<PAGE> 1
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
COMMISSION FILE NO. 9-45123
-----------
C.P. CLARE CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2561471
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
78 CHERRY HILL DRIVE
BEVERLY, MASSACHUSETTS 01915
(Address of principal executive offices) (Zip Code)
(508) 524-6700
(Registrant's telephone number, including area code)
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 such 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
As of December 29, 1996, there were 9,097,534 shares of Common Stock, $.01
par value, outstanding.
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C.P. CLARE CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
----
PART I FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Condensed Balance Sheets 1
Consolidated Condensed Statements of Operations 2
Consolidated Condensed Statements of Cash Flows 3
Notes to Consolidated Condensed Financial Statements 4 - 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8 - 11
PART II OTHER INFORMATION:
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Default Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12 - 13
Signatures 14
<PAGE> 3
<TABLE>
C.P. CLARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
ASSETS DECEMBER 29, 1996 MARCH 31, 1996
------ ----------------- --------------
<S> <C> <C>
Current assets:
Cash, cash equivalents and investments $ 35,758 $ 49,082
Accounts receivable, less allowance for doubtful accounts 17,592 19,471
Inventories (Note 5) 21,114 16,972
Other current assets 3,657 2,938
-------- --------
Total current assets 78,148 88,463
Property, plant and equipment, net 35,520 24,232
Other assets 2,691 4,001
-------- --------
$116,359 $116,696
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabiities:
Short-term borrowings $ 59 $ 1,340
Current portion of long-term debt 1,157 851
Accounts payable 6,566 7,929
Accrued expenses (Note 6) 22,166 12,306
-------- --------
Total current liabilities 29,948 22,426
Long-term debt, net of current portion 2,946 4,034
Other long-term liabilities 3,536 3,624
-------- --------
Total liabilities 36,430 30,084
Commitments and contingencies (Note 9)
Stockholders' equity:
Preferred stock, $.01 par value-
Authorized: 2,500,000 shares
Issued and outstanding: None - -
Common stock, $.01 par value-
Authorized 40,000,000 shares
Issued and outstanding 9,097,534 shares and 8,707,399 shares as of
December 29, 1996 and March 31, 1996, respectively 90 87
Additional paid-in capital 93,432 91,540
Deferred compensation (458) (607)
Accumulated deficit (13,244) (4,791)
Cumulative translation adjustment 109 383
======== ========
Total stockholders' equity 79,929 86,612
-------- --------
$116,359 $116,696
======== ========
The accompanying notes are an integral part of the consolidated condensed financial statements.
</TABLE>
1
<PAGE> 4
<TABLE>
C.P. CLARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- ------------------------------
Dec. 29, 1996 Dec. 31, 1995 Dec. 29, 1996 Dec. 31, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales $31,374 $32,818 $95,431 $94,704
Cost of sales 21,227 22,140 63,437 64,743
------- ------- ------- -------
Gross profit 10,147 10,678 31,994 29,961
Operating expenses:
Selling, general and administrative (Note 8) 7,607 6,080 21,843 17,515
Research and development 1,605 1,181 4,576 3,057
Restructuring cost (credit) (Note 7) (500) - 14,250 -
------- ------- ------- -------
Operating income (loss) 1,435 3,417 (8,675) 9,389
Interest income 384 404 1,285 585
Interest expense (113) (167) (349) (1,156)
Other income (expense), net 48 83 (100) (84)
------- ------- ------- -------
Income (loss) before provision for income taxes 1,754 3,737 (7,839) 8,734
Provision for income taxes 561 1,532 615 3,581
------- ------- ------- -------
Net income (loss) $ 1,193 $ 2,205 $(8,454) $ 5,153
======= ======= ======= =======
Net income (loss) per common and common
share equivalent (Note 3) $ 0.13 $ 0.25 $ (0.94) $ 0.67
======= ======= ======= =======
Weighted average number of common shares and
common share equivalents outstanding (Note 3) 9,392,877 8,863,464 8,950,584 7,677,240
========= ========= ========= =========
The accompanying notes are an integral part of these consolidated condensed financial statements.
</TABLE>
2
<PAGE> 5
<TABLE>
C.P. CLARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
FOR THE NINE MONTHS ENDED
-------------------------
DEC. 29, 1996 DEC. 31, 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (8,454) $ 5,153
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Non-cash portion of restructuring charge 3,500 -
Provision for environmental remediation costs 2,050 -
Depreciation and amortization 3,618 3,486
Gain on sale of property, plant and equipment - (55)
Benefit from deferred income taxes (20) (272)
Compensation expense associated with stock options 148 257
Changes in assets and liabilities:
Accounts receivable 1,589 (2,421)
Inventories (4,302) (5,728)
Other current assets (968) 986
Accounts payable (1,254) (1,334)
Accrued expenses and other liabilities 7,969 (199)
-------- --------
Net cash provided by (used in) operating activities 3,876 (127)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (17,111) (6,956)
Proceeds from sale of property, plant and equipment - 55
-------- --------
Net cash used in investing activities (17,111) (6,901)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments of lines of credit (1,218) (6,178)
Net proceeds from issuance of common stock 214 76,251
Proceeds from exercise of options and warrants 958 1,235
Repurchase of warrants - (3,925)
Payments of principal on long-term debt (572) (11,754)
Tax benefit of disqualifying disposition of incentive stock options 723 -
-------- --------
Net cash provided by financing activities 105 55,629
-------- --------
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS
AND INVESTMENTS (167) 271
-------- --------
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND
INVESTMENTS (13,297) 48,872
Cash, cash equivalents and investments, beginning of period 49,082 1,181
-------- --------
Cash, cash equivalents and investments, end of period $ 35,785 $ 50,053
======== ========
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
Deferred compensation associated with issuance of stock options $ - $ 651
======== ========
Cash paid during the period for:
Interest $ 39 $ 933
======== ========
Income taxes $ 2,338 $ 2,348
======== ========
The accompanying notes are an integral part of these consolidated condensed financial statements.
</TABLE>
3
<PAGE> 6
C.P. CLARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
DECEMBER 29, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
(UNAUDITED)
1. FISCAL PERIODS
--------------
The Company's fiscal year is comprised of either 52 or 53 weeks and ends on
the Sunday closest to March 31 each year. Interim quarters are comprised of 13
weeks unless otherwise noted and end on the Sunday closest to June 30, September
30, December 31 and March 31.
2. INTERIM FINANCIAL STATEMENTS
----------------------------
The unaudited interim financial statements presented herein have been
prepared in accordance with generally accepted accounting principles for interim
financial statements and with the instructions to Form 10-Q and Regulation S-X
pertaining to interim financial statements. Accordingly, these interim financial
statements do not include all information and footnotes required by generally
accepted accounting principles for complete financial statements. The financial
statements reflect all adjustments and accruals which management considers
necessary for a fair presentation of financial position as of December 29, 1996
and results of operations for the three and nine months ended December 29, 1996
and December 31, 1995. The results for the interim periods presented are not
necessarily indicative of results to be expected for any future period. The
financial statements should be read in conjunction with the summary of
significant accounting policies and notes to consolidated financial statements
included in the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1996 as filed with the Securities and Exchange Commission.
3. NET INCOME (LOSS) PER COMMON AND COMMON SHARE EQUIVALENT
--------------------------------------------------------
Net income per common and common share equivalent is computed using the
weighted average number of common shares and dilutive common share equivalents
outstanding during each period. Dilutive common share equivalents consist of
stock options and warrants using the modified treasury stock method. Fully
diluted earnings per share are not presented as the amounts are not materially
different. Net loss per common and common share equivalent is computed using
the weighted average number of common shares outstanding during each period.
4. CASH, CASH EQUIVALENTS AND INVESTMENTS
--------------------------------------
Cash, cash equivalents and investments are carried at cost, which
approximates market. Cash equivalents are short-term, highly liquid investments
with original maturities of less than three months. As of December 29, 1996,
cash, cash equivalents and investments consist principally of overnight and tax
exempt commercial paper and tax exempt variable rate municipal bonds. The
Company has the option to require the issuers of the tax exempt variable rate
municipal bonds to purchase these investments upon 7 days notice.
4
<PAGE> 7
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
5. INVENTORIES
-----------
<TABLE>
Inventories include materials, labor and manufacturing overhead, and are
stated at the lower of cost (first in, first out) or market and consist of the
following at December 29, 1996 and March 31, 1996:
<CAPTION>
DECEMBER 29, MARCH 31,
1996 1996
----------- ----------
<S> <C> <C>
Raw material $10,615 $ 7,675
Work in process 6,590 3,794
Finished goods 3,909 5,503
======= =======
$21,114 $16,972
======= =======
</TABLE>
6. ACCRUED EXPENSES
----------------
<TABLE>
Accrued Expenses consist of the following at December 29, 1996 and March
31, 1996:
<CAPTION>
DECEMBER 29, MARCH 31,
1996 1996
----------- ----------
<S> <C> <C>
Payroll and benefits $ 4,725 $ 5,973
Accrued Restructuring Costs (Note 7) 9,671 -
Environmental Remediation (Note 9) 4,761 2,373
Other 3,009 3,960
======= =======
$22,166 $12,306
======= =======
</TABLE>
7. RESTRUCTURING COSTS (CREDIT)
In September 1996, the Company announced a restructuring of its operations,
primarily in the Company's reed relay business, and recorded a restructuring
charge of $14,750. The restructuring included severance-related costs associated
with workforce reductions, primarily in manufacturing. Also included in the
restructuring was the write-down of certain facilities and intangible assets to
their net realizable value as a result of facilities realignment and the
consolidation of product lines.
Through the third quarter of fiscal 1997, the Company incurred
approximately $4,579 of these restructuring costs. During the third quarter of
fiscal 1997, the Company's restructuring plan was partially altered. A third
party offered to buy the Tongeren Manufacturing Company ("TMC") in Tongeren
Belgium, a reed switch and relay manufacturing operation of the Company, during
the third quarter of fiscal 1997. As a result of the proposed sale of TMC, the
Company's estimated restructuring costs were lowered by approximately $500
during the quarter ended December 29, 1996. As of December 29, 1996, the
Company had $9,671 remaining in accrued restructuring.
The sale of a TMC was consummated in January, 1997. After this
transaction, the Company has a remaining restructuring reserve of $3,771, which
is available to fund other restructuring activities. See Note 8 of Notes
to Consolidated Condensed Financial Statements.
5
<PAGE> 8
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
8. SUBSEQUENT EVENT
----------------
On January 17, 1997, the Company sold all of the stock of its wholly-owned
subsidiary TMC in Tongeren, Belgium to Gunther GmbH for nominal consideration.
TMC has been renamed Gunther Belgium.
As discussed in Note 9 of the Notes to Consolidated Condensed Financial
Statements, the Company has recorded a liability of $500 as of December 29, 1996
to cover the estimated cost of environmental remediation for the Tongeren,
Belgium facility. Upon the sale of TMC, the Company agreed to indemnify Gunther
Belgium for up to $500 for established environmental remediation costs, subject
to certain condition and limitations.
The Company and Gunther Belgium have entered into a long term supply
contract pursuant to which Gunther Belgium will supply its mercury switches and
relays exclusively to the Company, which will continue to offer these products
worldwide through its existing sales channels. Just prior to the sale, the
employees of TMC began a work stoppage and no product is currently being
manufactured at the site. See "Management's Discussion and Analysis of
Financial Conditions and Results of Operation - Certain Factors Affecting
Future Operating Results."
9. COMMITMENTS AND CONTINGENCIES
-----------------------------
Environmental Matters
The Company accrues for estimated costs associated with known environmental
matters, when such costs can be reasonably estimated. The actual costs to be
incurred for environmental remediations may vary from estimates, given the
inherent uncertainties in evaluating and estimating environmental liabilities,
including the possible effects of changing laws and regulations, the stage of
the remediation process and the magnitude of contamination found as the
remediation progresses. Management believes the ultimate disposition of known
environmental matters will not have a material adverse effect upon the
liquidity, capital resources, business or consolidated financial position of the
Company. However, one or more environmental matters could have a significant
negative impact on the Company's consolidated financial results for a particular
reporting period.
(i) United States
In connection with the acquisition of the Clare Division of General
Instrument Corporation ("General Instrument") in 1989, the Company purchased a
manufacturing facility located in Chicago, Illinois. From the acquisition date
until January 1994, the Company used the facility primarily as office space. The
Company believes that any environmental contamination predates the Company's
acquisition of the facility from General Instrument. The Company and General
Instrument jointly retained an independent environmental consulting firm to
assess the remediation requirements and develop a plan to voluntarily remediate
this property in accordance with federal and state law such that the property
could be used for residential purposes. Prior to commencing such voluntary
remediation, the Company and General Instrument entered into a cost-sharing
agreement. However, both parties have reserved their rights to litigate
concerning the final cost-sharing arrangement.
6
<PAGE> 9
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
As of March 31, 1996, the Company had an environmental remediation
accrual of $2,373 and receivable from General Instrument of $1,266 related to
the remediation of environmental contamination discovered at the Chicago
facility. In September 1996, an independent environmental consulting firm
retained by the Company completed their reassessment of the remediation
requirements. Based on the consultant's report and plan of remediation, the
Company accrued an additional $750 for related remediation expenses and
also recorded an additional $700 receivable related to General Instrument's
portion of these expenses.
During the quarter ended December 29, 1996, the Company and General
Instrument began the remediation at the site. The approved clean-up method
produced conditions that were not acceptable to the community. As a result, the
Company has determined the most likely scenario will be to remediate the
property to make it useable as industrial/commercial, rather than residential
property, as originally planned. On March 31, 1995, the Company signed a
purchase and sale agreement to sell this property to a developer for $3,150,
subject to certain conditions, principally the Company's successful remediation
of the property and the attainment of the required zoning ordinances to permit
residential development of this property. Based on the anticipated
industrial/commercial remediation plan, the Company has terminated this purchase
and sale agreement and has accrued an additional $800 to reflect an anticipated
lower net realizable value for the site.
During the nine months ended December 29, 1996, the Company incurred
approximately $172 of remediation costs and related expenses and with the
additional accrual for remediation expenses, the Company has an environmental
remediation accrual of $4,261. As of December 29, 1996, General Instrument
incurred approximately $190 of remediation costs during the nine month period
then ended and, with the additional accrued receivable for remediation expenses,
the receivable from General Instrument is $1,776. Management of the Company,
after consultation with its legal counsel, believes that the realization of this
amount from General Instrument is probable.
As the remediation progresses, the Company and General Instrument will
address contamination that has been found on adjacent sites. Management
continues to analyze the estimated environmental remediation liability and has
accrued additional amounts when known events have required revised estimates.
However, given the current stage of the remediation process and the magnitude of
contamination found at the site and adjacent sites, the ultimate disposition of
this environmental matter could have a significant negative impact on the
Company's consolidated financial results for a future reporting period.
(ii) Belgium
The Company retained an independent environmental consulting firm to assess
the environmental condition of its facility located in Tongeren, Belgium. The
scope of their work was to assess potential contamination in light of newly
adopted Belgium legal requirements and develop a plan to remediate the property
if necessary. Preliminary results show certain groundwater contamination that
may have resulted from the Company's past operations or from neighboring
manufacturing companies. The Company has recorded a liability of $500 as of
December 29, 1996 to cover the estimated cost of this remediation, however
Belgium environmental authorities have the ability to approve the remediation
plan.
In a subsequent event to the third quarter of fiscal 1997, the Company
completed the sale of TMC. Upon the sale of TMC, the Company agreed to
indemnify Gunther Belgium for up to $500 for established environmental
remediation costs, subject to certain conditions and limitations.
7
<PAGE> 10
C.P. CLARE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the relative percentage that certain income
and expense items bear to net sales for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------- ------------------------------
DECEMBER 29, DECEMBER 31, DECEMBER 29, DECEMBER 31,
1996 1995 1996 1995
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 67.7 67.5 66.5 68.4
----- ----- ----- -----
Gross profit 32.3 32.5 33.5 31.6
Operating expenses:
Selling, general and administrative 24.2 18.5 22.9 18.5
Research and development 5.1 3.6 4.8 3.2
Restructuring costs (credit) (1.6) - 14.9 -
----- ----- ----- -----
Operating income (loss) 4.6 10.4 (9.1) 9.9
Interest income 1.2 1.2 1.3 0.6
Interest expense (0.4) (0.5) (0.4) (1.2)
Other income (expense), net 0.2 0.3 (0.1) (0.1)
----- ----- ----- -----
Income (loss) before income taxes 5.6 11.4 (8.3) 9.2
Provision for income taxes (1.8) (4.7) (0.6) (3.8)
----- ----- ----- -----
Net income (loss) 3.8% 6.7% (8.9)% 5.4%
===== ===== ===== =====
</TABLE>
Net Sales. Net sales increased 0.7% for the nine months ended December 29,
1996 to $95.4 million from $94.7 million for the nine months ended December 31,
1995. The increase was primarily attributable to higher unit sales volume of
semiconductor products due to greater demand for these products and increased
advanced magnetic products business sales. The increase in net sales was offset
by decreased sales of the Company's reed relays and switches and other
electromagnetic products.
Net sales decreased 4.4% in the third quarter of fiscal 1997 to $31.4
million from $32.8 million for the same period in fiscal 1996. The decrease was
attributable to decreased sales of the Company's reed relays and switches and
other electromagnetic products. The decrease was partially offset by the higher
unit sales volume of semiconductor products.
8
<PAGE> 11
Net sales by major product category were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- ---------------------------
DECEMBER 29, DECEMBER 31, DECEMBER 29, DECEMBER 31,
1996 1995 1996 1995
------------------------------------------------------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Semiconductor products $14.8 $12.5 $45.2 $32.9
Electromagnetic and other products 16.6 20.3 50.2 61.8
</TABLE>
Net sales to customers located outside the United States (primarily Europe
and Asia) for the nine months ended December 29, 1996 decreased 8.3% to $36.9
million from $40.2 million for the nine months ended December 31, 1995. Net
sales to customers located outside the United States decreased 21.1% in the
third quarter of fiscal 1997 to $12.1 million from $15.3 million in the third
quarter of fiscal 1996. The decreases for the quarter and year to date periods
are primarily due to lower sales in Europe of the Company's reed relays and
switches and other electromagnetic products. These lower sales were partially
offset by increased sales in Asia, as the Company continues to focus on new
markets.
Gross Profit. The Company's gross profit as a percentage of sales increased
to 33.5% for the nine months ended December 29, 1996 from 31.6% for the nine
months ended December 31, 1995. The increase in gross profit was primarily
attributable to a more favorable product mix, which included increased sales in
the Company's higher margin semiconductor products. The Company's gross profit
as a percentage of net sales was 32.3% for the third quarter of fiscal 1997
which was consistent with the 32.5% in the same period in fiscal 1996. The
margins in the third quarter of fiscal 1997 were lower than margins for the nine
months ended December 29, 1996 because of the higher sales volume of the lower
margin advanced magnetic products and the costs associated with operating
parallel semiconductor facilities while the Beverly, Massachusetts plant is
being completed.
Selling, General and Administrative Expense. Selling, general and
administrative expense increased to $21.8 million for the nine months ended
December 29, 1996 from $17.5 million for the nine months ended December 31, 1995
and as a percentage of sales increased to 22.9% from 18.5%, respectively. These
expenses increased in the third quarter of fiscal 1997 to $7.6 million from $6.1
million in the same period of fiscal 1996. As a percentage of net sales,
selling, general and administrative expenses were 24.2% for the third quarter of
fiscal 1997 as compared with 18.5% for the same period of fiscal 1996. The
largest single components of the dollar and percentage increases were the result
of $2.1 million and $0.8 million environmental charges for the nine months and
three months ended December 29, 1996, respectively. See Note 9 of Notes to
Consolidated Condensed Financial Statements.
