million for SpecTran
Specialty, including equipment purchases. When fully operational, the expansion
at SpecTran Communication will increase its capacity by more than 100% from 1996
levels. The expansion at SpecTran Specialty increased capacity by more than 50%.
The Company intends to finance its capital and operational needs for the
remainder of the year through a combination of cash flow from operations and
borrowings, assuming the Company continues to meet its lenders revised
covenants. The Company is exploring various financial alternatives, including
seeking additional capital or entering into strategic alliances in an attempt to
reduce its debt. The Company believes that successful completion of one or more
of these alternatives and/or renewal or extension of its revolving credit
agreement is necessary to meet its longer-term cash requirements.
The Year 2000 Issue
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of the
Company's information technology systems (which the Company relies on to monitor
12
<PAGE>
and manage its operations, accounting, sales and administrative functions), such
as computers, servers, networks, and software ("IT Systems") and other systems
that use embedded microchip technology ("Non-IT Systems") that are date
sensitive may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in system failure or miscalculations causing disruption
of operations. Similarly, the date-sensitive IT Systems and Non-IT Systems of
third party suppliers or customers with whom the Company has material
relationships could experience similar malfunctions which could, in turn, have a
material adverse impact on the Company.
The Company has completed an enterprise-wide assessment of all mission
critical IT Systems and Non-IT Systems to evaluate the state of its preparedness
for the Year 2000. The Company has established teams by business unit to address
the Year 2000 issue. The Company has completed a significant portion of the
Non-IT Systems remediation in connection with the recent capacity expansion at
both facilities. A significant portion of production equipment was replaced or
upgraded as part of this expansion. The Company has revised its estimate for
Year 2000 spending down to approximately $1.0 million from $1.2 million. This
includes $222,000 for software, which will be expensed in 1999. The plan calls
for remediation to be complete on all systems critical to operate the business
by July 1999, with the remediation of the remaining non-critical systems
expected to be complete by the end of the third quarter. The Company estimates
that it is 80% complete with its remediation efforts for the Year 2000. The
costs of the project and the date the Company plans to complete Year 2000
modifications are based on management's best estimates. However, there can be no
guarantee that these estimates will be achieved and actual results could differ
materially from those plans. The Company presently believes that with
modifications to existing software and conversions to new software, the Year
2000 issue can be mitigated. However, if such modifications and conversions are
not made or are not completely timely, the Year 2000 issue could have a material
adverse impact on the operations of the Company. The Company is developing
contingency plans in case its remediation efforts are unsuccessful. The Company
expects to complete the contingency plans in July 1999 in conjunction with the
implementation and testing of the critical business systems.
The Company has initiated formal communications with a substantial
majority of its significant customers and suppliers to determine their plans to
address the Year 2000 issue. While the Company expects a successful resolution
of all issues there can be no guarantee that the systems of other companies on
which the Company relies will be completed in a timely manner or that these
issues would not have a material adverse effect on the Company.
Forward-Looking Statements
This document contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities and Exchange Act of 1934, as amended, which are intended
to be covered by the safe harbors created thereby. Investors are cautioned that
all forward-looking statements involve risks and uncertainties that may cause
results to differ materially from expectations, including without limitation,
the ability of the Company to market and develop its products, general economic
conditions and competitive conditions in markets served by the Company.
Forward-looking statements include, but are not limited to, global economic
conditions, product demand, competitive products and pricing, manufacturing
efficiencies, cost reductions, manufacturing capacity, facility expansions and
new plant start up cost, the rate of technology change and other risks. Although
the Company believes that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions could be
inaccurate, and therefore, there can be no assurance that the forward-looking
statements included in this filing will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements included
herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved.
13
<PAGE>
Recent Accounting Pronouncements
In June 1998, the Financial Standard Accounting Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the Balance Sheet
and measure those instruments at fair value. SFAS No. 133 is effective for
fiscal year beginning after June 15, 1999. The Company is currently evaluating
SFAS No. 133 and has not determined the impact on the Company's Consolidated
Financial Statements.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Footnote 9 of Financials.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) 10.123 Employment Agreement executed as of April 1, 1999 between SpecTran
Corporation and George Roberts.
