Text from 10K 2/24/97 Technology Agreement. As a part of its formation, the Company entered into
a technology agreement with Xerox Corporation (Xerox) and Spectra-Physics, Inc.
(Spectra-Physics) pursuant to which, among other things, SDL granted to
Spectra-Physics and Xerox an irrevocable, royalty-free, worldwide, non-exclusive
license to certain patented and non- patented technology developed by SDL. On
March 20, 1995, Spectra-Physics initiated a lawsuit against the Company in Santa
Clara County, California Superior Court, alleging that the Company was refusing
to comply with its obligations under the Technology Agreement. Spectra-Physics
claims that the Technology Agreement requires the Company to transfer and
license to Spectra-Physics all patented and non-patented technology developed by
the Company during a time period extending from the founding of the Company in
1983 until at least June 1993. Spectra-Physics asserts claims against the
Company for breach of contract, promissory estoppel and fraud.
On June 27, 1995, Spectra-Physics filed a first amended complaint, adding
Opto Power Corporation (Opto Power), an affiliate of Spectra-Physics and a
competitor of the Company, as a plaintiff. Opto Power's claims are based in part
on its assertion that it is entitled to access to the Company's technology as a
third party beneficiary of the Technology Agreement, because the Agreement is
alleged to give Spectra-Physics the right to sublicense its subsidiaries.
Spectra- Physics and Opto Power seek remedies of unspecified actual damages,
specific performance and a declaratory judgment regarding the parties' rights
and duties under the Technology Agreement.
The Company answered the First Amended Complaint denying the plaintiffs'
claims and filed a cross-complaint seeking declaratory relief regarding its
obligations under the Technology Agreement against Spectra-Physics and Opto
Power.
Discovery is being completed. Trial of the matter is presently scheduled
for April 21, 1997. The Company believes that it has meritorious defenses to the
claims of Spectra-Physics' and Opto Power. There can be no assurance, however,
that the Company will achieve a successful result in this litigation. The
litigation has involved and is expected to continue to involve significant
expense to the Company and to divert the attention of the Company's technical
and management
personnel, and the outcome could have a material adverse effect on the Company's
business and results of operations. If the Company does not prevail in such
litigation, the Company could face significant monetary damages and could be
required to license and to transfer SDL trade secrets and technology to
Spectra-Physics and possibly to Opto Power, which is currently manufacturing
optoelectronic devices that compete with a number of the Company's products.
Such a result could significantly impair the Company's competitive advantage in
certain technology areas and with respect to a number of products and could have
a material adverse effect on the Company's business and results of operations.
Then in the annual report.
In 1995 Spectra-Physics,Inc.Spectra and others filed suit against the Company alleging that the Company was refusing to comply with alleged obligations to transfer and license Company technology to them. On Dec 19 and Fev 7th the court orally indicated that it intends to dismiss Spectra's claim for punitive damages and the Company's claims for damages and injunctive relief and has set the matter for trial in April 1997. The company is vigourously contesting the Spectra claim.Management does not believe that its outcome will have a mateial adverse effect on the Company's financial position, results of operations and cash flows and has made no provisions for the ultimate outcome of these mattes in its financial statements.
I guess they are just arguing to keep the technology secrets. Money is not an issue anymore ??
Any one else read the annual report from cover to cover? Any comments?
Regards
Scott |