Excluding these non-recurring charges, selling, general and administrative
expense would have increased to $19.7 million for the nine months ended December
29, 1996 from $17.5 million for the nine months ended December 31, 1995 and as a
percentage of sales increased to 20.7% from 18.5%, respectively. Excluding this
non-recurring charge, expenses would have increased in the third quarter of
fiscal 1997 to $6.8 million from $6.1 million in the same period of fiscal 1996
and as a percentage of net sales would be 21.7% for the third quarter of fiscal
1997 as compared with 18.5% for the same period of fiscal 1996. The increased
spending primarily relates to increased staffing, advertising expenditures,
additional sales office locations, and increased communication costs compared to
fiscal 1996.
Research and Development Expense. Research and development (R&D) expense
increased to $4.6 million for the nine months ended December 29, 1996 from $3.1
million for the nine months ended December 31, 1995 and as a percentage of sales
increased to 4.8% from 3.2%, respectively. For the third quarter of fiscal 1997
R&D increased to $1.6 million from $1.2 million in the same period of fiscal
1996. These increases are primarily due to increased investment in new product
development programs, specifically in semiconductor products. The Company
expects to maintain its current rate of research and development spending in
fiscal 1997, as current R&D programs are continued, especially at the Company's
new semiconductor facility in Beverly, Massachusetts.
9
<PAGE> 12
Restructuring Cost (Credit). The Company recorded a non-recurring charge of
$14.3 million, or $12.7 million ($1.42 per share) after income taxes to
restructure operations primarily in the Company's reed relay business.
Restructuring cost includes costs for workforce reductions and worldwide
facilities realignments. Workforce reduction costs primarily include severance
costs related to involuntary terminations. Facilities realignment costs are
primarily associated with consolidations of product lines to restructure and
streamline the Company's operations. The restructuring costs also include asset
writedowns of $3.5 million in the second quarter of fiscal 1997, primarily
associated with the Tongeren Manufacturing Company ("TMC").
During the second and third quarters of fiscal 1997, the Company
incurred approximately $3,549 and $1,030, respectively, of these restructuring
costs. During the third quarter of fiscal 1997, the Company's restructuring
plan was partially altered. A third party offered to buy TMC in Tongeren
Belgium, a reed switch and relay manufacturing operation of the Company, during
the third quarter of fiscal 1997. As a result of the proposed sale of TMC, the
Company's estimated restructuring costs were lowered by approximately $500
during the quarter ended December 29, 1996. As of December 29, 1996, the
Company had $9,671 remaining in accrued restructuring. The sale of TMC was
consummated in January, 1997.
Cash flows from operations and existing cash, cash equivalents and
investments are expected to fund all restructuring charges. See Notes 6, 7 and 8
of Notes to Consolidated Condensed Financial Statements.
Interest Income. Interest income increased to $1.3 million for the nine
months ended December 29, 1996 from $0.6 million for the nine months ended
December 31, 1995. Interest income is related to the short-term investment of
the Company's cash in both commercial paper and tax exempt variable rate
municipal bonds. The increase in the nine months ended December 29, 1996 is the
result of the investment of the net proceeds from the Company's public offerings
of stock in fiscal year 1996. For the third quarter of both fiscal 1997 and
1996, interest income was comparable.
Interest Expense. Interest expense decreased to $0.3 million for the nine
months ended December 29, 1996 from $1.2 million for the nine months ended
December 31, 1995. This decrease is primarily the result of the repayment of the
$7.5 of million subordinated notes and the pay down of the Company's outstanding
domestic lines of credit during the first quarter of fiscal 1996. For the third
quarter of both fiscal 1997 and 1996, interest expense was comparable.
Other Income (Expense), net. Other income (expense), net for the nine
months and for the third quarter ended December 29, 1996 was comparable to the
nine months and third quarter ended December 31, 1995. The income and (expenses)
are primarily the result of foreign currency translation gains and losses.
Income Taxes. In accordance with generally accepted accounting principles,
the Company has provided for income taxes in fiscal 1997 and 1996 at its
estimated annual effective tax rates. Income tax expense decreased to $0.6
million for the nine months ended December 29, 1996 from $3.6 million for the
nine months ended December 31, 1995, as a result of recording a benefit of $2.0
million related to the Company's restructuring and environmental costs incurred
during the second quarter. The benefit was lower than the yearly effective rate
because the Company anticipates it will not be able to fully utilize the losses
associated with the restructuring.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended December 29, 1996, the Company's cash and cash
equivalents decreased by $13.3 million. Operations provided $3.9 million of cash
during this period. The Company used $17.1 million for capital expenditures
during the nine months ended December 29, 1996. Financing
10
<PAGE> 13
activities provided $0.1 million of cash during the period, primarily due to the
proceeds and tax benefits from exercises of options and warrants, which was
offset by the repayment of short-term borrowings.
The Company believes that cash generated from operations, available cash
and amounts available under its credit agreements will be sufficient to satisfy
its working capital needs, including all restructuring charges and planned
capital expenditures, for the next 12 to 24 months. However, there can be no
assurance that events in the future will not require the Company to seek
additional capital sooner or, if so required, that adequate capital will be
available on terms acceptable to the Company.
Certain Factors Affecting Future Operating Results
The information contained in this Form 10-Q contains forward-looking
statements with the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended. The
Company's actual results could differ materially from those set forth in the
forward looking statements. Factors that may affect future operating results
include: successful implementation of the proposed restructuring, the ability to
develop and market new products in a timely fashion, competitive pricing
pressures, manufacturing capacity, the continued growth of the
telecommunications industry, the ability to effectively manage operational
changes, and uncertainty regarding certain labor situations.
The Company announced a restructuring of its operations in order to reduce
operating costs, primarily in its reed relay business operations. The proposed
restructuring involves many of the Company's worldwide operations and will
involve workforce reduction and facility consolidation. The Company's future
results are dependent on the successful implementation of the announced
restructuring. Delays in such implementation or adverse reactions from local
labor unions could lead to a work slowdown, work stoppage or plant occupation
that could disrupt product shipments and would have a material adverse effect on
the Company's future operating results.
The Company's sale of the Tongeren Manufacturing Company to Gunther GmbH,
the signing of a long-term supply agreement with the newly formed Gunther
Belgium, and the current work stoppage by the employees of Gunther Belgium may
affect the Company's sales of mercury switches and relays. Future actions
taken by the employees of Gunther Belgium and the ongoing ability of Gunther
Belgium to produce quality product in an efficient manner may also have a
material adverse effect on the Company's future operating results.
To remain competitive, the Company must continue to develop new process and
manufacturing capabilities to meet customer needs and introduce new products
that reduce size and increase performance. If the Company is unable to develop
such new capabilities or is unable to design, develop and introduce competitive
new products, its operating results may be adversely affected. The Company is in
the process of constructing a larger, more advanced semiconductor facility in
Beverly, Massachusetts to address current capacity constraints and operating
efficiencies in the production of its semiconductor products. The construction
of this facility while the existing facility is operating near full capacity
could have an impact on production and associated costs. In addition, delays in
the delivery of equipment and qualification of the wafer fabrication process
could delay the full operation of the new facility.
The Company has experienced fluctuation in its operating results in the
past and its operating results may fluctuate in the future. The Company has
increased the scope and geographic area of its operations. This expansion has
resulted in new and increased responsibilities for management personnel and has
placed pressures on the Company's operating systems. The Company's future
success will depend to a large part on its ability to manage these changes and
manage effectively its remote offices and facilities.
11
<PAGE> 14
C.P. CLARE CORPORATION AND SUBSIDIARIES
PAGE II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to routine litigation incident to the conduct of its
business. None of such proceedings is considered material to the business or the
financial condition of the Company.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
In December 1995 the Company moved its corporate headquarters from
Lexington, Massachusetts to Beverly, Massachusetts. The address and telephone
number of the principal executive offices are 78 Cherry Hill Drive, Beverly,
Massachusetts, 01915, 508-524-6700.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
EXHIBIT NO. DESCRIPTION
10.32.1 Letter of Assignment and Promissory Note dated as of
January 17, 1997 with respect to that certain Technology
and Equipment Transfer and Supply Agreement between the
Registrant, Clare Europe, N.V. and American Telephone and
Telegraph Company dated January 23, 1989.
10.54 Amended and Restated Employment Agreement between the
Company and Michael J. Ferrantino dated as of
January 31, 1997.
10.56 Amended and Restated Employment Agreement between the
Company and Harsh Koppula dated as of January 31, 1997.
10.67 Employment Agreement between the Company and Richard
Morgan dated as of April 8, 1996.
10.68 Employment Agreement between the Company and William Reed
dated as of August 26, 1996.
12
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits (continued)
10.69 Stock Purchase Agreement dated as of December 19, 1996,
among the Company, Gunther GmbH, Tongeren Manufacturing
Company, and W. Gunther, GmbH.*
10.70 Supply Agreement dated as of January 17, 1997 among the
Company, Gunther GmbH, W. Gunther GmbH, and Robert Romano.*
11.1 Computation of Net Income Per Share.
27.0 Financial Data Schedule (Edgar)
* Confidential treatment requested for portions of this document.
(b) Reports on Form 8-K
The Registrant filed no Current Reports on Form 8-K
during the quarter ended December 29, 1996.
13
<PAGE> 16
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.
C.P. CLARE CORPORATION
By: /s/ Jacqueline D. Arthur
---------------------------------
Jacqueline D. Arthur
Vice President and
Chief Financial Officer
Date: February 11, 1997
14
<PAGE> 17
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
10.32.1 Letter of Assignment and Promissory Note dated as of
January 17, 1997 with respect to that certain Technology
and Equipment Transfer and Supply Agreement between the
Registrant, Care Europe, N.V. and American Telephone and
Telegraph Company dated January 23, 1989.
10.54 Amended and Restated Employment Agreement between the Company
and Michael J. Ferrantino dated as of January 31, 1997.
10.56 Amended and Restated Employment Agreement between the
Company and Harsh Koppula dated as of January 31, 1997.
10.67 Employment Agreement between the Company and Richard Morgan
dated as of April 8, 1996.
10.68 Employment Agreement between the Company and William Reed
dated as of August 26, 1996.
10.69 Stock Purchase Agreement dated as of December 19, 1996,
among the Company, Gunther GmbH, Tongeren Manufacturing
Company, and W. Gunther, GmbH.*
10.70 Supply Agreement dated as of January 17, 1997 among the
Company, Gunther GmbH, W. Gunther GmbH, and Robert Romano.*
11.1 Computation of Net Income Per Share.
27.0 Financial Data Schedule (Edgar)
* Confidential treatment requested for portions of this document.
15
<PAGE> 1
EXHIBIT 10.32.1
January 13, 1997
VIA: FEDERAL EXPRESS
---------------
Mr. Tom Wenz
Lucent Technologies
2 Oakway
Berkley Heights, NJ 07922
Dear Tom:
Please accept this letter as a notice that the undersigned Tongeren
Manufacturing Company (formerly C.P. Clare N.V.) intends to assign its rights
and obligations pursuant to that certain Technology and Equipment Transfer and
Supply Agreement dated as of January 23, 1989 by and among American Telephone
and Telegraph, CP Clare Corporation and Clare Europe, N.V. (the "Agreement") to
C.P. Clare Corporation. This assignment is being made in connection with the
proposed sale by CP Clare of its subsidiary Tongeren Manufacturing Company and
the assignment will only be valid upon the successful closing of that
transaction which is currently scheduled for January 15, 1997. As you are aware
the outstanding debt of $1,680,000.00 is payable 90% by Tongeren Manufacturing
Company and 10% by CP Clare Corporation and the subsidiary debt is guaranteed by
the parent. This assignment of all rights and obligations under the Agreement
will also serve to release the parental guaranty which will be of no further
force and effect as of the issuance and execution of the new promissory note
referenced below.
This notice is given in order to comply with Section 9.08 of the Agreement.
Upon receiving your consent to such assignment and the closing of the sale
transaction discussed above, CP Clare will execute a new promissory note,
attached hereto as EXHIBIT A, obligating it for the remaining amount of the debt
outstanding. Simultaneously, ATT will void the existing Promissory Note and
Guaranty, and Guaranty attached hereto as EXHIBITS B AND C.
Please indicate your consent to this Assignment by signing below and
returning a copy of this letter to the undersigned.
Very truly yours,
Lori M. Henderson
Corporate Counsel
The undersigned, as successor in interest to American Telephone and
Telegraph, hereby consents to the assignment of the rights and obligations under
the Agreement to CP Clare Corporation and the issuance of a new promissory note
and the full release of the existing Promissory Note and Guaranty effective upon
the due issuance and execution of such promissory note.
LUCENT TECHNOLOGIES
- -------------------
By:
Title:
<PAGE> 2
PROMISSORY NOTE
FOR VALUE RECEIVED, CP Clare Corporation ("Clare" or "Maker"), a
Massachusetts corporation promises to pay to the order of Lucent Technologies
("Holder") a New York corporation, its successors and assigns the sum of
$1,680,000 ONE MILLION SIX HUNDRED AND EIGHTY THOUSAND UNITED STATES DOLLARS
with interest at the rate of zero percent per annum in three (3) annual
installments as follows:
(1) Two (2) payments of Four Hundred and Eighty Thousand Dollars
($480,000) each on January 23rd of each year from 1997 through 1998;
and
(2) Seven Hundred and Twenty Thousand Dollars ($720,000.00) on January 22,
1999.
All payments are to be made in United States dollars by bank or wire transfer to
a bank account designated by Holder or as otherwise prescribed by Holder.
Maker further agrees as follows:
--------------------------------
1. ACCELERATION ON DEFAULT IN PAYMENT. On default in the payment in full of
any installment of this Note by Maker, which default continues for more than six
(6) months, the entire net present value of the then unpaid balance, calculated
at a discount rate of eight percent (8%), shall, at the option of Holder, become
immediately due and payable.
2. ACCELERATION UPON OCCURRENCE OF SPECIFIED EVENTS. The unpaid balance of
this Note, calculated in accordance with Paragraph 1 above, shall also become
due and payable immediately upon any insolvency, bankruptcy, receivership,
suspension, liquidation or dissolution of business or assignment for the benefit
of the creditors on the part of Maker and upon the confirmed occurance of one of
such events, Holder may set off any amount owed by Holder to Maker against any
unpaid balance of this Note. Nothing in this Note shall, however, authorize
Holder to withold or delay any payments due to Maker in the ordinary course of
business in the absence of one of such events.
3. ATTORNEY'S FEES ON COLLECTION. If an attorney is used to enforce or
collect this Note for nonpayment at maturity or when due, the undersigned agree
to pay such additional sum as attorney's fees as the court in such action may
adjudge reasonable.
4. WAIVER OF JURY TRIAL. The Maker waives trial by jury in any litigation
arising out of this Note.
5. ASSIGNMENT. This Note is executed in connection with a certain
Technology and Equipment Transfer and Supply Agreement between Holder and Maker
<PAGE> 3
dated as of January 23, 1989, is subject to certain terms of such Agreement and
is assignable by Holder subject to such terms. Maker's liability hereunder, or
any portion thereof, may not be assigned by Maker without the prior written
consent of Holder and any such purported assignment will be void.
6. APPLICABLE LAW. This Note shall be construed in accordance with the laws
of the State of New Jersey.
IN WITNESS WHEREOF, Maker has caused this Note to be executed by its duly
authorized officers.
Dated: As of January _____, 1997
CP CLARE CORPORATION
By: __________________________
Title: ________________________
2
<PAGE> 1
EXHIBIT 10.54
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Amended and Restated Employment Agreement, dated as of January ___, 1997,
between MICHAEL J. FERRANTINO of 14 Old Schoolhouse Road, Andover, Massachusetts
01810 ("the Employee") and C.P. CLARE CORPORATION, a Massachusetts Corporation
with its principal office at 78 Cherry Hill Drive, Beverly, Massachusetts 01915
(the "Company"). Unless the context otherwise requires, the term "Company" shall
include all subsidiary corporations of the Company.
WHEREAS, the Company and the Employee are party to an Employment Agreement
dated as of April 11, 1995, and,
WHEREAS, the parties hereto have agreed to amend and restate such
agreement, effective as of the date hereof.
NOW THEREFORE, in consideration of the terms and mutual covenants herein
contained, the Employee and the Company agree as follows:
1. Term of Employment.
------------------
(a) EMPLOYMENT. The Company hereby employs the Employee, and the Employee
hereby accepts employment by the Company, for the period commencing on April 11,
1995, the initial date of execution of this Agreement and ending on March 31,
1996 (the "Initial Term"), subject to extension in accordance with the
provisions of subparagraph (b), below, unless terminated earlier in accordance
with the terms hereof (the "Employment Period").
(b) EXTENSION OF TERM. In the event that on or before the date of
expiration of the Initial Term, the employment of the Employee shall not have
been terminated pursuant to the provisions of Paragraph 7 hereof, the term of
the employment of the Employee under this Agreement shall be automatically
renewed for successive one year terms thereafter until such time as the
employment of the Employee shall be terminated pursuant to the provisions of
Paragraph 7 hereof.
2. CAPACITY. The Employee shall serve as Vice President and General Manager
of the Company's Solid State Products Division and shall perform such duties and
functions with respect to such position as are assigned from time to time by the
Board of Directors or by the Chief Executive Officer of the Company. The
Employee shall report directly to the Chief Executive Officer of the Company.
3. FULL-TIME EMPLOYMENT. The Employee shall devote his entire business and
professional time, attention and energies to the performance of his duties to
the Company and of any of its subsidiaries by which he may be employed and shall
not, directly or indirectly, actively engage in or concern himself with any
other activities or commitments which interfere with the performance of his
duties hereunder or which, even if non-interfering, may be inimical or contrary
to the best interests of the Company. Notwithstanding the foregoing, the
Employee may
<PAGE> 2
at all times during the Employment Period (i) subject in each case to the
approval of the Chief Executive Officer of the Company, serve as an officer,
director, trustee, or committee member of any religious, professional, civic,
charitable or educational organization, or as a director of any corporation
whose business is not competitive with that of the Company; and (ii) engage in,
and devote time and effort to, any and all personal investments or business
ventures unrelated to the business or affairs of the Company, in each case so
long as such activities do not materially interfere with his obligations set
forth in this Paragraph 3 and provided that such activities are permitted under
Paragraph 12 of this Agreement.
4. COMPENSATION AND BENEFITS. For all services rendered by the Employee to
the Company, the Company shall pay to the Employee during the Employment Period
the following compensation:
(a) BASE SALARY. The Employee shall be entitled to an annual base salary of
Two Hundred Thousand Dollars ($200,000) from the date of this Agreement until
the expiration of the Employment Period. The base salary may be increased (but
may not be reduced) by the Board of Directors of the Company for any fiscal year
of the Company during the Employment Period. To that end, the Employee shall
receive a performance review at least once a year, in connection with which he
shall be eligible for such merit increases and other salary adjustments as the
Board of Directors of the Company shall approve, the first such review to take
place in December, 1995.
(b) ANNUAL BONUS. In addition to his regular salary, the Employee shall be
eligible (subject to the provisions of Paragraph 7(f) hereof) to receive a bonus
of up to 50% of his base salary with respect to each fiscal year or portion
thereof during the Employment Period, pursuant to the CP Clare Corporate Bonus
Program, as such program shall be amended and in effect from time to time.
(c) PAYMENT OF SALARY AND BONUS. The Employee's base salary under
subparagraph (a) of this Paragraph 4 shall be payable in substantially equal
installments in accordance with the Company's existing payroll practices for its
executives. Any annual bonus payable under subparagraph (b) of this Paragraph 4
shall be paid to the Employee within 60 days following the end of the fiscal
year with respect to which such bonus relates.