(b) Reports on Form 8-K
Current Report on Form 8-K dated February 11, 1999 with Exhibit
10.111-Patent License Agreement between Lucent Technologies and
SpecTran Communication dated as of October 30, 1998. (The Company has
been granted confidential treatment for portions of this Exhibit.)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
SPECTRAN CORPORATION
(Registrant)
Date: May 14, 1999 BY:
/s/ Charles B. Harrison
------------------------
Charles B. Harrison
President and
Chief Executive Officer
Date: May 14, 1999 BY:
/s/ George J. Roberts
----------------------
George J. Roberts
Senior Vice President,
Chief Financial Officer,
Secretary and Treasurer
15
<PAGE>
1
9903.23-1
Exhibit 10.123
GREMPFIN.323
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, executed as of April 1, 1999, between SpecTran
Corporation, a Delaware corporation (hereinafter referred to as the
"Corporation"), and George Roberts (hereinafter referred to as "Executive").
W I T N E S S E T H:
WHEREAS, Executive desires to be employed by the Corporation and the
Corporation desires to enter into this employment agreement with Executive.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto agree with each other as follows:
1. Employment. (a) The Corporation agrees to and does hereby employ
Executive, and Executive agrees to and does hereby accept employment by the
Corporation, as Senior Vice President, Chief Financial Officer, Secretary and
Treasurer of the Corporation, subject to the supervision and direction of the
Chief Executive Officer and/or Board of Directors of the Corporation. It is also
1
<PAGE>
understood that Executive may also serve simultaneously in an executive capacity
in one or more Affiliates1 of the Corporation. The term of Executive's
employment hereunder will be for the one year period commencing on April 1,
1999, and ending at midnight on the 31st day of March, 2000 (the "Base Term").
The Base Term shall be automatically renewed on a daily basis so that on each
date during which Executive is employed under this Agreement the remaining term
shall be a period of one year terminating at midnight of the first anniversary
of the day immediately preceding such date, unless at any time the outside
(i.e., non-employee) members of the Corporation's Board of Directors terminate
the automatic daily renewal feature of this Agreement as provided in Article
1(b) below. The Base Term and all renewals thereof shall be deemed the
"Employment Period" and shall hereinafter be referred to as such.
(b) At any time during the Employment Period the outside (i.e.,
non-employee) members of the Corporation's Board of Directors may by resolution
terminate the automatic daily renewal of this Agreement and set a termination
date which shall be midnight of the first anniversary of the date immediately
preceding the day on which such resolution was adopted (the "Termination Date").
1 For the purpose of this Agreement, an "Affiliate" of the Corporation shall be
deemed to be any corporation or other legal entity which controls the
Corporation, which is controlled by the Corporation, or which is under common
control with the Corporation, or any corporation or other legal entity in which
the Corporation directly or indirectly has an ownership interest (whether of the
vote or economic interest or both) of more than twenty-five percent (25%).
2
<PAGE>
Written notice ("Notice of Nonrenewal") of the outside directors' resolution
setting a Termination Date shall be executed by each outside director and
delivered to Executive within two business days of the adoption of such
resolution. A Notice of Nonrenewal may be rescinded at any time by resolution of
the outside members of the Corporation's Board of Directors executed and
delivered in the same fashion.
(c) If, following delivery to Executive of the Notice of Nonrenewal,
neither the Corporation nor Executive terminates Executive's employment under
Article 12 below, this Agreement shall continue in full force and effect for the
one-year period set forth in the Notice of Nonrenewal, and shall terminate on
the Termination Date.
2. Scope of Duties/Headquarters/Other Directorships.
(a) Executive agrees that as Senior Vice President, Chief Financial
Officer, Secretary and Treasurer of the Corporation, or in such other senior
executive position to which he may be appointed, he will devote his full time
and effort during the Employment Period to the performance of the duties of such
office.
(b) Executive shall make his business headquarters at Sturbridge,
Massachusetts but will also render services at other locations where the
Corporation or its Affiliates have facilities or do business. Executive shall
3
<PAGE>
relocate should the Corporation change its headquarters. Executive shall
undertake such travel as the Corporation may request.
(c) It is understood and agreed that Executive will advise the
Corporation of his intentions to act as a director of other corporations and may
hold such directorships and shall be permitted to devote such time thereto as
may reasonably be necessary to discharge the ordinary duties attendant upon any
such directorships. Executive agrees that he will, upon request of the Board of
Directors of the Corporation, resign from any such directorship notwithstanding
that the Corporation may have previously approved his accepting or retaining
such directorship.