(d) EQUITY COMPENSATION ARRANGEMENTS. The Employee shall also be eligible
to participate during the term of his employment under this Agreement in such
equity compensation arrangements as are provided by the Company for its
executives. In that regard, the Employee will be granted incentive stock options
under the Company's Amended and Restated 1994 Employee, Director and Consultant
Stock Option Plan which shall entitle the Employee to acquire up to 600,000
(120,000 post 1 for 5 split) shares of the Company's common stock for a purchase
price equal to the fair market value of such shares on the date of grant of such
options as determined by the Company's Board of Directors, such options to vest
ratably over a period of five (5) years.
2
<PAGE> 3
(e) WITHHOLDING TAXES. The Employee agrees that the Company shall withhold
from any and all payments required to be made to the Employee pursuant to this
Agreement all federal, state, local and/or other taxes which the Company
determines are required to be withheld in accordance with applicable statutes
and/or regulations from time to time in effect.
5. Fringe Benefits; Vacations.
--------------------------
(a) EMPLOYEE BENEFIT PLANS. The Employee shall be eligible to participate
during the Employment Period in such of the employee benefit and health plans
and other fringe benefit programs as the Company shall establish or maintain for
its employees from time to time (commensurate with the Employee's position and
compensation).
(b) LIFE AND DISABILITY INSURANCE. The Company shall provide to the
Employee at the expense of the Company and keep in force during the Employment
Period (and thereafter to the extent provided in Paragraph 7(a)(i) hereof) a
split dollar policy of term life insurance with a death benefit in the amount of
$500,000. Additionally, the Employee shall be entitled to participate in the
Company's group disability insurance program during the Employment Period (and
thereafter to the extent provided in Paragraph 7(a)(i) hereof).
(c) CAR ALLOWANCE. The Employee shall be entitled to a car allowance of
$650 per month during the Employment Period (and thereafter to the extent
provided in Paragraph 7(a)(i) hereof).
(d) VACATIONS. The Employee shall be entitled to vacation time in each year
consistent with the Company's vacation policy for its senior executives as in
effect from time to time. A copy of the Company's current vacation policy has
been provided to the Employee. The Employee shall also be entitled to all paid
holidays and personal days given by the Company to its executives.
6. REIMBURSEMENT. The Company shall promptly reimburse the Employee for all
reasonable business expenses incurred by him in connection with his performance
of his duties to the Company, upon substantiation of such expenses in accordance
with the policies of the Company in effect from time to time during the
Employment Period.
7. Termination of Employment.
-------------------------
(a) TERMINATION WITHOUT CAUSE. The Company expressly reserves the right to
terminate the employment of the Employee hereunder other than for cause as
provided in subparagraph (b), and other than as provided in subparagraphs (c)
and (d), of this Paragraph 7. In the event that the Employee's employment shall
have been so terminated by the Company other than for cause:
(i) SEVERANCE BENEFITS. The Employee shall be entitled to receive for
the period of one (1) year following such termination his base salary as
provided for in Paragraph 4(a) hereof at the rate in effect on the date of such
termination of employment, payable in equal installments in the same amounts and
in the same periodic intervals as his base salary was paid immediately prior to
such termination, plus the continuation of the fringe benefits, life and
disability
3
<PAGE> 4
insurance, and car allowance provided for in subparagraphs (a), (b) and (c) of
paragraph 5 hereof for such one (1) year period.
(ii) OUTPLACEMENT. The Company shall reasonably assist the Employee in
locating other suitable employment, including expending up to Ten Thousand
Dollars ($10,000) to engage professional outplacement assistance, if the
Employee shall request the Company to provide such outplacement assistance.
(b) VOLUNTARY TERMINATION AND TERMINATION FOR CAUSE. The Employee's
employment may be voluntarily terminated by him at any time by giving not less
than two (2) weeks' written notice thereof to the Company. Additionally, the
Employee's employment may be terminated at any time for cause (as hereinafter
defined) effective upon the giving of written notice of such termination for
cause by the Company to the Employee. If at any time during the term of this
Agreement (i) the Employee shall have voluntarily terminated his employment with
the Company (other than a contemplated by subparagraph (e) of this Paragraph 7),
or (ii) the Company shall have terminated the employment of the Employee for
cause (as hereinafter defined) the Employee shall be entitled to receive only
his base salary as provided in Paragraph 4(a) hereof to the date of such
termination and no other benefits, including, without limitation, those provided
for under Paragraphs 4(b) and 5 of this Agreement (except those that cannot be
divested pursuant to the Employee Retirement Income Security Act of 1974, as
amended or other applicable law), under this Agreement.
For purposes of this Agreement, the term "cause" shall mean (i) conviction
of the Employee of any criminal offense involving dishonesty or breach of trust
or any felony or crime of moral turpitude, (ii) willful misconduct in the
performance of his duties, (iii) the willful continuous neglect of the duties
and responsibilities of his office (other than failure to perform his duties and
fulfill his responsibilities resulting from the Employee's incapacity due to a
physical or mental illness), or (iv) the Employee's failure to perform any term,
covenant or condition required to be performed by the Employee pursuant to this
Agreement, all to be finally determined in the sole discretion of the Board of
Directors of the Company.
(c) DISABILITY. In the event that the Employee shall sustain a disability
and be unable to perform his duties and responsibilities during the term of this
Agreement, as shall have been certified by at least two (2) duly licensed and
qualified physicians approved by the Board of Directors of the Company (the
"Examining Physicians"), the Company shall continue to pay to the Employee while
such disability continues the full amount of his base salary as set forth in
Paragraph 4(a) hereof for a period following the date upon which such disability
shall have been so certified equal to the lesser of (i) six months or (ii) the
period ending upon the date of inception of the payment of benefits under any
disability insurance to which the Employee may become entitled pursuant to
Paragraph 5(b) hereof. Thereafter, if the Employee's disability shall continue
(as evidenced by the continued absence of the Employee from his duties), the
employment of the Employee under this Agreement shall terminate and all
obligations of the Employee shall cease and the Employee shall be entitled to
receive only the benefits, if any, as may be provided by any insurance to which
he may have become entitled pursuant to Paragraph 5(b) hereof and the payment of
any amounts of the Employee's base salary then remaining to be
4
<PAGE> 5
paid under Paragraph 4(a) hereof through the date of the termination of the
Employee's employment. "Disability" means the complete disability of the
Employee resulting from injury, sickness, disease, or infirmity due to age,
whereby the Employee is unable to perform his usual services for the Company;
the "Date of Disability" shall be deemed to be the date on which the Board of
Directors of the Company receives written notice from the Examining Physicians
stating that the Employee is suffering a Disability as defined herein.
(d) DEATH. In the event of the Employee's death during the term of this
Agreement, the Employee's employment hereunder shall immediately terminate and,
in such event, the Employee's estate shall be entitled to receive the Employee's
base salary as provided in Paragraph 4(a) hereof to the last day of the month
during which the Employee's death shall have occurred and such additional
benefits, if any, as may be provided by any insurance to which the Employee may
have become entitled pursuant to Paragraph 5(b) hereof.
(e) TERMINATION FOR GOOD REASON FOLLOWING CHANGE OF CONTROL. The Employee's
employment may be terminated by him by written notice for a Good Reason (as
hereinafter defined), effective upon the giving of such notice, at any time
within one hundred eighty (180) days following a Change of Control (as
hereinafter defined), in which event, notwithstanding the provisions of
Paragraph 7(b) hereof, the Employee shall be entitled to receive the severance
benefits and outplacement services provided for in Paragraph 7(a) hereof to the
same extent as if the employment of the Employee had been terminated by the
Company without cause pursuant to said Paragraph 7(a).
For purposes of this Agreement, the term "Good Reason" means any of the
following:
(i) A material diminution by the Company in the Employee's authority,
functions, duties or responsibilities in the capacity specified in Paragraph 2
hereof; provided that such material diminution is not in connection with a
termination of the Employee's employment hereunder by the Company in accordance
with Paragraph 7(a); or
(ii) A failure by the Company to comply with any material provision of
this Agreement which has not been cured within thirty (30) days after notice of
such noncompliance has been given by the Employee to the Company.
For purposes of this Agreement, a "Change of Control" means that any of the
following events has occurred:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended, (the "Act") (other than the
Company, any of its Subsidiaries (as hereinafter defined), or any trustee,
fiduciary or other person or entity holding securities under any employee
benefit plan or trust of the Company or any of its Subsidiaries), together with
all "affiliates" and "associates" (as such terms are defined in Rule 12b-2 under
the Act) of such person, shall become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company representing 50% or more of either (A) the combined voting power of
the Company's then outstanding securities having the right to
5
<PAGE> 6
vote in an election of the Company's Board of Directors ("Voting Securities") or
(B) the then outstanding shares of Stock (as hereinafter defined) of the Company
(in either such case other than as a result of an acquisition of securities
directly from the Company); or
(ii) persons who, as of the Effective Date, constitute the Company's
Board of Directors (the "Incumbent Directors") cease for any reason, including,
without limitation, as a result of a tender offer, proxy contest, merger or
similar transaction, to constitute at least a majority of the Board, provided
that any person becoming a director of the Company subsequent to the Effective
Date whose election or nomination for election was approved by a vote of at
least a majority of the Incumbent Directors shall, for purposes of this Plan, be
considered an Incumbent Director; or
(iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company or any Subsidiary where the shareholders
of the Company, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, beneficially own (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly, shares
representing in the aggregate 60% or more of the voting shares of the
corporation issuing cash or securities in the consolidation or merger (or of its
ultimate parent corporation, if any), (B) any sale, lease, exchange or other
transfer (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of the
assets of the Company or (C) any plan or proposal for the liquidation or
dissolution of the Company;
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
have occurred for purposes of the foregoing clause (i) solely as the result of
an acquisition of securities by the Company which, by reducing the number of
shares of Stock or other Voting Securities outstanding, increases (x) the
proportionate number of shares of Stock beneficially owned by any person to 50%
or more of the shares of Stock then outstanding or (y) the proportionate voting
power represented by the Voting Securities beneficially owned by any person to
50% or more of the combined voting power of all then outstanding Voting
Securities; PROVIDED, HOWEVER, that if any person referred to in clause (x) or
(y) of this sentence shall thereafter become the beneficial owner of any
additional shares of Stock or other Voting Securities (other than pursuant to a
stock split, stock dividend, or similar transaction), then a "Change of Control"
shall be deemed to have occurred for purposes of the foregoing clause (i).
For purposes of the foregoing definition of "Change of Control":
(A) the term "Stock" means the Common Stock, par value $.01 per share,
of the Company, subject to adjustment or change as a result of any merger,
consolidation, sale of all or substantially all of the assets of the Company, or
any reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or similar transaction; and
(B) the term "Subsidiary" means any corporation or other entity (other
than the Company) in any unbroken chain of corporations or entities, beginning
with the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total
6
<PAGE> 7
combined voting power of all classes of stock or other interests in one of the
other corporations or entities in the chain.
(f) Treatment of Annual Bonus on Termination.
----------------------------------------
(i) CURRENT YEAR'S BONUS. In the event of the termination of the
employment of the Employee for any reason, the Employee shall not be entitled to
receive any annual bonus payment pursuant to Paragraph 4(b) hereof in respect of
the fiscal year of the Company in which the termination shall take place.
(ii) PREVIOUS YEAR'S BONUS. In the event that at the time of his
termination, the Employee is due, but has not yet received, payment of an annual
bonus in respect of the preceding fiscal year of the Company, such bonus shall
be paid to the Employee at the time it is paid to the other employees of the
Company, except that, notwithstanding the foregoing, if the Employee shall have
been terminated for cause as provided in subparagraph (b) of this Paragraph 7,
the Employee shall forfeit and shall not be entitled to receive payment of any
such annual bonus in respect of the preceding fiscal year which the Employee
shall not have received on or before the date of such termination for cause.
8. Inventions and Patents.
----------------------
(a) DISCLOSURE OF DEVELOPMENTS. The Employee will promptly and fully
disclose to the Company any and all inventions, discoveries, trade secrets and
improvements, whether or not patentable and whether or not they are made,
conceived or reduced to practice during working hours or using the Company's
data or facilities, which the Employee develops, makes, conceives or reduces to
practice during his employment by the Company, either solely or jointly with
others (collectively, "Developments"). All such Developments shall be the sole
property of the Company, and the Employee hereby assigns to the Company, without
further compensation, all his right, title and interest in and to such
Developments and any and all related patents, patent applications, copyrights,
copyright applications, trademarks and trade names in the United States and
elsewhere.
(b) MAINTENANCE OF RECORDS. The Employee will keep and maintain adequate
and current written records of all Developments (in the form of notes, sketches,
drawings and as may be specified by the Company), which records shall be
available to and remain the sole property of the Company at all times.
(c) ASSISTANCE IN OBTAINING PATENTS. The Employee will assist the Company
in obtaining and enforcing patent, copyright and other forms of legal protection
for the Developments in any country. Upon request, the Employee will sign all
applications, assignments, instruments and papers and perform all acts necessary
or desired by the Company to assign all such Developments fully and completely
to the Company and to enable the Company, its successors, assigns and nominees,
to secure and enjoy the full and exclusive benefits and advantages thereof.
During his employment, the Employee will perform his obligations under this
subparagraph (c) without further compensation, except for reimbursement of
expenses incurred at the request of
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<PAGE> 8
the Company. If the Employee is not employed by the Company as an employee
at the time he is requested to perform any obligations under this subparagraph,
he shall receive for such performance a reasonable per diem fee, as well as
reimbursement of any expenses incurred at the request of the Company.
9. Proprietary Information.
-----------------------
(a) OBLIGATION TO KEEP CONFIDENTIAL. The Employee recognizes that his
relationship with the Company is one of high trust and confidence by reason of
his access to and contact with the trade secrets and confidential and
proprietary information of the Company. The Employee will not at any time,
either during his employment with the Company or thereafter, disclose to others,
or use for his own benefit or the benefit of others, any confidential or
proprietary information, and all other knowledge, information, documents or
materials, owned, developed or possessed by the Company, whether in tangible or
intangible form, the confidentiality of which the Company takes reasonable
measures to protect, and which pertains, in any manner, to subjects which
include, but are not limited to, the Company's research operations, customers
(including identities of customers and prospective customers, identities of
individual contacts at business entities which are customers or prospective
customers, preferences, businesses or habits), business relationships, products
(including prices, costs, sales or content), financial information or
measurements, business methods, future business plans, data bases, computer
programs, marketing plans, forecasts, licenses, pricing information and other
information owned, developed or possessed by the Company ("Proprietary
Information").
(b) EXCEPTIONS. The Employee's undertakings and obligations under the
Paragraph 9 will not apply to any Proprietary Information which: (a) is or
becomes generally known to the public through no action on the part of the
Employee, (b) is generally disclosed to third parties by the Company without
restriction on such third parties, (c) is approved for release by written
authorization of the Board of Directors of the Company, or (d) is the subject
matter of a lawful request or subpoena by and within the authority of a court or
governmental agency or other body.
(c) RETURN OF PROPRIETARY INFORMATION. Upon termination of the employment
of the Employee with the Company or at any other time upon request, the Employee
will promptly deliver to the Company all notes, memoranda, notebooks, drawings,
records, reports, files and other documents (and all copies of reproductions of
such materials) in his possession or under his control, whether prepared by him
or others, which contain Proprietary Information. The Employee acknowledges that
the material is the sole property of the Company.
10. ABSENCE OF RESTRICTIONS UPON DISCLOSURE AND COMPETITION. The Employee
represents that his performance of all the terms of this Agreement does not and
will not breach any agreement to keep in confidence proprietary information,
knowledge or data acquired by him in confidence or in trust prior to the date of
this Agreement, and he will not disclose to the Company or induce the Company to
use any confidential or proprietary information or material belonging to any
previous Company or others.
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<PAGE> 9
11. OTHER OBLIGATIONS REGARDING PROPRIETARY INFORMATION. The Employee
acknowledges that the Company from time to time may have agreements with other
persons or with the U.S. Government, or agencies thereof, which impose
obligations or restrictions on the Company regarding inventions made during the
course of work under such agreements or regarding the confidential nature of
such work. The Employee agrees to be bound by all such obligations and
restrictions which are made known to him and to take all action necessary to
discharge the obligations of the Company under such agreements.
12. Noncompetition.
--------------
(a) During the Employment Period, the Employee agrees not to compete in any
manner, either directly or indirectly, with the Company, or to assist any other
person or entity to compete with the Company. Further, while an employee of the
Company, the Employee agrees not to engage in any other employment or business
enterprise without the written permission of the Chief Executive Officer of the
Company.
(b) After the termination, for any reason, of his employment with the
Company, the Employee agrees that for a period of one (1) year following such
termination, the Employee will not compete with the Company by developing,
marketing, or assisting others to develop or market a product or service which
is competitive with the products or services of the Company then existing or
planned for the future, which the Employee learns of or develops while an the
Employee of the Company. The Employee further agrees that for the same period
following such termination, for any reason, the Employee will not accept
employment from or have any other professional relationship with any entity
which is competitive with the products or services of the Company then existing
or which were known by the Employee to be planned for the future. The foregoing
restrictions shall apply in all geographical areas where the Employee performed
services for the Company prior to such termination, and at all other places
where the Company does business and/or did business during the term of his
employment, and at all places where, during his employment with the Company, the
Company had plans or reasonable expectations to do business in the future.
(c) During the Employment Period and for one (1) year following the
termination, for any reason, of his employment, the Employee agrees either on
his behalf or on behalf of any other person or entity, directly or indirectly,
not (i) to hire, solicit, or encourage to leave the employ of the Company any
person who is then an employee of the Company, or (ii) to solicit, entice
away or divert any person or entity who is then a client of the Company and who
was a client of the Company at the time of employment. The Employee agrees that
customer or client lists, business contracts and related items are the property
of the Company. The restrictions described herein shall apply to the activities
of the Employee in any state or other jurisdiction in which the Company engaged
in business during the term of employment.
Furthermore, for one (1) year following the termination, for any reason, of
his employment (except following termination of the employment of the Employee
pursuant to the Company's termination of business and liquidation of assets),
the Employee agrees that he will not (i) solicit or accept work or provide
services which is direct follow-up to work or services
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<PAGE> 10
under contract performed or being performed by the Company or being actively
solicited by the Company at the time of termination of the employment of the
Employee, or (ii) directly or indirectly recruit the employees of the Company
(or any successor thereto).
The restrictions against competition set forth in this Paragraph 12 are
considered by the parties to be reasonable for the purposes of protecting the
business of the Company. However, if any such restriction is found by any court
of competent jurisdiction to be unenforceable because it extends for too long a
period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.
13. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Company and the Employee and their respective heirs, executors,
administrators, legal representatives, successors and assigns. This Agreement
and the rights and obligations of the parties hereunder are personal to the
Company and the Employee and are not assignable or transferable to any other
person, firm or corporation without the consent of the other party, provided,
however, that the Company may assign its rights and obligations hereunder to any
person or entity who or which succeeds to all or substantially all of the
Company's business and assets. This Agreement is intended to take effect as a
sealed instrument.
14. NOTICES. All notices required or permitted hereunder shall be in
writing and deemed effectively given upon personal delivery or upon deposit in
the United States mails, by registered or certified mail, postage prepaid,
addressed to the other party hereto at the address set forth in the introductory
paragraph of this Agreement, or at such other address or addresses as either
party shall designate to the other in accordance with this Paragraph 14.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties, and supersedes all prior agreements and understandings,
relating to the subject matter of this Agreement.
16. AMENDMENT. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee.
17. HEADINGS. The Paragraph and subparagraph headings used in this
Agreement are for convenience only and shall not be deemed to be a party of this
Agreement.
18. SEVERABILITY. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
19. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of The Commonwealth of Massachusetts
applicable to agreements
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<PAGE> 11
made to be performed entirely within such state, without giving effect to the
conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
C.P. CLARE CORPORATION
By:_____________________
its
EMPLOYEE:
-------------------------
Michael J. Ferrantino
11
<PAGE> 1
EXHIBIT 10.56
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Amended and Restated Employment Agreement, dated as of January 31, 1997
between HARSH KOPPULA of 6714 Fieldstone Drive, Surr Ridge, Illinois 60521 ("the
Employee") and C.P. CLARE CORPORATION, a Massachusetts Corporation with its
principal office 78 Cherry Hill Drive, Beverly, Massachusetts 01915 (the
"Company"). Unless the context otherwise requires, the term "Company" shall
include all subsidiary corporations of the Company.