3. Employment Period - Annual Compensation. (a) Annual Executive
Compensation. For the services and duties to be rendered and performed by
Executive during the Employment Period, the Corporation agrees to pay Executive
compensation at the rate of not less than Fifteen Thousand Five Hundred dollars
and no cents ($15,500.00) per month, for a total of One Hundred Eighty Six
Thousand dollars and no cents ($186,000.00) per year, which amount may be
increased by action of the Board of Directors at such time or times and in such
amount or amounts as it may in its sole discretion determine (this annual amount
to be referred to as "Base Annual Executive Compensation"). Base Annual
Executive Compensation shall be payable in equal semi-monthly installments. The
4
<PAGE>
Corporation shall reimburse Executive for all expenses reasonably and
necessarily incurred in connection with his employment by the Corporation,
including traveling expenses while absent, on the Corporation's business, from
his business headquarters. The Company will pay to Executive Fifty Thousand
dollars ($50,000), grossed up by one-third to offset taxes, for expenses
relating to Executive's relocation to Sturbridge, Massachusetts, payable in two
equal lump sums of Twenty Five Thousand dollars ($25,000) each, plus the tax
gross up, with the first payment to be made during Executive's first week of
employment by the Corporation, and the second payment to be made at the time of
the closing of the sale of Executive's home in Atlanta, Georgia. Executive will
be reimbursed, based upon receipts, for reasonable temporary lodging in
Sturbridge, Massachusetts for a period of up to six weeks. Executive will
receive a monthly automobile allowance of Eight Hundred Twenty Five Dollars and
no cents ($825.00).
(b) Bonus. Executive will be eligible to participate in the
Corporation's key employee incentive plan which, based upon the achievement of
certain specified objectives, will entitle Executive, while in the position of
Chief Financial Officer, to a target bonus equal to thirty percent (30%) of the
Base Annual Executive Compensation with additional opportunities to earn up to a
maximum of seventy five percent (75%) of Executive Base Annual Executive
Compensation. Executive will also be eligible to participate in the
5
<PAGE>
Corporation's all employee profit sharing plan, which entitles Executive to earn
up to ten percent (10%) of Base Annual Executive Compensation as additional
compensation. Notwithstanding anything herein to the contrary, Executive
understands and agrees that the plans referred to in this Section 3(b) are
subject to amendment or termination at the discretion of the Board of Directors.
(c) Stock Options. At the first meeting of the Compensation and
Incentive Stock Option Committee after Executive's first day as a full time
employee of the Corporation (the "First Day"), Executive will be granted
incentive stock options to purchase up to an aggregate of Twenty Five Thousand
(25,000) shares of common stock at a per share exercise price equal to the
closing price of the Corporation's common stock on the First Day, as reported on
the NASDAQ National Market (the "Closing Price"). Such options will vest at the
rate of one-third per year for three years, commencing on the first anniversary
of the date of grant, and will have a term of ten years.
4. Vacation. Executive shall be entitled to a vacation each year equal
to one (1) month. Said vacation may be taken all at once or weekly at the sole
discretion of Executive.
5. Secrets. Executive agrees that any trade secrets or any other
proprietary information (whether in written, verbal or any other form) relating
6
<PAGE>
to the existing or contemplated business and/or field of interest of the
Corporation or any of its Affiliates and any proprietary information (whether in
written, verbal or any other form) of any of the Corporation's customers,
suppliers, licensor or licensees, including, but not limited to, information
relating to inventions, disclosures, processes, systems, methods, formulae,
patents, patent applications, machinery, materials, notes, drawings, research
activities and plans, costs of production, contract forms, prices, volume of
sales, promotional methods, lists of names or classes of customers, which he has
heretofore acquired during his employment by the Corporation or any of its
Affiliates or which he may hereafter acquire during his employment with the
Corporation or any of its Affiliates, in both cases whether during or outside
business hours, whether or not on the Corporation's premises, as the result of
any disclosures to him, or in any other way, shall be regarded as held by him in
a fiduciary capacity solely for the benefit of the Corporation, its successors
or assigns, and shall not at any time, either during the term of this Agreement
or thereafter, be disclosed, divulged, furnished, or made accessible by him to
anyone, or be otherwise used by him, except in the regular course of business of
the Corporation or its Affiliates. Upon termination of his employment, Executive
shall return or deliver to the Corporation all tangible forms of such
information in his possession or control, and shall retain no copies thereof.
Information shall, for purposes of this Agreement, be considered to be secret
not known by the trade generally, even though such information may have been
disclosed to one or more third parties pursuant to any business discussion or
agreement, including distribution agreements, joint research agreements or other
agreements entered into by the Corporation or any of its Affiliates.