WHEREAS, the Company and the Employee are party to an Employment Agreement
dated March 1, 1995; and,
WHEREAS, the parties hereto have agreed to amend and restate such agreement
effective as of the date hereof.
NOW THEREFORE, in consideration of the terms and mutual covenants herein
contained, the Employee and the Company agree as follows:
1. Term of Employment.
------------------
(a) EMPLOYMENT. The Company hereby employs the Employee, and the Employee
hereby accepts employment by the Company, for the period commencing March 1,
1995, the initial date of execution of this Agreement and ending on February 29,
1996 (the "Initial Term"), subject to extension in accordance with the
provisions of subparagraph (b), below, unless terminated earlier in accordance
with the terms hereof (the "Employment Period").
(b) EXTENSION OF TERM. In the event that on or before the date of
expiration of the Initial Term, the employment of the Employee shall not have
been terminated pursuant to the provisions of Paragraph 7 hereof, the term of
the employment of the Employee under this Agreement shall be automatically
renewed for successive one year terms thereafter until such time as the
employment of the Employee shall be terminated pursuant to the provisions of
Paragraph 7 hereof.
2. CAPACITY. The Employee shall serve as Vice President of Advanced
Magnetic Products of the Company and shall perform such duties and functions
with respect to such position as are assigned from time to time by the Board of
Directors or by the Chief Executive Officer of the Company.
3. FULL-TIME EMPLOYMENT. The Employee shall devote his entire business and
professional time, attention and energies to the performance of his duties to
the Company and of any of its subsidiaries by which he may be employed and shall
not, directly or indirectly, actively engage in or concern himself with any
other activities or commitments which interfere with the performance of his
duties hereunder or which, even if non-interfering, may be inimical or contrary
to the best interests of the Company. Notwithstanding the foregoing, the
Employee may at all times during the Employment Period (i) subject in each case
to the approval of the Chief Executive Officer of the Company, serve as an
officer, director trustee, or committee member of any religious, professional,
civic, charitable or educational organization, or as a director of any
corporation
<PAGE> 2
whose business is not competitive with that of the Company; and (ii) engage in,
and devote time and effort to, any and all personal investments or business
ventures unrelated to the business or affairs of the Company, in each case so
long as such activities do not materially interfere with his obligations set
forth in this Paragraph 3 and provided that such activities are permitted under
Paragraph 12 of this Agreement.
4. COMPENSATION AND BENEFITS. For all services rendered by the Employee to
the Company, the Company shall pay to the Employee during the Employment Period
the following compensation:
(a) BASE SALARY. The Employee shall be entitled to an annual base salary of
One Hundred Fifty Thousand Dollars ($150,000) from the date of this Agreement
until the expiration of the Employment Period. The base salary may be increased
(but may not be reduced) by the Board of Directors of the Company for any fiscal
year of the Company during the Employment Period. To that end, the Employee
shall receive a performance review at least once a year, in connection with
which he shall be eligible for such merit increases and other salary adjustments
as the Board of Directors of the Company shall approve.
(b) ANNUAL BONUS. In addition to his regular salary, the Employee shall be
eligible (subject to the provisions of Paragraph 7(f) hereof) to receive a bonus
up to 50% of his base salary with respect to each fiscal year or portion thereof
during the Employment Period, pursuant to the CP Clare Corporate Bonus Program,
as such program shall be amended and in effect from time to time.
(c) PAYMENT OF SALARY AND BONUS. The Employee's base salary under
subparagraph (a) of this Paragraph 4 shall be payable in substantially equal
installments in accordance with the Company's existing payroll practices for its
executives. Any annual bonus payable under subparagraph (b) of this Paragraph 4
shall be paid to the Employee within 60 days following the end of the fiscal
year with respect to which such bonus relates.
(d) EQUITY COMPENSATION ARRANGEMENTS. The Employee shall also be eligible
to participate during the term of his employment under this Agreement in such
equity compensation arrangements as are provided by the Company for its
executives.
(e) WITHHOLDING TAXES. The Employee agrees that the Company shall withhold
from any and all payments required to be made to the Employee pursuant to this
Agreement all federal, state, local and/or other taxes which the Company
determines are required to be withheld in accordance with applicable statutes
and/or regulations from time to time in effect.
5. Fringe Benefits; Vacations.
--------------------------
(a) EMPLOYEE BENEFIT PLANS. The Employee shall be eligible to participate
during the Employment Period in such of the employee benefit and health plans
and other fringe benefit programs as the Company shall establish or maintain for
its employees from time to time (commensurate with the Employee's position and
compensation).
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<PAGE> 3
(b) LIFE AND DISABILITY INSURANCE. The Company shall provide to the
Employee at the expense of the Company and keep in force during the Employment
Period (and thereafter to the extent provided in Paragraph 7(a)(i) hereof) a
policy of term life insurance with a death benefit in the amount of $500,000.
Additionally, the Employee shall be entitled to participate in the Company's
group disability insurance program during the Employment Period, and thereafter
to the extent provided in Paragraph 7(a)(i) hereof.
(c) CAR ALLOWANCE. The Employee shall be entitled to a car allowance of
$650 per month during the Employment Period.
(d) VACATIONS. The Employee shall be entitled to vacation time in each year
consistent with the Company's vacation policy for its senior executives as in
effect from time to time. A copy of the Company's current vacation policy has
been provided to the Employee. The Employee shall also be entitled to all paid
holidays and personal days given by the Company to its executives.
6. REIMBURSEMENT. The Company shall promptly reimburse the Employee for all
reasonable business expenses incurred by him in connection with his performance
of his duties to the Company, upon substantiation of such expenses in accordance
with the policies of the Company in effect from time to time during the
Employment Period.
7. Termination of Employment.
-------------------------
(a) TERMINATION WITHOUT CAUSE. The Company expressly reserves the right to
terminate the employment of the Employee hereunder other than for cause as
provided in subparagraph (b), and other than as provided in subparagraphs (c)
and (d), of this Paragraph 7. In the event that the Employee's employment shall
have been so terminated by the Company other than for cause:
(i) Severance Benefits. The Employee shall be entitled to receive for
the period of one (1) year following such termination his base salary as
provided for in Paragraph 4(a) hereof at the rate in effect on the date of such
termination of employment, payable in equal installments in the same amounts and
in the same periodic intervals as his base salary was paid immediately prior to
such termination, plus the continuation of the fringe benefits, life and
disability insurance, and car allowance provided for in subparagraphs (a), (b)
and (c) of Paragraph 5 hereof for such one (1) year period.
(ii) Outplacement. The Company shall reasonably assist the Employee in
locating other suitable employment, including expending up to Ten Thousand
Dollars ($10,000) to engage professional outplacement assistance, if the
Employee shall request the Company to provide such outplacement assistance.
(b) VOLUNTARY TERMINATION AND TERMINATION FOR CAUSE. The Employee's
employment may be voluntarily terminated by him at any time by giving not less
than two (2) weeks' written notice thereof to the Company. Additionally, the
Employee's employment may be terminated at any time for cause (as hereinafter
defined) effective upon the giving of written notice of such termination
3
<PAGE> 4
for cause by the Company to the Employee. If at any time during the term of this
Agreement (i) the Employee shall have voluntarily terminated his employment with
the Company (other than as contemplated by subparagraph (e) of this Paragraph
7), or (ii) the Company shall have terminated the employment of the Employee for
cause (as hereinafter defined) the Employee shall be entitled to receive only
his base salary as provided in Paragraph 4(a) hereof to the date of such
termination and no other benefits, including, without limitation, those provided
for under Paragraphs 4(b) and 5 of this Agreement (except those that cannot be
divested pursuant to the Employee Retirement Income Security Act of 1974, as
amended or other applicable law), under this Agreement.
For purposes of this Agreement, the term "cause" shall mean (i) conviction
of the Employee of any criminal offense involving dishonesty or breach of trust
or any felony or crime of moral turpitude, (ii) willful misconduct in the
performance of his duties, (iii) the willful continuous neglect of the duties
and responsibilities of his office (other than failure to perform his duties and
fulfill his responsibilities resulting from the Employee's incapacity due to a
physical or mental illness), or (iv) the Employee's failure to perform any term,
covenant or condition required to be performed by the Employee pursuant to this
Agreement, all to be finally determined in the sole discretion of the Board of
Directors of the Company.
(c) DISABILITY. In the event that the Employee shall sustain a disability
and be unable to perform his duties and responsibilities during the term of this
Agreement, as shall have been certified by at least two (2) duly licensed and
qualified physicians approved by the Board of Directors of the Company (the
"Examining Physicians"), the Company shall continue to pay to the Employee while
such disability continues the full amount of his base salary as set forth in
Paragraph 4(a) hereof for a period following the date upon which such disability
shall have been so certified equal to the lesser of (i) six months or (ii) the
period ending upon the date of inception of the payment of benefits under any
disability insurance to which the Employee may become entitled pursuant to
Paragraph 5(b) hereof. Thereafter, if the Employee's disability shall continue
(as evidenced by the continued absence of the Employee from his duties), the
employment of the Employee under this Agreement shall terminate and all
obligations of the Employee shall cease and the Employee shall be entitled to
receive only the benefits, if any, as may be provided by any insurance to which
he may have become entitled pursuant to Paragraph 5(b) hereof and the payment of
any amounts of the Employee's base salary then remaining to be paid under
Paragraph 4(a) hereof through the date of the termination of the Employee's
employment. "Disability" means the complete disability of the Employee resulting
from injury, sickness, disease, or infirmity due to age, whereby the Employee is
unable to perform his usual services for the Company; the "Date of Disability"
shall be deemed to be the date on which the Board of Directors of the Company
receives written notice from the Examining Physicians stating that the Employee
is suffering a Disability as defined herein.
(d) DEATH. In the event of the Employee's death during the term of this
Agreement, the Employee's employment hereunder shall immediately terminate and,
in such event, the Employee's estate shall be entitled to receive the Employee's
base salary as provided in Paragraph 4(a) hereof to the last day of the month
during which the Employee's death shall have occurred and such additional
benefits, if any, as may be provided by any insurance to which the Employee may
have become entitled pursuant to Paragraph 5(b) hereof.
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<PAGE> 5
(e) TERMINATION FOR GOOD REASON FOLLOWING CHANGE OF CONTROL. The Employee's
employment may be terminated by him by written notice for a Good Reason (as
hereinafter defined), effective upon the giving of such notice, at any time
within one hundred eighty (180) days following a Change of Control (as
hereinafter defined), in which event, notwithstanding the provisions of
Paragraph 7(b) hereof, the Employee shall be entitled to receive the severance
benefits and outplacement services provided for in Paragraph 7(a) hereof to the
same extent as if the employment of the Employee had been terminated by the
Company without cause pursuant to said Paragraph 7(a).
For purposes of this Agreement, the term "Good Reason" means any of the
following:
(i) A material diminution by the Company in the Employee's authority,
functions, duties or responsibilities in the capacity specified in Paragraph 2
hereof; provided that such material diminution is not in connection with a
termination of the Employee's employment hereunder by the Company in accordance
with Paragraph 7(a); or
(ii) A failure by the Company to comply with any material provision of
this Agreement which has not been cured within thirty (30) days after notice of
such noncompliance has been given by the Employee to the Company.
For purposes of this Agreement, a "Change of Control" means that any of the
following events has occurred:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended, (the "Act") (other than the
Company, any of its Subsidiaries (as hereinafter defined), or any trustee,
fiduciary or other person or entity holding securities under any employee
benefit plan or trust of the Company or any of its Subsidiaries), together with
all "affiliates" and "associates" (as such terms are defined in Rule 12b-2 under
the Act) of such person, shall become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company representing 50% or more of either (A) the combined voting power of
the Company's then outstanding securities having the right to vote in an
election of the Company's Board of Directors ("Voting Securities") or (B) the
then outstanding shares of Stock (as hereinafter defined) of the Company (in
either such case other than as a result of an acquisition of securities directly
from the Company); or
(ii) persons who, as of the Effective Date, constitute the Company's
Board of Directors (the "Incumbent Directors") cease for any reason, including,
without limitation, as a result of a tender offer, proxy contest, merger or
similar transaction, to constitute at least a majority of the Board, provided
that any person becoming a director of the Company subsequent to the Effective
Date whose election or nomination for election was approved by a vote of at
least a majority of the Incumbent Directors shall, for purposes of this Plan, be
considered an Incumbent Director; or
(iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company or any Subsidiary where the shareholders
of the Company, immediately
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<PAGE> 6
prior to the consolidation or merger, would not, immediately after the
consolidation or merger, beneficially own (as such term is defined in Rule 13d-3
under the Act), directly or indirectly, shares representing in the aggregate 60%
or more of the voting shares of the corporation issuing cash or securities in
the consolidation or merger (or of its ultimate parent corporation, if any), (B)
any sale, lease, exchange or other transfer (in one transaction or a series of
transactions contemplated or arranged by any party as a single plan) of all or
substantially all of the assets of the Company or (C) any plan or proposal for
the liquidation or dissolution of the Company;
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
have occurred for purposes of the foregoing clause (i) solely as the result of
an acquisition of securities by the Company which, by reducing the number of
shares of Stock or other Voting Securities outstanding, increases (x) the
proportionate number of shares of Stock beneficially owned by any person to 50%
or more of the shares of Stock then outstanding or (y) the proportionate voting
power represented by the Voting Securities beneficially owned by any person to
50% or more of the combined voting power of all then outstanding Voting
Securities; PROVIDED, HOWEVER, that if any person referred to in clause (x) or
(y) of this sentence shall thereafter become the beneficial owner of any
additional shares of Stock or other Voting Securities (other than pursuant to a
stock split, stock dividend, or similar transaction), then a "Change of Control"
shall be deemed to have occurred for purposes of the foregoing clause (i).
For purposes of the foregoing definition of "Change of Control":
(A) the term "Stock" means the Common Stock, par value $.01 per share,
of the Company, subject to adjustment or change as a result of any merger,
consolidation, sale of all or substantially all of the assets of the Company, or
any reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or similar transaction; and
(B) the term "Subsidiary" means any corporation or other entity (other
than the Company) in any unbroken chain of corporations or entities, beginning
with the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting
power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
(f) Treatment of Annual Bonus on Termination.
----------------------------------------
(i) CURRENT YEAR'S BONUS. In the event of the termination of the
employment of the Employee for any reason, the Employee shall not be entitled to
receive any annual bonus payment pursuant to Paragraph 4(b) hereof in respect of
the fiscal year of the Company in which the termination shall take place.
(ii) PREVIOUS YEAR'S BONUS. In the event that at the time of his
termination, the Employee is due, but has not yet received, payment of an annual
bonus in respect of the preceding fiscal year of the Company, such bonus shall
be paid to the Employee at the time it is paid to the other employees of the
Company, except that, notwithstanding the foregoing, if the Employee
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<PAGE> 7
shall have been terminated for cause as provided in subparagraph (b) of this
Paragraph 7, the Employee shall forfeit and shall not be entitled to receive
payment of any such annual bonus in respect of the preceding fiscal year which
the Employee shall not have received on or before the date of such termination
for cause.
8. Inventions and Patents.
----------------------
(a) DISCLOSURE OF DEVELOPMENTS. The Employee will promptly and fully
disclose to the Company any and all inventions, discoveries, trade secrets and
improvements, whether or not patentable and whether or not they are made,
conceived or reduced to practice during working hours or using the Company's
data or facilities, which the Employee develops, makes, conceives or reduces to
practice during his employment by the Company, either solely or jointly with
others (collectively, "Developments"). All such Developments shall be the sole
property of the Company, and the Employee hereby assigns to the Company, without
further compensation, all his right, title and interest in and to such
Developments and any and all related patents, patent applications, copyrights,
copyright applications, trademarks and trade names in the United States and
elsewhere.
(b) MAINTENANCE OF RECORDS. The Employee will keep and maintain adequate
and current written records of all Developments (in the form of notes, sketches,
drawings and as may be specified by the Company), which records shall be
available to and remain the sole property of the Company at all times.
(c) ASSISTANCE IN OBTAINING PATENTS. The Employee will assist the Company
in obtaining and enforcing patent, copyright and other forms of legal protection
for the Developments in any country. Upon request, the Employee will sign all
applications, assignments, instruments and papers and perform all acts necessary
or desired by the Company to assign all such Developments fully and completely
to the Company and to enable the Company, its successors, assigns and nominees,
to secure and enjoy the full and exclusive benefits and advantages thereof.
During his employment, the Employee will perform his obligations under this
subparagraph (c) without further compensation, except for reimbursement of
expenses incurred at the request of the Company. If the Employee is not employed
by the Company as an employee at the time he is requested to perform any
obligations under this subparagraph, he shall receive for such performance a
reasonable per diem fee, as well as reimbursement of any expenses incurred at
the request of the Company.
9. Proprietary Information.
-----------------------
(a) OBLIGATION TO KEEP CONFIDENTIAL. The Employee recognizes that his
relationship with the Company is one of high trust and confidence by reason of
his access to and contact with the trade secrets and confidential and
proprietary information of the Company. The Employee will not at any time,
either during his employment with the Company or thereafter, disclose to others,
or use for his own benefit or the benefit of others, any confidential or
proprietary information, and all other knowledge, information, documents or
materials, owned, developed or possessed by the Company, whether in tangible or
intangible form, the confidentiality of which the Company takes
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reasonable measures to protect, and which pertains, in any manner, to subjects
which include, but are not limited to, the Company's research operations,
customers (including identities of customers and prospective customers,
identities of individual contacts at business entities which are customers or
prospective customers, preferences, businesses or habits), business
relationships, products (including prices, costs, sales or content), financial
information or measurements, business methods, future business plans, data
bases, computer programs, marketing plans, forecasts, licenses, pricing
information and other information owned, developed or possessed by the Company
("Proprietary Information").
(b) EXCEPTIONS. The Employee's undertakings and obligations under the
Paragraph 9 will not apply to any Proprietary Information which: (a) is or
becomes generally known to the public through no action on the part of the
Employee, (b) is generally disclosed to third parties by the Company without
restriction on such third parties, (c) is approved for release by written
authorization of the Board of Directors of the Company, or (d) is the subject
matter of a lawful request or subpoena by and within the authority of a court or
governmental agency or other body.
(c) RETURN OF PROPRIETARY INFORMATION. Upon termination of the employment
of the Employee with the Company or at any other time upon request, the Employee
will promptly deliver to the Company all notes, memoranda, notebooks, drawings,
records, reports, files and other documents (and all copies of reproductions of
such materials) in his possession or under his control, whether prepared by him
or others, which contain Proprietary Information. The Employee acknowledges that
the material is the sole property of the Company.
10. ABSENCE OF RESTRICTIONS UPON DISCLOSURE AND COMPETITION. The Employee
represents that his performance of all the terms of this Agreement does not and
will not breach any agreement to keep in confidence proprietary information,
knowledge or data acquired by him in confidence or in trust prior to the date of
this Agreement, and he will not disclose to the Company or induce the Company to
use any confidential or proprietary information or material belonging to any
previous Company or others.
11. OTHER OBLIGATIONS REGARDING PROPRIETARY INFORMATION. The Employee
acknowledges that the Company from time to time may have agreements with other
persons or with the U.S. Government, or agencies thereof, which impose
obligations or restrictions on the Company regarding inventions made during the
course of work under such agreements or regarding the confidential nature of
such work. The Employee agrees to be bound by all such obligations and
restrictions which are made known to him and to take all action necessary to
discharge the obligations of the Company under such agreements.
12. Noncompetition.
--------------
(a) During the Employment Period, the Employee agrees not to compete in any
manner, either directly or indirectly, with the Company, or to assist any other
person or entity to compete with the Company. Further, while an employee of the
Company, the Employee agrees not to engage in any other employment or business
enterprise without the written permission of the Chief Executive Officer of the
Company.
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(b) After the termination, for any reason, of his employment with the
Company, the Employee agrees that for a period of one (1) year following such
termination, the Employee will not compete with the Company by developing,
marketing, or assisting others to develop or market a product or service which
is competitive with the products or services of the Company then existing or
planned for the future, which the Employee learns of or develops while an the
Employee of the Company. The Employee further agrees that for the same period
following such termination, for any reason, the Employee will not accept
employment from or have any other professional relationship with any entity
which is competitive with the products or services of the Company then existing
or which were known by the Employee to be planned for the future. The foregoing
restrictions shall apply in all geographical areas where the Employee performed
services for the Company prior to such termination, and at all other places
where the Company does business and/or did business during the term of his
employment, and at all places where, during his employment with the Company, the
Company had plans or reasonable expectations to do business in the future.
(c) During the Employment Period and for one (1) year following the
termination, for any reason, of his employment, the Employee agrees either on
his behalf or on behalf of any other person or entity, directly or indirectly,
not (i) to hire, solicit, or encourage to leave the employ of the Company any
person who is then an employee of the Company, or (ii) to solicit, entice
away or divert any person or entity who is then a client of the Company and who
was a client of the Company at the time of employment. The Employee agrees that
customer or client lists, business contracts and related items are the property
of the Company. The restrictions described herein shall apply to the activities
of the Employee in any state or other jurisdiction in which the Company engaged
in business during the term of employment.
Furthermore, for one (1) year following the termination, for any reason, of
his employment (except following termination of the employment of the Employee
pursuant to the Company's termination of business and liquidation of assets),
the Employee agrees that he will not (i) solicit or accept work or provide
services which is direct follow-up to work or services under contract performed
or being performed by the Company or being actively solicited by the Company at
the time of termination of the employment of the Employee, or (ii) directly or
indirectly recruit the employees of the Company (or any successor thereto).
The restrictions against competition set forth in this Paragraph 12 are
considered by the parties to be reasonable for the purposes of protecting the
business of the Company. However, if any such restriction is found by any court
of competent jurisdiction to be unenforceable because it extends for too long a
period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.
13. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Company and the Employee and their respective heirs, executors,
administrators, legal representatives, successors and assigns. This Agreement
and the rights and obligations of the parties hereunder are personal to the
Company and the Employee and are not assignable or transferable to any other
person, firm or corporation without the consent of the other party,
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provided, however, that the Company may assign its rights and obligations
hereunder to any person or entity who or which succeeds to all or substantially
all of the Company's business and assets. This Agreement is intended to take
effect as a sealed instrument.
14. NOTICES. All notices required or permitted hereunder shall be in
writing and deemed effectively given upon personal delivery or upon deposit in
the United States mails, by registered or certified mail, postage prepaid,
addressed to the other party hereto at the address set forth in the introductory
paragraph of this Agreement, or at such other address or addresses as either
party shall designate to the other in accordance with this Paragraph 14.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties, and supersedes all prior agreements and understandings,
relating to the subject matter of this Agreement.
16. AMENDMENT. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee.
17. HEADINGS. The Paragraph and subparagraph headings used in this
Agreement are for convenience only and shall not be deemed to be a party of this
Agreement.
18. SEVERABILITY. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
19. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of The Commonwealth of Massachusetts
applicable to agreements made to be performed entirely within such state,
without giving effect to the conflicts of laws principles thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
C.P. CLARE CORPORATION
By:_____________________
its
EMPLOYEE:
-------------------------
Harsh Koppula
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<PAGE> 1
EXHIBIT 10.67
EMPLOYMENT AGREEMENT
Employment Agreement, dated as of the 8th day of April, 1996 between
Richard Morgan of 1 Bancroft Way, Hamilton, Massachusetts, 01936 ("the
Employee") and C.P. CLARE CORPORATION, a Massachusetts Corporation with its
principal office at 78 Cherry Hill Drive, Beverly, Massachusetts 01915 (the
"Company"). Unless the context otherwise requires, the term "Company" shall
include all subsidiary corporations of the Company.
In consideration of the terms and mutual covenants herein contained, the
Employee and the Company agree as follows:
1. Term of Employment:
------------------
(a) EMPLOYMENT. The Company hereby employs the Employee, and the Employee
hereby accepts employment by the Company, for the period commencing on the data
hereof and ending on April 8, 1997 (the "Initial Term"), subject to extension in
accordance with the provisions of subparagraph (b) below, unless terminated
earlier in accordance with the terms hereof (the "Employment Period").
(b) EXTENSION OF TERM. In the event that on or before the date of
expiration of the Initial Term, the employment of the Employee shall not have
been terminated pursuant to the provisions of Paragraph 7 hereof, the term of
the employment of the Employee under this Agreement shall be automatically
renewed for successive one year terms thereafter until such time as the
employment of the Employee shall be terminated pursuant to the provisions of
Paragraph 7 hereof.
2. CAPACITY. The Employee shall serve as Vice President of Human Resources and
shall perform such duties and functions with respect to such position as are
assigned from time to time by the Board of Directors or by the Chief Executive
Officer of the Company.
3. FULL-TIME EMPLOYMENT. The Employee shall devote his entire business and
professional time, attention and energies to the performance of his duties to
the Company and of any of its subsidiaries by which he may be employed and shall
not, directly or indirectly, actively engage in or concern himself with any
other activities or commitments which interfere with the performance of his
duties hereunder or which, even if non-interfering, may be inimical or contrary
to the best interests of the Company. Notwithstanding the foregoing, the
Employee may at all times during the Employment Period (i) subject in each case
to the approval of the Chief Executive Officer of the Company, serve as an
officer, director, trustee, or committee member of any religious, professional,
civic, charitable or educational organization, or as a director of any
corporation whose business is not competitive with that of the Company; and (ii)
engage in, and devote time and effort to, any and all personal investments or
business ventures unrelated to the business or affairs of the Company, in each
case so long as such activities do not materially interfere with his obligations
set forth in this Paragraph 3 and provided that such activities are permitted
under Paragraph 12 of this Agreement.
4. COMPENSATION AND BENEFITS. For all services rendered by the Employee to the
Company, the Company shall pay to the Employee during the Employment Period the
following compensation:
(a) BASE SALARY. The Employee shall be entitled to an annual base salary of
$125,000 from the date of this Agreement until the expiration of the Employment
Period. The base salary may be increased (but may not be reduced) by the Board
of Directors of the Company for any fiscal year of the Company during the
Employment Period. To that end, the Employee shall receive a performance review
at least once a year, in connection with which he shall be eligible for such
merit increases and other salary adjustments as the Board of Directors of the
Company shall approve.
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(b) ANNUAL BONUS. In addition to his regular salary, the Employee shall be
eligible (subject to the provisions of Paragraph 7(f) hereof) to receive a bonus
with respect to each fiscal year or portion thereof during the Employment
Period, of up to 50% of his base salary pursuant to the Company's 1995 Key
Employee Incentive Plan, as such Plan shall be amended and in effect from time
to time.
(c) PAYMENT OF SALARY AND BONUS. The Employee's base salary under
subparagraph (a) of this Paragraph 4 shall be payable in substantially equal
installments in accordance with the Company's existing payroll practices for its
executives. Any annual bonus payable under subparagraph (b) of this Paragraph 4
shall be paid to the Employee within 60 days following the end of the fiscal
year with respect to which such bonus relates.
(d) EQUITY COMPENSATION ARRANGEMENTS. The Employee shall also be eligible
to participate during the term of his employment under this Agreement in such
equity compensation arrangements as are provided by the Company for its
executives. In that regard, the Employee will be granted stock options under the
Company's 1995 Stock Option and Incentive Plan which shall entitle the Employee
to acquire up to 35,000 shares of the Company's common stock for a purchase
price of $17.75 per share, such options to vest ratably over a period of five
(5) years; provided that the vesting of the right to exercise all such options
granted to the Employee shall be accelerated in the event that there shall be a
Change of Control of the Company (as hereinafter defined).
(e) WITHHOLDING TAXES. The Employee agrees that the Company shall withhold
from any and all payments required to be made to the Employee pursuant to this
Agreement all federal, state, local and/or other taxes which the Company
determines are required to be withheld in accordance with applicable statues
and/or regulations from time to time in effect.
5. Fringe Benefits, Vacations
--------------------------
(a) EMPLOYEE BENEFIT PLANS. The Employee shall be eligible to participate
during the Employment Period in such of the employee benefit and health plans
and other fringe benefit programs as the Company shall establish or maintain for
its employees from time to time (commensurate with the Employee's position and
compensation).
DISABILITY INSURANCE. The Employee shall be entitled to participate in the
Company's group disability insurance program during the Employment Period.
(c) CAR ALLOWANCE. The Employee shall be entitled to a car allowance of
$650.00 per month during the Employment Period.
(d) VACATIONS. The Employee shall be entitled to vacation time each year
consistent with the Company's vacation policy for its senior executives as in
effect from time to time, which in no event shall be less than three (3) weeks
per year. The Employee shall also be entitled to all paid holidays and personal
days given by the Company to its executives.
6. REIMBURSEMENT. The Company shall promptly reimburse the Employee for all
reasonable business expenses incurred by him in connection with his performance
of his duties to the Company, upon substantiation of such expenses in accordance
with the policies of the Company in effect from time to time during the
Employment Period.
7. Termination of Employment.
-------------------------
(a) TERMINATION WITHOUT CAUSE. The Company expressly reserves the right to
terminate the employment of the Employee hereunder other than for cause as
provided in subparagraph (b), and other than as provided in subparagraphs (c)
and (d), of this Paragraph 7. Subject to the provisions of
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subparagraph (e) of this Paragraph 7, in the event that the Employees Employment
shall have been so terminated by the Company other than for cause:
(i) SEVERANCE BENEFITS. The Employee shall be entitled to receive for the
period of one (1) year following such termination his base salary as provided
for in Paragraph 4(a) hereof at the rate in effect on the date of such
termination of employment, payable in equal installments in the same amounts and
in the same periodic intervals as his base salary was paid immediately prior to
such termination, plus the continuation of the health plan benefits, provided
for in subparagraph (a) of Paragraph 5 hereof for such one (1) year period.
(b) VOLUNTARY TERMINATION AND TERMINATION FOR CAUSE. The Employee's
employment may be voluntarily terminated by him at any time by giving not less
than two (2) weeks' written notice thereof to the Company. Additionally, the
Employee's employment may be terminated at any time for cause (as hereinafter
defined) effective upon the giving of written notice of such termination for
cause by the Company to the Employee. If at any time during the term of this
Agreement (i) the Employee shall have voluntarily terminated his employment with
the Company (other than as contemplated by subparagraph (e) of this Paragraph
7), or (ii) the Company shall have terminated the employment of the Employee for
cause (as hereinafter defined) the Employee shall be entitled to receive only
his base salary as provided in Paragraph 4 (a) hereof to the date of such
termination and no other benefits, including without limitation, those provided
for under Paragraphs 4(b) and 5 of this Agreement (except those that cannot be
divested pursuant to the Employee Retirement Income Security Act of 1974, as
amended or other applicable law), under this Agreement.
For purposes of this Agreement the term "cause" shall mean (i) conviction
of the Employee of any criminal offense involving dishonesty or breach of trust
or any felony or crime of moral turpitude, (ii) willful misconduct in the
performance of his duties, (iii) the willful continuous neglect of the duties
and responsibilities of his office (other than failure to perform his duties and
fulfill his responsibilities resulting from the Employee's incapacity due to a
physical or mental illness), or (iv) the Employee's failure to perform any term,
covenant or condition required to be performed by the Employee pursuant to this
Agreement, all to be finally determined in the sole discretion of the Board of
Directors of the Company.
(c) DISABILITY. In the event that the Employee shall sustain a disability
and be unable to perform his duties and responsibilities during the term of this
Agreement, as shall have been certified by at least two (2) duly licensed and
qualified physicians approved by the Board of Directors of the Company (the
"Examining Physicians"), the Company shall continue to pay to the Employee while
such disability continues the full amount of his base salary as set forth in
Paragraph 4 (a) hereof for a period following the date upon which such
disability shall have been so certified equal to the lesser of (i) six months or
(ii) the period ending upon the date of inception of the payment of benefits
under any disability insurance to which the Employee may become entitled
pursuant to Paragraph 5 (b) hereof. Thereafter, if the Employee's disability
shall continue (as evidenced by the continued absence of the Employee from his
duties), the employment of the Employee under this Agreement shall terminate and
all obligations of the Employee shall cease and the Employee shall be entitled
to receive only the benefits, if any, as may be provided by any insurance to
which he may have become entitled pursuant to Paragraph 5(b) hereof and the
payment of any amounts of the Employee's base salary then remaining to be paid
under Paragraph 4(a) hereof through the date of the termination of the
Employee's employment. "Disability" means the complete disability of the
Employee resulting from injury, sickness, disease, or infirmity due to age,
whereby the Employee is enable to perform his usual services for the Company;
the "Date of Disability" shall be deemed to be the date on which the Board of
Directors of the Company receives written notice from the Examining Physicians
stating that the Employee is suffering a Disability as defined herein.
(d) DEATH. In the event of the Employee's death during the term of this
Agreement, the Employee's employment hereunder shall immediately terminate and,
in such event, the Employee's estate
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shall be entitled to receive the Employee's base salary as provided in Paragraph
4(a) hereof to the last day of the month during which the Employee's death shall
have occurred and such additional benefits, if any, as may be provided by any
insurance to which the Employee may have become entitled pursuant to Paragraph
5(b) hereof.
(e) TERMINATION FOR GOOD REASON FOLLOWING CHANGE OF CONTROL. The Employee's
employment may be terminated by him by written notice for a Good Reason (as
hereinafter defined), effective upon the giving of such notice, at any time
within one hundred eighty (180) days following a Change of Control (as
hereinafter defined), in which event, notwithstanding the provisions of
Paragraph 7(b) hereof, the Employee shall be entitled to receive the severance
benefits provided for in Paragraph 7(a) hereof to the same extent as if the
employment of the Employee had been terminated by the Company without cause
pursuant to said Paragraph 7(a).
For purposes of this Agreement, the term "Good Reason" means any of the
following:
(i) A material diminution by the Company in the Employee's authority,
functions, duties or responsibilities in the capacity specified in Paragraph 2
hereof; provided that such material diminution is not in connection with a
termination of the Employee's employment hereunder by the Company in accordance
with Paragraph 7(a); or
(ii) A failure by the Company to comply with any material provision of this
Agreement which has not been cured within thirty (30) days after notice of such
noncompliance has been given by the Employee to the Company.
For purposes of this Agreement, a "Change of Control" means that any of the
following events has occurred:
(i) any "person", as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended, (the "Act") (other than the
Company, any of its Subsidiaries (as hereinafter defined), or any trustee,
fiduciary or other person or entity holding securities under any employee
benefit plan or trust of the Company or any of its Subsidiaries), together with
all "affiliates" and "associates" (as such terms are defined in Rule 12b-2 under
the Act) of such person, shall become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company representing 50% or more of either (A) the combined voting power of
the Company's then outstanding securities having the right to vote in an
election of the Company's Board of Directors ("Voting Securities") or (B) the
then outstanding shares of Stock (as hereinafter defined) of the Company (in
either such case other than as a result of an acquisition of securities directly
from the Company); or
(ii) persons who, as of April, 1995 constituted the Company's Board of
Directors (the "Incumbent Directors") cease for any reason, including, without
limitation, as a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the Board, provided that any
person becoming a director of the Company subsequent to April, 1995, whose
election or nomination for election was approved by a vote of at least a
majority of the Incumbent Directors shall, for purposes of this Plan be
considered an Incumbent Director; or
(iii) the stockholders of the Company shall approve (A) any consolidation
or merger of the Company or any Subsidiary where the shareholders of the
Company, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, beneficially own (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly, shares
representing in the aggregate 60% or more of the voting shares of the
corporation issuing case or securities in the consolidation or merger (or of its
ultimate parent corporation, if any), (B) any sale, lease, exchange or other
transfer (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of the
assets of the Company or (C) any plan or proposal for the liquidation or
dissolution of the Company.
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Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
have occurred for purposes of the foregoing clause (I) solely as the result of
an acquisition of securities by the Company which, by reducing the number of
shares of Stock or other Voting Securities outstanding, increases (x) the
proportionate number of shares of Stock beneficially owned by any person to 50%
or more of the shares of stock then outstanding or (y) the proportionate voting
power represented by the Voting Securities beneficially owned by any person to
50% or more of the combined voting power of all then outstanding Voting
Securities; provided, however, that if any person referred to in clause (x) or
(y) of this sentence shall thereafter become the beneficial owner of any
additional shares of Stock or other Voting Securities (other than pursuant to a
stock split, stock divided, or similar transaction), then a "Change of Control"
shall be deemed to have occurred for purposes of the foregoing clause (I).
For purposes of the foregoing definition of "Change of Control":
(A) the term "Stock" means the Common Stock, par value $.01 per share, of
the Company, subject to adjustment or change as a result of any merger,
consolidation, sale of all or substantially all of the assets of the Company, or
any reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or similar transaction; and
(B) the term "Subsidiary" means any corporation or other entity (other than
the Company) in any unbroken chain of corporations or entities, beginning with
the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting
power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
(f) Treatment of Annual Bonus on Termination
----------------------------------------
(i) CURRENT YEAR'S BONUS. In the event of the termination of the
employment of the Employee for any reason, the Employee shall not be entitled to
receive any annual bonus payment pursuant to Paragraph 4(b) hereof in respect of
the fiscal year of the Company in which the termination shall take place.
(iii) PREVIOUS YEAR'S BONUS. In the event that at the time of his
termination, the Employee is due, but has not yet received, payment of an annual
bonus in respect of the preceding fiscal year of the Company, such bonus shall
be paid to the Employee at the time it is paid to the other employees of the
Company, except that, notwithstanding the foregoing, if the Employee shall have
been terminated for cause as provided in subparagraph (b) of this Paragraph 7,
the Employee shall forfeit and shall not be entitled to receive payment of any
such annual bonus in respect of the preceding fiscal year which the Employee
shall not have received on or before the date of such termination for cause.
8. Inventions and Patents
----------------------
(a) DISCLOSURE OF DEVELOPMENTS. The Employee will promptly and fully
disclose to the Company and all inventions, discoveries, trade secrets and
improvements, whether or not patentable and whether or not they are made,
conceived or reduced to practice during working hours or using the Company's
data or facilities, which the Employee develops, makes, conceives or reduces to
practice during his employment by the Company, either solely or jointly with
others (collectively, "Developments"). All such Developments shall be the sole
property of the Company, and the Employee hereby assigns to the Company, without
further compensation, all his right, title and interest in and to such
Developments and any and all related patents, patent applications, copyrights,
copyright applications, trademarks and trade names in the United States and
elsewhere.
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(b) MAINTENANCE OF RECORDS. The Employee will keep and maintain adequate
and current written records of all Developments (in the form of notes, sketches,
drawings and as may be specified by the Company), which records shall be
available to and remain the sole property of the company at all times.
(c) ASSISTANCE IN OBTAINING PATENTS. The Employee will assist the Company
in obtaining and enforcing patent, copyright and other forms of legal protection
for the Developments in any country. Upon request, the Employee will sign all
applications, assignments, instruments and papers and perform all acts necessary
or desired by the Company to assign all such Developments fully and completely
to the Company and to enable the Company, its successors, assigns and nominees,
to secure and enjoy the full and exclusive benefits and advantages thereof.