6. Patents. Executive agrees to and does hereby sell, assign, transfer
and set over to the Corporation, its successors, assigns, or Affiliates, as the
case may be, all his right, title, and interest in and to any inventions,
improvements, processes, patents or applications for patents which he develops
or conceives individually or in conjunction with others during his employment by
the Corporation, or, having possibly conceived same prior to his employment, may
complete while in the employ of the Corporation or any of its Affiliates, in
both cases whether during or outside business hours, whether or not on the
Company's premises, which inventions, improvements, processes, patents or
applications for patents are (i) in connection with any matters within the scope
of the existing or contemplated business of the Corporation or any of its
Affiliates, or (ii) aided by the use of time, materials, facilities or
information paid for or provided by the Corporation or its Affiliates, all of
the foregoing to be held and enjoyed by the Corporation, its successors, assigns
or Affiliates, as the case may be, to the full extent of the term for which any
Letters Patent may be granted and as fully as the same would have been held by
8
<PAGE>
Executive, had this Agreement, sale or assignment not been made. Executive will
make, execute and deliver any and all instruments and documents necessary to
obtain patents for such inventions, improvements and processes in any and all
countries. Executive hereby irrevocably appoints the Corporation to be his
attorney in fact in the name of and on behalf of Executive to execute all such
instruments and do all such things and generally to use the Executive's name for
the purposes of assuring to the Corporation (or its nominee) the full benefit of
its rights under the provisions of Articles 5 and 6.
7. Disability. (a) In the event Executive becomes partially disabled,
or becomes totally disabled (as determined in accordance with Article 7(c)
below) and such total disability has continued for less than six (6) full
consecutive calendar months, then the Corporation shall continue during the
Employment Period to pay Executive at the rate of his Base Annual Executive
Compensation as set forth in Article 3 and continue the benefits provided for
him in Articles 8 and 9 hereof. The Corporation shall retain the right,
notwithstanding Executive's partial disability, to deliver a Notice of
Nonrenewal during such time as such partial disability continues, unless
Executive has already received a Notice of Nonrenewal, in which event such prior
Notice of Nonrenewal shall remain effective notwithstanding Executive's partial
disability. In any event, the Corporation's obligations in the event of
Executive's partial disability shall terminate upon the end of the Employment
Period.
9
<PAGE>
(b) In the event Executive becomes totally disabled (as determined in
accordance with Article 7(c) below), and such total disability has continued for
six (6) full consecutive calendar months or more, then for so long thereafter
during the Employment Period as such total disability shall continue or for a
period of one (1) year, whichever is longer, Executive shall be paid at
seventy-five percent (75%) of the rate of his Base Annual Executive Compensation
as set forth in Article 3 hereof. For purposes of determining the balance of the
Employment Period under this Article 7(b), Executive shall be deemed to have
received a Notice of Nonrenewal effective on the last day of said six-month
period, unless he has already received a Notice of Nonrenewal, in which event
such prior Notice of Nonrenewal shall be controlling.
(c) For purposes of this Agreement, determination of whether Executive is
or is not totally disabled shall be made as follows: (i) Executive's inability,
physical or mental, for whatever reason, to be able to perform his duties to the
Corporation shall be total disability; and
(ii) If any difference shall arise between the Corporation and Executive as
to whether he is totally disabled, such difference shall be resolved as follows:
10
<PAGE>
Executive shall be examined by a physician appointed by the Corporation and a
physician appointed by Executive. If said two physicians shall disagree
concerning whether Executive is totally disabled, that question shall be
submitted to a third physician, who shall be selected by such two physicians.
The medical opinion of such third physician, after examination of Executive and
consultation with such other two physicians, shall decide the question.
(d) Should Executive become totally disabled then he may by action of
the Board of Directors be removed from his position and employment with the
Corporation.
8. Death. In the event of the death of Executive during the Employment
Period, the Corporation shall continue to pay Executive's Base Annual Executive
Compensation for a period of one (1) year from the date of death. The salary
payment will be made to the wife of Executive or if no wife shall survive
Executive, to his estate.