During his employment, the Employee will perform his obligations under this
subparagraph (c) without further compensation, except for reimbursement of
expenses incurred at the request of the Company. If the Employee is not employed
by the Company as an Employee at the time he is requested to perform any
obligations under this subparagraph, he shall receive for such performance a
reasonable per diem fee, as well as reimbursement of any expenses incurred at
the request of the Company.
9. Proprietary Information.
-----------------------
(a) OBLIGATION TO KEEP CONFIDENTIAL. The Employee recognizes that his
relationship with the Company is one of high trust and confidence by reason of
his access to and contact with the trade secrets and confidential and
proprietary information of the Company. The Employee will not at any time,
either during his employment with the Company or thereafter, disclose to others,
or use for his own benefit or the benefit of others, any confidential or
proprietary information, and all other knowledge, information, documents or
materials, owned, developed or possessed by the Company, whether in tangible or
intangible form, the confidentiality of which the Company takes reasonable
measures to protect, and which pertains, in any manner, to subjects which
include, but are not limited to, the Company's research operations, customers
(including identities of customers and prospective customers, identities of
individual contacts at business entities which are customers or prospective
customers, preferences, businesses or habits), business relationships, products
(including prices, costs, sales or content), financial information or
measurements, business methods, future business plans, data bases, computer
programs, marketing plans, forecasts, licenses, pricing information and other
information owned, developed or possessed by the Company ("Proprietary
Information").
(b) EXCEPTIONS. The Employee's undertakings and obligations under the
Paragraph 9 will not apply to any Proprietary Information which: (a) is or
becomes generally known to the public through no action on the part of the
Employee, (b) is generally disclosed to third parties by the Company without
restriction on such third parties, (c) is approved for release by written
authorization of the Board of Directors of the Company, or (d) is the subject
matter of a lawful request or subpoena by and within the authority of a court or
governmental agency or other body.
(c) RETURN OF PROPRIETARY INFORMATION. Upon termination of the employment
of the Employee with the Company or at any other time upon request, the Employee
will promptly deliver to the Company all notes, memoranda, notebooks, drawings,
records, reports, files and other documents (and all copies or reproductions of
such materials) in his possession or under his control, whether prepared by him
or others, which contain Proprietary Information. The Employee acknowledges that
the material is the sole property of the Company.
10. ABSENCE OF RESTRICTIONS UPON DISCLOSURE AND COMPETITION. The Employee
represents that his performance of all the terms of this Agreement does not and
will not breach any agreement to keep in confidence proprietary information,
knowledge or data acquired by him in confidence or in trust prior to the date of
this Agreement, and he will not disclose to the Company or induce the Company to
use any confidential or proprietary information or material belonging to any
other Company or other entity. Employee represents that he will not hire any new
employees of the Company in violation of any agreement which is binding on the
Employee.
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11. OTHER OBLIGATIONS REGARDING PROPRIETARY INFORMATION. The Employee
acknowledges that the Company from time to time may have agreements with other
persons or with the U.S. Government, or agencies thereof, which impose
obligations or restrictions on the Company regarding inventions made during the
course of work under such agreements or regarding the confidential nature of
such work. The Employee agrees to be bound by all such obligations and
restrictions which are made known to him and to take all action necessary to
discharge the obligations of the Company under such agreements.
12. Noncompetition.
--------------
(a) During the Employment Period, the Employee agrees not to compete in any
manner, either directly or indirectly, with the Company, or to assist any other
person or entity to compete with the Company. Further, while an employee of the
Company, the Employee agrees not to engage in any other employment or business
enterprise without the written permission of the Chief Executive Officer of the
Company.
(b) After the termination, for any reason, of his employment with the
Company, the Employee agrees that for a period of one (1) year following such
termination, the Employee will not compete with the Company by developing,
marketing, or assisting others to develop or market a product or service which
is competitive with the products or services of the Company then existing or
planned for the future, which the Employee learns of or develops while an
Employee of the Company. The Employee further agrees that for the same period
following such termination, for any reason, the Employee will not accept
employment from or have any other professional relationship with any entity
which is competitive with the products or services of the Company then existing
or which were known by the Employee to be planned for the future. The foregoing
restrictions shall apply in all geographical areas where the Employee performed
services for the Company prior to such termination, and at all other places
where the Company does business and/or did business during the term of his
employment, and at all places where, during his employment with the Company, the
Company had plans or reasonable expectations to do business in the future.
(c) During the Employment Period and for one (1) year following
termination, for any reason, of his employment, the Employee agrees either on
his behalf or on behalf of any other person or entity, directly or indirectly,
not (i) to hire, solicit, or encourage to leave the employ of the Company any
person who is then an employee of the Company, or (ii) to solicit, entice away
or divert any person or entity who is then a client of the Company and who was a
client of the Company at the time of employment. The Employee agrees that
customer or client lists, business contracts and related items are the property
of the Company. The restrictions described herein shall apply to the activities
of the Employee in any state or other jurisdiction in which the Company engaged
in business during the term of employment.
Furthermore, for one (1) year following the termination, for any reason, of
his employment (except following termination of the employment of the Employee
pursuant to the Company's termination of business and liquidation of assets),
the Employee agrees that he will not (i) solicit or accept work or provide
services which is direct follow-up work or services under contract performed or
being performed by the Company or being actively solicited by the Company at the
time of termination of the employment of the Employee, or (ii) directly or
indirectly recruit the employees of the Company (or any successor thereto).
The restrictions against competition set forth in this Paragraph 12 are
considered by the parties to be reasonable for the purposes of protecting the
business of the Company. However, if any such restriction is found by any court
of competent jurisdiction to be unenforceable because it extends for too long a
period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic areas as to which it may be
enforceable.
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13. BINDING EFFECT. This Agreement shall be binding upon and insure to the
benefit of the Company and the Employee and their respective heirs, executors,
administrators, legal representatives, successors and assigns. This Agreement
and the rights and obligations of the parties hereunder are personal to the
Company and The Employee and are not assignable or transferable to any other
person, firm or corporation without the consent of the other party, provided,
however, that the Company may assign its rights and obligations hereunder to any
person or entity who or which succeeds to all or substantially all of the
Company's business and assets. This Agreement is intended to take effect as a
sealed instrument.
14. NOTICES. All notices required or permitted hereunder shall be in writing
and deemed effectively given upon personal delivery or upon deposit in the
United States mails, by registered or certified mail, postage prepaid, addressed
to the other party hereto at the address set forth in the introductory paragraph
of this Agreement, or at such other address or addresses as either party shall
designate to the other in accordance with this Paragraph 14.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties, and supersedes all prior agreements and understandings, relating to
the subject matter of this Agreement.
16. AMENDMENT. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee.
17. HEADINGS. The Paragraph and subparagraph headings used in this Agreement
are for convenience only and shall not be deemed to be a part of this Agreement.
18. SEVERABILITY. If any portion or provision of this Agreement shall to any
extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
19. GOVERNING LAW. This Agreement shall be construed, interpreted and enforced
in accordance with the laws of The Commonwealth of Massachusetts applicable to
agreements made to be performed entirely within such state, without giving
effect to the conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
C.P. CLARE CORPORATION
By:_________________________
its
RICHARD MORGAN
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EXHIBIT 10.68
EMPLOYMENT AGREEMENT
Employment Agreement, dated as of the 26th day of August, 1996 between
William D. Reed of One Gibson Road, Wellesley, Massachusetts, 02181 ("the
Employee") and C.P. CLARE CORPORATION, a Massachusetts Corporation with its
principal office at 78 Cherry Hill Drive, Beverly, Massachusetts 01915 (the
"Company"). Unless the context otherwise requires, the term "Company" shall
include all subsidiary corporations of the Company.
In consideration of the terms and mutual covenants herein contained, the
Employee and the Company agree as follows:
1. Term of Employment:
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(a) EMPLOYMENT. The Company hereby employs the Employee, and the Employee
hereby accepts employment by the Company, for the period commencing on the data
hereof and ending on August 25, 1997 (the "Initial Term"), subject to extension
in accordance with the provisions of subparagraph (b) below, unless terminated
earlier in accordance with the terms hereof (the "Employment Period").
(b) EXTENSION OF TERM. In the event that on or before the date of
expiration of the Initial Term, the employment of the Employee shall not have
been terminated pursuant to the provisions of Paragraph 7 hereof, the term of
the employment of the Employee under this Agreement shall be automatically
renewed for successive one year terms thereafter until such time as the
employment of the Employee shall be terminated pursuant to the provisions of
Paragraph 7 hereof.
2. CAPACITY. The Employee shall serve as Vice President - Worldwide Sales
and Corporate Marketing and shall perform such duties and functions with
respect to such position as are assigned from time to time by the Board of
Directors or by the Chief Executive Officer of the Company.
3. FULL-TIME EMPLOYMENT. The Employee shall devote his entire business and
professional time, attention and energies to the performance of his duties to
the Company and of any of its subsidiaries by which he may be employed and shall
not, directly or indirectly, actively engage in or concern himself with any
other activities or commitments which interfere with the performance of his
duties hereunder or which, even if non-interfering, may be inimical or contrary
to the best interests of the Company. Notwithstanding the foregoing, the
Employee may at all times during the Employment Period (i) subject in each case
to the approval of the Chief Executive Officer of the Company, serve as an
officer, director, trustee, or committee member of any religious, professional,
civic, charitable or educational organization, or as a director of any
corporation whose business is not competitive with that of the Company; and (ii)
engage in, and devote time and effort to, any and all personal investments or
business ventures unrelated to the business or affairs of the Company, in each
case so long as such activities do not materially interfere with his obligations
set forth in this Paragraph 3 and provided that such activities are permitted
under Paragraph 12 of this Agreement.
4. COMPENSATION AND BENEFITS. For all services rendered by the Employee to the
Company, the Company shall pay to the Employee during the Employment Period the
following compensation:
(a) BASE SALARY. The Employee shall be entitled to a bi-monthly base salary
of $7,708.34 ($185,000 annualized) from the date of this Agreement until the
expiration of the Employment Period. The base salary may be increased (but may
not be reduced) by the Board of Directors of the Company for any fiscal year of
the Company during the Employment Period. To that end, the Employee shall
receive a performance review at least once a year, in connection with which he
shall be eligible for such merit increases and other salary adjustments as the
Board of Directors of the Company shall approve.
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(b) ANNUAL BONUS. In addition to his regular salary, the Employee shall be
eligible (subject to the provisions of Paragraph 7(f) hereof) to receive a bonus
with respect to each fiscal year or portion thereof during the Employment
Period, of up to 50% of his base salary pursuant to the Company's Executive
Bonus Plan, as in effect from time to time. During fiscal year 1997, Employee
will receive a minimum bonus of $46,250 which for this year will be paid 30 days
after the close of the fiscal year.
(c) PAYMENT OF SALARY AND BONUS. The Employee's base salary under
subparagraph (a) of this Paragraph 4 shall be payable in substantially equal
installments in accordance with the Company's existing payroll practices for its
executives. Any annual bonus, other than the special bonus for fiscal year 1997,
payable under subparagraph (b) of this Paragraph 4 shall be paid to the Employee
within 60 days following the end of the fiscal year with respect to which such
bonus relates.
(d) EQUITY COMPENSATION ARRANGEMENTS. The Employee shall also be eligible
to participate during the term of his employment under this Agreement in such
equity compensation arrangements as are provided by the Company for its
executives. In that regard, the Employee will be granted stock options under the
Company's 1995 Stock Option and Incentive Plan which shall entitle the Employee
to acquire up to 100,000 shares of the Company's common stock for a purchase
price of $10.50 per share, such options to vest ratably over a period of five
(5) years; provided that the vesting of the right to exercise all such options
granted to the Employee shall be accelerated in the event that there shall be a
Change of Control of the Company (as hereinafter defined).
(e) WITHHOLDING TAXES. The Employee agrees that the Company shall withhold
from any and all payments required to be made to the Employee pursuant to this
Agreement all federal, state, local and/or other taxes which the Company
determines are required to be withheld in accordance with applicable statues
and/or regulations from time to time in effect.
5. Fringe Benefits; Vacations
---------------------------
(a) EMPLOYEE BENEFIT PLANS. The Employee shall be eligible to participate
during the Employment Period in such of the employee benefit and health plans
and other fringe benefit programs as the Company shall establish or maintain for
its employees from time to time (commensurate with the Employee's position and
compensation).
(b) Life and Disability Insurance. The Company shall provide to the
Employee at the expense of the Company and keep in force during the Employment
Period (and thereafter to the extent provided in Paragraph 7(a)(i) hereof) a
policy of whole life insurance with a death benefit in the amount of $500,000.
Additionally, the Employee shall be entitled to participate in the Company's
group disability insurance program during the Employment Period (and thereafter
to the extent provided in Paragraph 7(a)(i) hereof).
(c) CAR ALLOWANCE. The Employee shall be entitled to a car allowance of
$650.00 per month during the Employment Period (and thereafter to the extent
provided in Paragraph 7(a)(i).
(d) VACATIONS. The Employee shall be entitled to vacation time each year
consistent with the Company's vacation policy for its senior executives as in
effect from time to time, but in any case not less than 3 weeks paid vacation
per year. A copy of the Company's current vacation policy has been provided to
the Employee. The Employee shall also be entitled to all paid holidays and
personal days given by the Company to its executives.
6. REIMBURSEMENT. The Company shall promptly reimburse the Employee for all
reasonable business expenses incurred by him in connection with his performance
of his duties to the Company, upon substantiation of such expenses in accordance
with the policies of the Company in effect from time to time during the
Employment Period.
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7. TERMINATION OF EMPLOYMENT.
(a) TERMINATION WITHOUT CAUSE. The Company expressly reserves the right to
terminate the employment of the Employee hereunder other than for cause as
provided in subparagraph (b), and other than as provided in subparagraphs (c)
and (d), of this Paragraph 7. Subject to the provisions of subparagraph (e) of
this Paragraph 7, in the event that the Employees Employment shall have been so
terminated by the Company other than for cause:
(i) Severance Benefits. The Employee shall be entitled to receive for the
period of one (l) year following such termination his base salary as provided
for in Paragraph 4(a) hereof at the rate in effect on the date of such
termination of employment, payable in equal installments in the same amounts and
in the same periodic intervals as his base salary was paid immediately prior to
such termination, plus the continuation of the fringe benefits, life and
disability insurance, and car allowance provided for in subparagraphs (a), (b),
and (c) of Paragraph 5 hereof for such one (1) year period.
(ii) Outplacement. The Company shall reasonably assist the Employee in
locating other suitable employment, including expending up to Ten Thousand
Dollars ($10,000) to engage professional outplacement assistance, if the
Employee shall request the Company to provide such outplacement assistance.
(b) VOLUNTARY TERMINATION AND TERMINATION FOR CAUSE. The Employee's
employment may be voluntarily terminated by him at any time by giving not less
than two (2) weeks' written notice thereof to the Company. Additionally, the
Employee's employment may be terminated at any time for cause (as hereinafter
defined) effective upon the giving of written notice of such termination for
cause by the Company to the Employee. If at any time during the term of this
Agreement (i) the Employee shall have voluntarily terminated his employment with
the Company (other than as contemplated by subparagraph (e) of this Paragraph
7), or (ii) the Company shall have terminated the employment of the Employee for
cause (as hereinafter defined) the Employee shall be entitled to receive only
his base salary as provided in Paragraph 4 (a) hereof to the date of such
termination and no other benefits, including without limitation, those provided
for under Paragraphs 4(b) and 5 of this Agreement (except those that cannot be
divested pursuant to the Employee Retirement Income Security Act of 1974, as
amended or other applicable law), under this Agreement.
For purposes of this Agreement the term "cause" shall mean (i) conviction
of the Employee of any criminal offense involving dishonesty or breach of trust
or any felony or crime of moral turpitude, (ii) willful misconduct in the
performance of his duties, (iii) the willful continuous neglect of the duties
and responsibilities of his office (other than failure to perform his duties and
fulfill his responsibilities resulting from the Employee's incapacity due to a
physical or mental illness), or (iv) the Employee's failure to perform any term,
covenant or condition required to be performed by the Employee pursuant to this
Agreement, all to be finally determined in the sole discretion of the Board of
Directors of the Company.
(c) DISABILITY. In the event that the Employee shall sustain a disability
and be unable to perform his duties and responsibilities during the term of this
Agreement, as shall have been certified by at least two (2) duly licensed and
qualified physicians approved by the Board of Directors of the Company (the
"Examining Physicians"), the Company shall continue to pay to the Employee while
such disability continues the full amount of his base salary as set forth in
Paragraph 4 (a) hereof for a period following the date upon which such
disability shall have been so certified equal to the lesser of (i) six months or
(ii) the period ending upon the date of inception of the payment of benefits
under any disability insurance to which the Employee may become entitled
pursuant to Paragraph 5 (b) hereof. Thereafter, if the Employee's disability
shall continue (as evidenced by the continued absence of the Employee from his
duties), the employment of the Employee under this Agreement shall terminate and
all obligations of the
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Employee shall cease and the Employee shall be entitled to receive only the
benefits, if any, as may be provided by any insurance to which he may have
become entitled pursuant to Paragraph 5(b) hereof and the payment of any amounts
of the Employee's base salary then remaining to be paid under Paragraph 4(a)
hereof through the date of the termination of the Employee's employment.
"Disability" means the complete disability of the Employee resulting from
injury, sickness, disease, or infirmity due to age, whereby the Employee is
unable to perform his usual services for the Company; the "Date of Disability"
shall be deemed to be the date on which the Board of Directors of the Company
receives written notice from the Examining Physicians stating that the Employee
is suffering a Disability as defined herein.
(d) DEATH. In the event of the Employee's death during the term of this
Agreement, the Employee's employment hereunder shall immediately terminate and,
in such event, the Employee's estate shall be entitled to receive the Employee's
base salary as provided in Paragraph 4(a) hereof to the last day of the month
during which the Employee's death shall have occurred and such additional
benefits, if any, as may be provided by any insurance to which the Employee may
have become entitled pursuant to Paragraph 5(b) hereof.
(e) TERMINATION FOR GOOD REASON FOLLOWING CHANGE OF CONTROL. The Employee's
employment may be terminated by him by written notice for a Good Reason (as
hereinafter defined), effective upon the giving of such notice, at any time
within one hundred eighty (180) days following a Change of Control (as
hereinafter defined), in which event, notwithstanding the provisions of
Paragraph 7(b) hereof, the Employee shall be entitled to receive the severance
benefits and outplacement services provided for in Paragraph 7(a) hereof to the
same extent as if the employment of the Employee had been terminated by the
Company without cause pursuant to said Paragraph 7(a).
For purposes of this Agreement, the term "Good Reason" means any of the
following:
(i) A material diminution by the Company in the Employee's authority,
functions, duties or responsibilities in the capacity specified in Paragraph 2
hereof; provided that such material diminution is not in connection with a
termination of the Employee's employment hereunder by the Company in accordance
with Paragraph 7(a); or
(ii) A failure by the Company to comply with any material provision of this
Agreement which has not been cured within thirty (30) days after notice of such
noncompliance has been given by the Employee to the Company.
For purposes of this Agreement, a "Change of Control" means that any of the
following events has occurred:
(i) any "person", as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended, (the "Act") (other than the
Company, any of its Subsidiaries (as hereinafter defined), or any trustee,
fiduciary or other person or entity holding securities under any employee
benefit plan or trust of the Company or any of its Subsidiaries), together with
all "affiliates" and "associates" (as such terms are defined in Rule 12b-2 under
the Act) of such person, shall become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company representing 50% or more of either (A) the combined voting power of
the Company's then outstanding securities having the right to vote in an
election of the Company's Board of Directors ("Voting Securities") or (B) the
then outstanding shares of Stock (as hereinafter defined) of the Company (in
either such case other than as a result of an acquisition of securities directly
from the Company); or
(ii) persons who, as of April, 1995 constituted the Company's Board of
Directors (the "Incumbent Directors") cease for any reason, including, without
limitation, as a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the Board, provided that any
person becoming a director of the Company subsequent to April, 1995, whose
election or nomination
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for election was approved by a vote of at least a majority of the Incumbent
Directors shall, for purposes of this Plan be considered an Incumbent Director;
or
(iii) the stockholders of the Company shall approve (A) any consolidation
or merger of the Company or any Subsidiary where the shareholders of the
Company, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, beneficially own (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly, shares
representing in the aggregate 60% or more of the voting shares of the
corporation issuing case or securities in the consolidation or merger (or of its
ultimate parent corporation, if any), (B) any sale, lease, exchange or other
transfer (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of the
assets of the Company or (C) any plan or proposal for the liquidation or
dissolution of the Company.
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
have occurred for purposes of the foregoing clause (I) solely as the result of
an acquisition of securities by the Company which, by reducing the number of
shares of Stock or other Voting Securities outstanding, increases (x) the
proportionate number of shares of Stock beneficially owned by any person to 50%
or more of the shares of stock then outstanding or (y) the proportionate voting
power represented by the Voting Securities beneficially owned by any person to
50% or more of the combined voting power of all then outstanding Voting
Securities; provided, however, that if any person referred to in clause (x) or
(y) of this sentence shall thereafter become the beneficial owner of any
additional shares of Stock or other Voting Securities (other than pursuant to a
stock split, stock divided, or similar transaction), then a "Change of Control"
shall be deemed to have occurred for purposes of the foregoing clause (I).
For purposes of the foregoing definition of "Change of Control":
(A) the term "Stock" means the Common Stock, par value $.01 per share, of
the Company, subject to adjustment or change as a result of any merger,
consolidation, sale of all or substantially all of the assets of the Company, or
any reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or similar transaction; and
(B) the term "Subsidiary" means any corporation or other entity (other than
the Company) in any unbroken chain of corporations or entities, beginning with
the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting
power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
(f) TREATMENT OF ANNUAL BONUS ON TERMINATION
(i) CURRENT YEAR'S BONUS. In the event of the termination of the
employment of the Employee for any reason, the Employee shall not be entitled to
receive any annual bonus payment pursuant to Paragraph 4(b) hereof in respect of
the fiscal year of the Company in which the termination shall take place.
(iii) PREVIOUS YEAR'S BONUS. In the event that at the time of his
termination, the Employee is due, but has not yet received, payment of an annual
bonus in respect of the preceding fiscal year of the Company, such bonus shall
be paid to the Employee at the time it is paid to the other employees of the
Company, except that, notwithstanding the foregoing, if the Employee shall have
been terminated for cause as provided in subparagraph (b) of this Paragraph 7,
the Employee shall forfeit and shall not be entitled to receive payment of any
such annual bonus in respect of the preceding fiscal year which the Employee
shall not have received on or before the date of such termination for cause.
INVENTIONS AND PATENTS
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(a) DISCLOSURE OF DEVELOPMENTS. The Employee will promptly and fully
disclose to the Company and all inventions, discoveries, trade secrets and
improvements, whether or not patentable and whether or not they are made,
conceived or reduced to practice during working hours or using the Company's
data or facilities, which the Employee develops, makes, conceives or reduces to
practice during his employment by the Company, either solely or jointly with
others (collectively, "Developments"). All such Developments shall be the sole
property of the Company, and the Employee hereby assigns to the Company, without
further compensation, all his right, title and interest in and to such
Developments and any and all related patents, patent applications, copyrights,
copyright applications, trademarks and trade names in the United States and
elsewhere.
(b) MAINTENANCE OF RECORDS. The Employee will keep and maintain adequate
and current written records of all Developments (in the form of notes, sketches,
drawings and as may be specified by the Company), which records shall be
available to and remain the sole property of the company at all times.
(c) ASSISTANCE IN OBTAINING PATENTS. The Employee will assist the Company
in obtaining and enforcing patent, copyright and other forms of legal protection
for the Developments in any country. Upon request, the Employee will sign all
applications, assignments, instruments and papers and perform all acts necessary
or desired by the Company to assign all such Developments fully and completely
to the Company and to enable the Company, its successors, assigns and nominees,
to secure and enjoy the full and exclusive benefits and advantages thereof.
During his employment, the Employee will perform his obligations under this
subparagraph (c) without further compensation, except for reimbursement of
expenses incurred at the request of the Company. If the Employee is not employed
by the Company as an Employee at the time he is requested to perform any
obligations under this subparagraph, he shall receive for such performance a
reasonable per diem fee, as well as reimbursement of any expenses incurred at
the request of the Company.
9. PROPRIETARY INFORMATION
(a) OBLIGATION TO KEEP CONFIDENTIAL. The Employee recognizes that his
relationship with the Company is one of high trust and confidence by reason of
his access to and contact with the trade secrets and confidential and
proprietary information of the Company. The Employee will not at any time,
either during his employment with the Company or thereafter, disclose to others,
or use for his own benefit or the benefit of others, any confidential or
proprietary information, and all other knowledge, information, documents or
materials, owned, developed or possessed by the Company, whether in tangible or
intangible form, the confidentiality of which the Company takes reasonable
measures to protect, and which pertains, in any manner, to subjects which
include, but are not limited to, the Company's research operations, customers
(including identities of customers and prospective customers, identities of
individual contacts at business entities which are customers or prospective
customers, preferences, businesses or habits), business relationships, products
(including prices, costs, sales or content), financial information or
measurements, business methods, future business plans, data bases, computer
programs, marketing plans, forecasts, licenses, pricing information and other
information owned, developed or possessed by the Company ("Proprietary
Information").
(b) EXCEPTIONS. The Employee's undertakings and obligations under the
Paragraph 9 will not apply to any Proprietary Information which: (a) is or
becomes generally known to the public through no action on the part of the
Employee, (b) is generally disclosed to third parties by the Company without
restriction on such third parties, (c) is approved for release by written
authorization of the Board of Directors of the Company, or (d) is the subject
matter of a lawful request or subpoena by and within the authority of a court or
governmental agency or other body.
(c) RETURN OF PROPRIETARY INFORMATION. Upon termination of the employment
of the Employee with the Company or at any other time upon request, the Employee
will promptly deliver to the Company
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all notes, memoranda, notebooks, drawings, records, reports, files and other
documents (and all copies or reproductions of such materials) in his possession
or under his control, whether prepared by him or others, which contain
Proprietary Information. The Employee acknowledges that the material is the sole
property of the Company.
10. ABSENCE OF RESTRICTIONS UPON DISCLOSURE AND COMPETITION. The Employee
represents that his performance of all the terms of this Agreement does not and
will not breach any agreement to keep in confidence proprietary information,
knowledge or data acquired by him in confidence or in trust prior to the date of
this Agreement, and he will not disclose to the Company or induce the Company to
use any confidential or proprietary information or material belonging to any
other Company or other entity. Employee represents that he will not hire any new
employees of the Company in violation of any agreement which is binding on the
Employee.
11. OTHER OBLIGATIONS REGARDING PROPRIETARY INFORMATION. The Employee
acknowledges that the Company from time to time may have agreements with other
persons or with the U.S. Government, or agencies thereof, which impose
obligations or restrictions on the Company regarding inventions made during the
course of work under such agreements or regarding the confidential nature of
such work. The Employee agrees to be bound by all such obligations and
restrictions which are made known to him and to take all action necessary to
discharge the obligations of the Company under such agreements.
12. NONCOMPETITION.
(a) During the Employment Period, the Employee agrees not to compete in any
manner, either directly or indirectly, with the Company, or to assist any other
person or entity to compete with the Company. Further, while an employee of the
Company, the Employee agrees not to engage in any other employment or business
enterprise without the written permission of the Chief Executive Officer of he
Company.
(b) After the termination, for any reason, of his employment with the
Company, the Employee agrees that for a period of one (1) year following such
termination, the Employee will not compete with the Company by developing,
marketing, or assisting others to develop or market a product or service which
is competitive with the products or services of the Company then existing or
planned for the future, which the Employee learns of or develops while an
Employee of the Company. The Employee further agrees that for the same period
following such termination, for any reason, the Employee will not accept
employment from or have any other professional relationship with any entity
which is competitive with the products or services of the Company then existing
or which were known by the Employee to be planned for the future. The foregoing
restrictions shall apply in all geographical areas where the Employee performed
services for the Company prior to such termination, and at all other places
where the Company does business and/or did business during the term of his
employment, and at all places where, during his employment with the Company, the
Company had plans or reasonable expectations to do business in the future.
(c) During the Employment Period and for one (1) year following
termination, for any reason, of his employment, the Employee agrees either on
his behalf or on behalf of any other person or entity, directly or indirectly,
not (i) to hire, solicit, or encourage to leave the employ of the Company any
person who is then an employee of the Company, or (ii) to solicit, entice away
or divert any person or entity who is then a client of the Company and who was a
client of the Company at the time of employment. The Employee agrees that
customer or client lists, business contracts and related items are the property
of the Company. The restrictions described herein shall apply to the activities
of the Employee in any state or other jurisdiction in which the Company engaged
in business during the term of employment.
Furthermore, for one (1) year following the termination, for any reason, of
his employment (except following termination of the employment of the Employee
pursuant to the Company's termination of business and liquidation of assets),
the Employee agrees that he will not (i) solicit or accept work or
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provide services which is direct follow-up work or services under contract
performed or being performed by the Company or being actively solicited by the
Company at the time of termination of the employment of the Employee, or (ii)
directly or indirectly recruit the employees of the Company (or any successor
thereto).
The restrictions against competition set forth in this Paragraph 12 are
considered by the parties to be reasonable for the purposes of protecting the
business of the Company. However, if any such restriction is found by any court
of competent jurisdiction to be unenforceable because it extends for too long a
period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic areas as to which it may be
enforceable.
13. BINDING EFFECT. This Agreement shall be binding upon and insure to the
benefit of the Company and the Employee and their respective heirs, executors,
administrators, legal representatives, successors and assigns. This Agreement
and the rights and obligations of the parties hereunder are personal to the
Company and The Employee and are not assignable or transferable to any other
person, firm or corporation without the consent of the other party, provided,
however, that the Company may assign its rights and obligations hereunder to any
person or entity who or which succeeds to all or substantially all of the
Company's business and assets. This Agreement is intended to take effect as a
sealed instrument.
14. NOTICES. All notices required or permitted hereunder shall be in writing
and deemed effectively given upon personal delivery or upon deposit in the
United States mails, by registered or certified mail, postage prepaid, addressed
to the other party hereto at the address set forth in the introductory paragraph
of this Agreement, or at such other address or addresses as either party shall
designate to the other in accordance with this Paragraph 14.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties, and supersedes all prior agreements and understandings, relating to
the subject matter of this Agreement.
16. AMENDMENT. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee.
17. HEADINGS. The Paragraph and subparagraph headings used in this Agreement
are for convenience only and shall not be deemed to be a part of this Agreement.
18. SEVERABILITY. If any portion or provision of this Agreement shall to any
extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
19. GOVERNING LAW. This Agreement shall be construed, interpreted and enforced
in accordance with the laws of The Commonwealth of Massachusetts applicable to
agreements made to be performed entirely within such state, without giving
effect to the conflicts of laws principles thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
C.P. CLARE CORPORATION
By:_________________________
its
WILLIAM D. REED
----------------------------
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EXHIBIT 10.69
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of December 19, 1996 (the "Agreement"),
among Tongeren Manufacturing Company, a company organized under the laws of
Belgium (the "Company" or "TMC"), C.P. Clare Corporation, a Massachusetts
corporation ("Seller"), Gunther, GmbH, a corporation organized under the laws of
Switzerland ("Buyer") and W. Gunther, GmbH, a corporation organized under the
laws of Germany ("Gunther").
WITNESSETH:
WHEREAS, Seller owns or will own prior to the Closing all of the shares of
stock of TMC (the "TMC Shares");
WHEREAS, the Seller desires to sell to the Buyer and the Buyer desires to
purchase from the Seller all of the Seller's shares of TMC in accordance with
the terms and conditions hereof.
NOW, THEREFORE, in order to consummate the purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows.
Section 1. SALE OF THE SELLER'S SHARES
1.1 TRANSFER OF COMPANY SHARES. At the Closing, the Seller and Buyer
shall enter the transfer of the TMC Shares in the shareholder's register of TMC
by signing appropriate transfer declarations thereon. Seller will execute such
other documents as may be reasonably required by Buyer to effect a valid
transfer of such TMC Shares by the Seller. Buyer may require the transfer of one
share to a third party purchaser to be named by Buyer.
1.2 PURCHASE PRICE AND PAYMENT. In consideration of the sale by
Seller to Buyer of the TMC Shares, Buyer agrees that at the Closing it will
deliver to the Seller a total purchase price of $10.00 (Ten U.S. Dollars).
1.3 TIME AND PLACE OF CLOSING. The closing of the purchase and sale
provided for in this Agreement (herein called "Closing) shall be held at the
offices of Seller at 78 Cherry Hill Drive, Beverly, Massachusetts on January 15,
1997 or at such other place or an earlier or later date or time as may be
mutually agreed upon by the parties.
<PAGE> 2
Section 2. CERTAIN REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES BY THE SELLER. The Seller
represents and warrants to Buyer that:
(a) ORGANIZATION. The Company is a corporation duly organized,
and validly existing under the laws of Belgium.
(b) POWER AND AUTHORIZATION. The Seller has full legal right,
power and authority to enter into and perform its obligations under this
Agreement and the other agreements and documents (collectively, the
"Agreements") required to be delivered by it hereunder. The execution, delivery
and performance by the Seller of this Agreement and such other Agreements and
documents have been duly authorized by all necessary corporate action. This
Agreement has been duly and validly executed and delivered by the Seller and
constitutes its legal, valid and binding obligation, enforceable in accordance
with its terms. When executed and delivered by the Seller as contemplated
herein, each of such other Agreements to be executed in connection with this
Agreement and the transactions contemplated hereby shall constitute the legal,
valid and binding obligation of the Seller, enforceable in accordance with its
terms.
(c) OWNERSHIP OF SELLER SHARES. Upon transfer of the TMC Shares
owned by Seller, Buyer shall acquire good and marketable title to such TMC
Shares, free and clear of all claims, liens, charges, proxies, encumbrances and
security interests of any kind or nature whatsoever.
(d) DISCLAIMER. No representation or warranty of any kind or
nature (express or implied) is being made by the Seller or the Company with
respect to the business, the results of operations, or future operations or
prospects of the Company or the nature, condition, or value of any assets or
liabilities (contingent or otherwise) of the Company or to any other matter with
respect to the Company or the merchantability, fitness for a particular purpose,
condition, use, quantity, workmanship or existence of any assets. Buyer and
Gunther acknowledge that the transfer of the TMC Shares from the Seller is being
made "AS IS WHERE IS" on a non-recourse basis with respect to the Seller, except
to the extent that the representations and warranties in Section 2.1 are not
accurate and provided, however, that Seller represents that the written
information made available to Buyer as set forth in Schedule 1 herein is
accurate to the best of its knowledge and belief at the time such information
was provided.
2.2 CERTAIN REPRESENTATIONS AND WARRANTIES BY THE BUYER AND GUNTHER.
Each of Buyer and Gunther represents and warrants to the Seller that:
(a) ORGANIZATION. Each of Buyer and Gunther is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation. Gunther owns all the outstanding capital stock or other equity
interests of Buyer.
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(b) POWER AND AUTHORIZATION. Buyer has the legal right, power and
authority to enter into and perform its obligations under this Agreement and the
other Agreements required to be delivered by it hereunder. The execution,
delivery and performance by Buyer of this Agreement and such other agreements
and documents have been duly authorized by all necessary corporate action. This
Agreement has been duly and validly executed and delivered by Buyer and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms. When executed and delivered by Buyer as contemplated
herein, each of such other Agreements to be executed in connection with this
Agreement and the transactions contemplated hereby shall constitute the legal,
valid and binding obligation of Buyer, enforceable in accordance with its terms.
(c) POWER AND AUTHORIZATION. Gunther has the legal right, power
and authority to enter into and perform its obligations under this Agreement and
the other Agreements required to be delivered by it hereunder. The execution,
delivery and performance by Gunther of this Agreement and such other agreements
and documents have been duly authorized by all necessary corporate action. This
Agreement has been duly and validly executed and delivered by Gunther and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms. When executed and delivered by Gunther as
contemplated herein, each of such other Agreements to be executed in connection
with this Agreement and the transactions contemplated hereby shall constitute
the legal, valid and binding obligation of Gunther, enforceable in accordance
with its terms.
(d) DUE DILIGENCE AND ANALYSIS: Buyer and Gunther understand and
agree that they and not any Seller or the Company have been responsible for
having conducted due diligence investigations of the Company. Buyer and Gunther
acknowledge and agree that in entering into this Agreement, each has relied upon
its own valuation of the Company and the TMC Shares and not upon any valuation
provided by the Company or the Seller. In this regard, Buyer and Gunther also
acknowledge that they or their representatives have had complete opportunity to
ask such questions and make such detailed inquiries, and receive such
information and material, regarding the business, personnel, assets, condition,
capital structure, agreements and prospects of and applicable to the Company.
Buyer and Gunther acknowledge and verify that neither the Seller nor the Company
has made any representation or warranty or has any duty or obligation to it
whether express or implied, of any kind or character, except as expressly set
forth herein or as may be set forth in a definitive Supply Agreement executed by
the parties. Buyer and Gunther acknowledge that they have completed their due
diligence investigation of the Company to their full satisfaction prior to
signing this Agreement, including with respect to environmental and labor
related matters, and that Buyer's and Gunther's obligation to close the
transactions contemplated by this Agreement are not conditioned upon the absence
of a material, adverse change in the financial condition or prospects of the
Company's operations. Neither Gunther or Buyer is relying on any forecasted
operating results, budgets or valuations (including, without limitation, any
information
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<PAGE> 4
* Confidential Treatment Requested *
contained in any confidential offering memorandum supplied in connection with
this transaction) prepared by the Seller or the Company but is rather relying on
its own plan of operation and financial forecasts for the Company or such other
information that it deems appropriate.
Section 3. COVENANTS
3.1 COVENANTS OF THE COMPANY. The Company hereby makes the covenants
and agreements set forth in this Section 3.1.
3.1.1 CONDUCT OF BUSINESS. Between the date of this Agreement and the
Closing Date, TMC will conduct and Seller will cause TMC to conduct its business
in the ordinary course, except with respect to the following:
(a) the continued negotiations and proceedings with respect to
the collective dismissal of approximately 160 employees of TMC in accordance
with the collective dismissal papers filed with the Belgian authorities on
December 3, 1996 and any social actions taken by the workers of the Company with
respect to such collective dismissal, including, without limitation, a strike,
plant occupation or other such action;
(b) the sale by TMC of a group of up to six engineers, and
certain related assets, associated with such group all as set forth on Exhibit
B, to a company to be designated by Seller for consideration [CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION], which amount shall be paid in cash upon the receipt by such company
of all the equipment set forth on Exhibit B;
(c) the transfer for no consideration of up to three employees
specified by the Company in its sole discretion to C.P. Clare, N.V.;
(d) the filing by the Company of an environmental report with
respect to certain investigations undertaken at the Tongeren, Belgium site of
the Company with the appropriate Flemish environmental authorities; and
(e) balance sheet adjustments necessary following a review by the
Company of current grants outstanding from the Flemish government.
3.1.2 AUTHORIZATION FROM OTHERS. Prior to the Closing Date, the Company
will use its best efforts to obtain all authorizations, consents and permits of
others required to permit the consummation by the Seller and the Company of the
transactions contemplated by this Agreement.
3.1.3 CONSUMMATION OF AGREEMENT. The Company and the Seller shall use
their best efforts to perform and fulfill all conditions and obligations on
their parts to be
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performed and fulfilled under this Agreement. The Company will obtain prior to
the Closing all necessary authorization of its Board of Directors.