9. Employee Benefits. (a) Executive may participate in any life
insurance, hospitalization or surgical program, or insurance program presently
in effect or hereafter adopted by the Corporation, to the extent, if any, that
he may be eligible to do so under the provisions of such plan or program. The
Corporation may terminate, modify, or amend any such plan or program, in the
manner and to the extent permitted therein, and the rights of Executive under
11
<PAGE>
any such plan or program shall be subject to any such right of termination,
modification, or amendment. To the extent any payments under any such plan or
program are made to Executive because he is disabled, such amounts shall be
credited against amount due to Executive under Article 7.
(b) The Corporation shall provide Executive with term life insurance
for which Executive may designate one or more beneficiaries, with a death
benefit equal to Executive's Base Annual Executive Compensation. To the extent
that such life insurance is not provided in the Corporation's existing employee
benefits package, the Corporation will endeavor to take out supplemental
coverage, provided that Executive shall cooperate in obtaining such coverage,
that Executive is not uninsurable, and that the premium is not unreasonably
high.
(c) For the sake of clarification, and notwithstanding any other
provision of this Agreement, it is understood and agreed that all benefits
provided to Executive under this Agreement shall be provided to the extent that
they exceed any employee benefit provided to Executive other than specifically
through this Agreement, such as the programs, plans, etc. referred to in Article
9(a) above. The benefits provided under this Agreement shall be supplemental to
benefits provided otherwise to Executive by the Corporation, and shall not be
provided to the extent that they are duplicative.
12
<PAGE>
1 For the purpose of this Agreement, an "Affiliate" of the Corporation shall be
deemed to be any corporation or other legal entity which controls the
Corporation, which is controlled by the Corporation, or which is under common
control with the Corporation, or any corporation or other legal entity in which
the Corporation directly or indirectly has an ownership interest (whether of the
vote or economic interest or both) of more than twenty-five percent (25%).
10. Covenant Not to Solicit Employees. During the one-year period
immediately following termination of Executive's employment with the Company
(the "One-Year Period"), Executive agrees that, if such agreement is requested
by the Company, he will not (a) solicit any past, present or future customers of
the Corporation in any way relating to any business in which the Corporation was
engaged during the term of his employment, or which the Corporation planned,
during the term of his employment, to enter, or (b) induce or actively attempt
to influence any other employee or consultant of the Company to terminate his or
her employment or consultancy with the Company. During the One-Year Period,
provided that the Company has requested the non-competition agreement referred
to above with respect to said period, Executive shall be paid, in the same
manner as paid while Executive was an employee, compensation equal to
seventy-five percent (75%) of Executive's Base Annual Executive Compensation and
employee benefits he received during the last year of employment with the
Company, and, in addition, the Company shall have the right to call upon
Executive's services as a consultant. In the event that Executive violates any
provision of this Article 10, then in addition to any other remedies available
to the Corporation, the Corporation shall have the right immediately to
terminate any payments or benefits provided or to be provided to Executive under
this Agreement.
13
<PAGE>
11. Assignment. This Agreement may be assigned by the Corporation as
part of the sale of substantially all of its business; provided, however, that
the purchaser shall expressly assume all obligations of the Corporation under
this Agreement. Further, this Agreement may be assigned by the Corporation to an
Affiliate, provided that any such Affiliate shall expressly assume all
obligations of the Corporation under this Agreement, and provided further that
the Corporation shall then fully guarantee the performance of the Agreement by
such Affiliate. Executive agrees that if this Agreement is so assigned, all the
terms and conditions of this Agreement shall remain between such assignee and
himself with the same force and effect as if said Agreement had been made with
such assignee in the first instance.
12. Termination.
(a) Survival. The provisions of Articles 5, 6, 10, 12 and 14 shall survive
the termination of this -------- Agreement.
(b) Termination by Executive. Subject to the provisions of Article
12(c)(iii) regarding a Change in Control, if at any time during the Employment
Period (whether or not Executive has received a Notice of Nonrenewal), Executive
14
<PAGE>
elects to terminate his employment with the Corporation, then the Corporation's
obligations to Executive under this Agreement shall be limited to the Base
Annual Executive Compensation and benefits earned up to the date of Executive's
departure.
(c) Termination Without Cause. (i) Subject to the provisions of Article
15
<PAGE>
12(c)(ii) below, and provided there has been no Change in Control (as defined in
Article 12(c)(v) below), in the event the Corporation dismisses Executive
without Cause from employment in a senior executive capacity with the
Corporation, the Corporation shall continue to fulfill its obligations under
this Agreement until the later of: (A) the date six months following Executive's
dismissal, or (B) the end of the Employment Period. For purposes of determining
the end of the Employment Period under this Article, Executive shall be deemed
to have received a Notice of Nonrenewal effective on the date of his dismissal
without Cause, unless he has already received a Notice of Nonrenewal, in which
event such prior Notice of Nonrenewal shall be controlling.
(ii) Provided there has been no Change in
Control (as defined in Article
12(c)(v) below), if Executive takes other employment during the six-month period
following his dismissal without Cause, then the Corporation's obligation to
Executive shall be limited to payment of Executive's Base Annual Executive
Compensation for the balance of said six-month period. Provided there has been
no Change in Control (as defined in Article 12(c)(v) below), if Executive takes
other employment after the end of the six-month period following his dismissal
without Cause but before the end of the Employment Period, the Corporation's
obligations to Executive under this Agreement shall cease upon Executive's
taking such other employment.
(iii) In the event that a Change in Control
occurs during the Employment
Period and either [A] Executive is dismissed without Cause from employment in a
senior executive capacity up to and including twelve (12) months from such
Change in Control or [B] Executive voluntarily leaves the employ of the
Corporation up to and including twelve (12) months from such Change in Control,
then in either case the Corporation shall continue to fulfill its obligations
under this Agreement for a period of twelve (12) months from such dismissal
without Cause or voluntary departure, as the case may be; provided, however,
that if Executive takes other employment during said twelve-month period, the
Corporation's obligation to Executive for the balance of said twelve-month
period shall be limited to payment of Executive's Base Annual Executive
Compensation.
(iv) Notwithstanding anything to the contrary in this Agreement, the
Corporation, in its sole and absolute discretion, may accelerate the payment of
any amounts payable under Article 12(c) hereof to Executive, provided, however,
16
<PAGE>
that accelerating such payments does not affect Executive's eligibility to
continue his insurance benefits on the same basis (both with respect to coverage
and contributions) as the Corporation's active employees until such time as he
would have received the last amount payable under Article 12(c) hereof had
payment thereof not been accelerated pursuant to this Article 12(c)(iv).
(v) "Change in Control" shall mean [A] the date of public announcement that
a person has become, without the approval of the Corporation's Board of
Directors, the beneficial owner of 20% or more of the voting power of all
securities of the Corporation then outstanding; [B] the date of the commencement
of a tender offer or tender exchange by any person, without the approval of the
Corporation'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 Corporation then outstanding; or [C] the date on which
individuals who constituted the Board of Directors of the Corporation on the
date this Agreement was adopted cease for any reason to constitute a majority
thereof, provided that any person becoming a director subsequent to such date
whose election or nomination was approved by at least three quarters of such
incumbent Board of Directors shall be considered as though such person were an
incumbent director.
17
<PAGE>
(vi) "Cause" shall mean [A] breach of Executive's obligations under Article
5 or 10 of this Agreement, [B] stealing from the Corporation or [C] Executive's
conviction of a felony.
(d) Executive agrees not to apply for or receive unemployment
insurance benefits while receiving any benefits under this contract.
13. Notices. All notices required or permitted to be given hereunder
shall be mailed by certified mail or delivered by hand to the party to whom such
notice is required or permitted to be given hereunder. If mailed, any such
notice shall be deemed to have been given when mailed as evidenced by the
postmark at point of mailing. If delivered by hand, any such notice shall be
deemed to have been given when received by the party to whom notice is given, as
evidenced by written and dated receipt of the receiving party.
Any notice to the Corporation or to any assignee of the Corporation
shall be addressed as follows:
SpecTran Corporation
50 Hall Road
Sturbridge, MA 01566
Attn: Chief Executive Officer
With an additional copy to:
Ira S. Nordlicht, Esq.
Nordlicht & Hand
645 Fifth Avenue
New York, New York 10022
18
<PAGE>
Any notice to Executive shall be addressed to the address appearing on
the records of the Corporation at the time such notice is given.
Either party may change the address to which notice to it is to be
addressed, by notice as provided herein.
14. Applicable Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the Commonwealth of Massachusetts without giving
effect to the principles of conflicts of law.
15. Effective Date. This Agreement shall become effective as of the
date first mentioned in this Agreement.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed the above
Agreement as of the day and year first above written.
SPECTRAN CORPORATION
s/s Michelle J. Cristo By s/s Charles B. Harrison
NOTARY Name: Charles B. Harrison
Title: President and
Chief Executive Officer
S/s David Calvillo s/s George Roberts
NOTARY George Roberts
20
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