3.2 COVENANTS OF BUYER. Buyer hereby makes the covenants and
agreements set forth in this Section 3.2.
3.2.1 CONSUMMATION OF AGREEMENT. Buyer shall use its best efforts to
perform and fulfill all conditions and obligations on its part to be performed
and fulfilled under this Agreement. To this end, Buyer will obtain prior to the
Closing all necessary authorizations or approvals of its stockholders and Board
of Directors.
3.2.2 MANAGING DIRECTOR. Buyer shall insure that Mr. Elson Nowell is
appointed as the Managing Director of TMC on the day of the Closing and remains
so during the term of the Supply Agreement, for so long as he shall be employed
by Gunther or any of its subsidiaries or affiliates. In the event that TMC
wishes to replace Mr. Nowell as Managing Director, the operating committee
established under the Supply Agreement will have the right and authority to
consent to such replacement Managing Director.
3.2.3 LEGAL COUNSEL. Buyer covenants and agrees following the Closing
to cause TMC to continue to retain Stibbe Simont Monahan Duhot as designated
legal counsel to assist in the social restructuring begun prior to the Closing
and that Stibbe Simont Monahan Duhot shall participate in the negotiations
regarding such social restructuring. The operating committee to be formed
pursuant to the Supply Agreement shall have the right to oversee and review all
decisions made regarding such social restructuring and Seller shall continue to
have the right to engage Stibbe Simont Monahan Duhot on any matter and consult
directly with them with respect to such social restructuring. Any legal fees
incurred following the Closing relating directly or indirectly to the social
restructuring shall be the responsibility of TMC and Buyer; provided, however
that Seller shall pay legal fees it incurs.
3.2.4 TAX RETURNS; ACCESS TO RECORDS. Following the Closing, Buyer
shall cause the Company to cooperate with Seller to permit the Seller, in
accordance with applicable law, to promptly prepare and file on or before the
due date or any extension thereof, all federal, state and local tax returns
required to be filed by the Seller with respect to taxable periods ending on or
before the Closing. The Company will afford the Seller and its attorneys and
accountants access to all records, files and other historic materials of the
Company required by Seller to complete such tax and other filings. In the event
that the Company is audited with respect to any period prior to the Closing,
Buyer will notify the Seller immediately and the Seller shall have the right to
control such audit procedure and, at its own expense, hire accountants to assist
in such audit.
Section 4. CONDITIONS
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* Confidential Treatment Requested *
4.1 CONDITIONS TO THE OBLIGATIONS OF BUYER. The obligation of Buyer
to consummate this Agreement and the transactions contemplated hereby are
subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent:
(a) REPRESENTATIONS; WARRANTIES. Each of the representations and
warranties of the Company and the Seller contained in Section 2 shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing; and the Company and
the Seller shall, on or before the Closing, have performed all of their
obligations hereunder which by the terms hereof are to be performed on or before
the Closing.
(b) SUPPLY AGREEMENT. Each of the Seller, Buyer and TMC, and
insofar as is applicable Gunther, shall have executed and delivered a Supply
Agreement in form and substance reasonably satisfactory to both parties with the
terms and conditions outlined in Exhibit A hereof.
(c) ESCROW AGREEMENT. Each of the Company, the Seller and the
Escrow Agent shall have executed and delivered the Escrow Agreement in form and
substance reasonably satisfactory to both parties.
(d) CONSENTS. The Company and the Seller, as the case may be,
shall have made all filings with and notifications of governmental authorities,
regulatory agencies and other entities required to be made by the Company or the
Seller in connection with the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby and the Company and Buyer
shall have received all authorizations, waivers, consents and permits, in form
and substance reasonably satisfactory to Buyer, from all third parties,
including without limitation, applicable governmental authorities, regulatory
agencies, lessors, lenders and contract parties, required to permit the
continuation of the business of the Company and the consummation of the
transactions contemplated by this Agreement.
(e) BALANCE SHEET ITEMS. At the Closing, the balance sheet of
the Company shall contain the following items, (i) a cash balance of at least
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION], which amount may be increased up to [CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] in the
event that the debt outstanding as set forth in item (ii) hereof exceeds
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION], in which case the cash balance will increase on a
proportional basis; (ii) debt payable to Kredietbank in a total principal amount
equal to a minimum of [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION] and a maximum of [CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]; (iii)
a book amount of intercompany
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* Confidential Treatment Requested *
accounts receivable of approximately [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION; and (iv) the write off
of goodwill in an amount approximately equal to 37,837,000 BEF and certain other
balance sheet adjustments to be subsequently defined.
4.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE SELLER. The
obligation of the Company and the Seller to consummate this Agreement and the
transactions contemplated hereby is subject to the fulfillment, prior to or at
the Closing, of the following conditions precedent:
(a) REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the
representations and warranties of the Buyer and Gunther contained in Section 2
shall be true and correct in all material respects as of the date of this
Agreement and as of the
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<PAGE> 8
* Confidential Treatment Requested *
Closing Date as though made on and as of the Closing; and Buyer and Gunther
shall, on or before the Closing, have performed all of their obligations
hereunder which by the terms hereof are to be performed on or before the
Closing.
(b) SUPPLY AGREEMENT. Each of the Seller, the Buyer and TMC, and
insofar as applicable Gunther shall have executed and delivered a Supply
Agreement in form and substance reasonably satisfactory to both parties with the
terms and conditions outline in Exhibit A hereof.
(c) ESCROW AGREEMENt. Each of the Company, Buyer, Seller and the
Escrow Agent shall have executed and delivered the Escrow Agreement in form and
substance reasonably satisfactory to both parties.
(d) CONSENTS. The Buyer and Gunther shall have made all filings
with and notifications of governmental authorities, regulatory agencies and
other entities required to be made by the Buyer of Gunther in connection with
the execution and delivery of this Agreement and the performance of the
transactions contemplated hereby and the Company, and Buyer shall have received
all authorizations, waivers, consents and permits, in form and substance
reasonably satisfactory to the Company and Seller, from all third parties,
including without limitation, applicable governmental authorities, regulatory
agencies, lessors, lenders and contract parties, required to permit the
continuation of the business of the Company and the consummation of the
transactions contemplated by this Agreement.
(e) BALANCE SHEET ITEMS. At the Closing, the balance sheet of
the Company shall contain the following items, (i) a cash balance of at least
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION], which amount may be increased up to [CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] in the
event that the debt outstanding as set forth in item (ii) hereof exceeds
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION], in which case the cash balance will increase on a
proportional basis; (ii) debt payable to Kredietbank in a total principal amount
equal to a minimum of [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION] BEF and a maximum of [CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION]; (iii) a book amount of intercompany accounts receivable of
approximately [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]; and (iv) the write off of goodwill in an
amount approximately equal to 37,837,000 BEF and certain other balance sheet
adjustments to be subsequently defined.
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(f) SERVICE AGREEMENT. The Company and Seller, or its designated
affiliates shall enter into a Service Agreement with respect to services to be
provided for up to one year by the Company to Seller and its affiliates by up to
6 engineers and certain designated administrative personnel. The Service
Agreement will also provide that Seller or such affiliates shall have the right
to require the transfer to Seller or such affiliate, of such personnel during
the term of such Service Agreement, with the consent of such person. Such
Service Agreement may also provide that CP Clare or its affiliates will provide
certain services to the Company for a limited term. Prior to or at the Closing,
the existing Service Agreement dated as of July 10, 1996 by and between the
Company and CP Clare, N.V. shall have been terminated and be of no further force
and effect, and all intercompany transfers required thereunder shall have been
made or settled.
(g) Guaranty Release. The Seller shall have received a full and
unconditional release of its parental guaranty of the Company's debt outstanding
to Kredietbank, in form and substance satisfactory to the Seller.
Section 5. OTHER COVENANTS AND INDEMNITIES
5.1 RELEASE. Unless as otherwise set forth in Section 5.2, each of
TMC, Gunther and Buyer and their affiliated persons hereby irrevocably waive the
assertion of any claims against the Seller and its affiliates and affiliated
persons as concerns any and all claims and liabilities arising in respect of the
acquisition of the TMC Shares and agrees not to bring any lawsuit or other
action or proceeding or claim in respect thereto, including with respect to any
amounts of severance or other amounts required to be paid due to the social
restructuring of the Company; provided, however, that nothing in this Section
5.1 shall limit the right of Buyer or Gunther to seek indemnification as set
forth in Section 5.2 hereof. Each of Gunther and Buyer hereby acknowledge that
the Company has given notice of a collective dismissal of 160 Company employees.
5.2 INDEMNIFICATION.
(a) After the Closing the Company shall save, defend, indemnify
and hold harmless the Seller and its affiliated persons from, and shall promptly
reimburse each of them for, any losses, damages, costs and expenses, including
reasonable legal fees, incurred by or assessed against any of them and arising
out of or resulting directly or indirectly from: (A) any act or omission of the
Company following the Closing Date with respect to the operation and conduct of
the business; (B) the payment or fulfillment or failure to pay or fulfill when
due and liability or obligation of the Company, whether arising prior to or
after the date hereof, including, without limitation, liabilities associated
with severance or social restructuring; and (C) the performance or failure to
perform under any contract or other agreement applicable to the Company.
(b) Buyer and Gunther shall jointly and severally save, defend,
indemnify and hold harmless the Seller and its affiliated persons from, and
shall promptly reimburse each of them for, any losses, damages, costs and
expenses (including
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reasonable legal fees) incurred by or assessed against any of them and arising
out of or resulting directly or indirectly from: (A) the inaccuracy of any
representation or warranty made by Gunther or Buyer in this Agreement; or (B)
the failure by Gunther or Buyer to perform or observe any term or provision of
this Stock Purchase Agreement.
(c) Following the Closing, the Seller shall save, defend,
indemnify and hold harmless the Buyer and Gunther and their affiliated persons
from and shall promptly reimburse each of them for, any losses, damages, costs
and expenses (including reasonable legal fees) incurred by or assessed against
any of them arising out of or resulting from, (A) the inaccuracy of any
representation or warranty made by the Seller in this Agreement; (B) the failure
by the Seller to perform or observe any term or provision of this Agreement, (C)
legal action taken against the Company by Elfein Elektrogerate GmbH with respect
to claims for allegedly defective switches sold by the Company prior to the
Closing (D) the indebtedness of the Company to Hamlin, Inc. which has been
repaid and ATT, all of which indebtedness has been transferred out of the
Company prior to the Closing and (E) taxes payable by the Company for periods
ending prior to the Closing Date in the event that such tax liability exceeds
the net operating losses attributable to the Company on the date of Closing or
penalties associated with any late payment of taxes.
(d) When a party seeking indemnification under Sections 5.2(a),
(b), or (c) (the "Indemnified Party") receives notice of any claim made by third
party (a "Third Party Claim") which is to be the basis for a claim for
indemnification hereunder, the Indemnified Party shall give prompt written
notice thereof to the party from which indemnification is sought (the
"Indemnifying Party") reasonably indicating (to the extent known) the nature of
such claim and the basis thereof, but the failure so to notify the Indemnifying
Party (i) will not relieve it from liability under paragraphs (a), (b) or (c)
above unless and to the extent such failure results in the forfeiture by the
Indemnifying Party of any right and defense and (ii) will not, in any event,
relieve the Indemnifying Party from any other obligations to any Indemnified
Party. Upon notice from the Indemnified Party, the Indemnifying Party may, but
shall not be required to, assume the defense of any such Third Party Claim,
including its compromise or settlement, and the Indemnifying Party shall pay all
reasonable costs and expenses thereof and shall be fully responsible for the
outcome thereof; provided, however, that in such case the Indemnifying Party
shall have no obligation to pay any further costs or expenses of legal counsel
of the Indemnified Party in connection with such defense. Notwithstanding the
Indemnifying Party's election to appoint counsel to represent the Indemnified
Party in an action, the Indemnified Party shall have the right to employ
separate counsel (including local counsel), and the Indemnifying Party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) use
of counsel chosen by the Indemnifying Party to represent the Indemnified Party
would present such counsel with a material conflict of interest, (ii) the
defendants in, or targets of, any such action include both the Indemnified
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Party and the Indemnifying Party and the Indemnified Party shall have reasonably
concluded that there are legal defense available to it which conflict with those
available to the Indemnifying Party, (iii) the Indemnifying Party shall not have
employed counsel reasonably satisfactory to the Indemnified Party to represent
the Indemnified Party within 30 days after notice of the institution of such
action or (iv) the Indemnifying Party shall authorize the Indemnified Party to
employ separate counsel at the expense of the Indemnifying Party. No compromise
or settlement in respect of any Third Party Claim may be effected by the
Indemnifying Party without the Indemnified Party's prior written consent (which
consent shall not be unreasonably withheld), unless the sole relief is monetary
damages that are paid in full by the Indemnifying Party. The Indemnifying Party
shall give notice to the Indemnified Party as to its intention to assume the
defense of any such Third Party Claim within thirty business days after the date
of receipt of the Indemnified Party's notice in respect of such Third Party
Claim. If an Indemnifying Party does not, within thirty business days after the
Indemnified Party's notice is given, give notice to the Indemnified Party of its
assumption of the defense of the Third Party Claim, the Indemnifying Party shall
be deemed to have waived its rights to control the defense thereof. If the
Indemnified Party assumes the defense of any Third Party Claim because of the
failure of the Indemnifying Party to do so in accordance with this Section the
Indemnifying Party shall pay all reasonable costs and expenses of such defense.
The Indemnifying Party shall have no liability with respect to any compromise or
settlement thereof effected without its prior written consent (which consent
shall not be unreasonably withheld). An Indemnifying Party will not, without the
prior written consent of the Indemnified Parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising out of such claim, action, suit or proceeding.
5.3 ENVIRONMENTAL INDEMNITY. Following the Closing, Seller agrees to
indemnify the Company for fifty percent (50%) of the reasonable and conclusively
documented costs incurred by the Company on instruction of OVAM or other
appropriate Flemish governmental authority to remediate any groundwater
contamination that is found at the Tongeren, Belgium site of the Company and
described in the Dames and Moore report dated December 5, 1996 (the "Report");
and which was caused by the operation of the Company prior to the date of such
Report. Such Report was provided to the Buyer prior to the execution of this
Agreement. The indemnification by the Seller with respect to this Section 5.3
shall in no event exceed $500,000; and any amounts owing or paid by Seller to
Company shall be reduced by fifty percent (50%) of any amount received by the
Company as a contribution towards the clean up costs, including, without
limitation, governmental funding or contribution by other parties, whenever such
set off amount is received. The right of indemnification arising under this
Section 5.3 shall only arise if (a) Seller has been advised in writing and in
advance of any amounts to be expended in connection with any such clean-up and
has the opportunity to review and approve any clean-up proposal, which approval
will not be unreasonably withheld,
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and (b) the Company proves to the satisfaction of the Seller that the Company,
with the assistance of the Buyer, as needed, has used its best efforts to
obtain any such government or third party contribution towards the clean up
costs as may be available and has exercised all other recourse as may be
available, provided, however, that this item (b) shall not require the Company
to commence litigation to obtain such contribution. The right to
indemnification by the Company under this Section 5.3 shall terminate and be of
no further force and effect on January 31, 2002 and shall terminate earlier in
the event that any groundwater remediation is completed by the Company or it is
determined that no such remediation obligation exists.
5.4 CONFIDENTIALITY. If this Agreement and the transactions
contemplated hereby are not consummated, each party hereto shall treat all
information obtained in connection with this Agreement and the transactions
contemplated hereby, not otherwise in the public domain, as confidential in
accordance with the provisions of the Confidentiality Agreement previously
signed by the parties on August 19, 1996.
5.5 LIABILITY. Nothing in this Agreement shall be deemed to impose
any liability on Comus International, Elson Nowell or Robert Romano.
Section 6. CLOSING DELIVERIES
6.1 SELLER'S DELIVERIES. At the Closing, Seller shall deliver, shall
have previously delivered, or shall cause to be delivered, as applicable, the
following:
(a) an executed copy of the Supply Agreement
(b) an executed copy of the Escrow Agreement
(c) an executed copy of the Service Agreement
(d) a legal opinion issued by counsel to the Seller reasonably
satisfactory to the Buyer opining upon (i) the legal existence and good standing
of the Seller in its jurisdiction of organization; (ii) the enforceability of
the Agreements executed at the closing; and (iii) the authority of the Seller to
enter into and fully perform the Agreements to be executed at the Closing
(e) such other documents and instruments as Buyer may reasonably
request to effectuate or evidence the transactions contemplated by this
Agreement.
6.2 THE BUYER'S DELIVERIES. At the Closing, the Buyer shall deliver,
or shall cause to be delivered, to Seller the items described below:
(a) the cash Purchase Price
(b) an executed copy of the Supply Agreement
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(c) an executed copy of the Escrow Agreement
(d) an executed copy of the Service Agreement
(e) a legal opinion issued by counsel to the Buyer and Gunther
reasonably satisfactory to the Seller opining upon (i) the legal existence and
good standing of each of the Company and Gunther in their respective
jurisdictions of organization; (ii) the enforceability of the Agreements
executed at the closing; and (iii) the authority of each such Company to enter
into and fully perform the Agreements to be executed at the Closing.
(f) such other documents and instruments as the Seller may
reasonably request to effectuate or evidence the transactions contemplated by
this Agreement.
Section 7. MISCELLANEOUS
7.1 ASSIGNMENT. None of the parties to this Agreement may assign any
of its rights or obligations under this Agreement without the prior written
consent of the other parties hereto. Subject to the foregoing, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns.
7.2 ENTIRE AGREEMENT; AMENDMENTS; WAIVER. This Agreement contains the
entire understanding between the parties hereto with respect to its specific
subject matter. This Agreement may be amended only by written instrument duly
executed by the parties hereto. No party may waive any term, provisions,
covenant or restriction of this Agreement except by duly signed writing
referring to the specific provision to be waived.
7.3 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be delivered personally
or transmitted by telex, fax of telegram, to the respective parties as follows:
(a) If to the Seller:
C.P. Clare Corporation
78 Cherry Hill Drive
Beverly, MA 01915
Attn: Jacqueline D. Arthur
with a copy to:
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C.P. Clare Corporation
78 Cherry Hill Drive
Beverly, MA 01915
Attn: Lori M. Henderson
(b) If to the Buyer:
Gunther GmbH
St. Jakobs - Strasse 7
4052 Basel, Switzerland
Attn: Dr. Beat Schultheiss
with a copy to:
W. Gunther GmbH
Virnsberger Strasse 51
Nuremberg D. 90431
Germany
Attn: Elson Nowell
or to such other address as any party may have furnished to the others in
writing.
7.4 GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the internal laws of the Commonwealth of Massachusetts, USA,
without regard to its conflict of laws provisions.
7.5 SURVIVAL. All representations, warranties, covenants and
agreements of the parties hereto shall survive indefinitely the Closing.
7.6 FEES AND EXPENSES. Each of the parties will bear its own expenses
in connection with the negotiation and the consummation of the transactions
contemplated by this Agreement.
7.7 PUBLICITY AND DISCLOSURES. No press releases or public
disclosure, either written or oral, of the transactions contemplated by this
Agreement, shall be made by a party to this Agreement without the prior
knowledge and written consent of Buyer and the Company.
7.8 CONSENT TO JURISDICTION. The parties hereby consent to personal
jurisdiction, service of process and venue in the federal or state courts of
Massachusetts USA or Belgium for any claim, suit or proceeding arising under
this Agreement, or in the case of a third party claim subject to indemnification
hereunder, in the court where such claim is brought.
7.9 COUNTERPARTS; HEADINGS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together
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shall constitute one and the same document. The article and section headings
contained herein are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
7.10 REPRESENTATION. Each party hereto acknowledges that it has had
the benefit of advice of competent legal counsel with respect to its decision to
enter into this Agreement. This Agreement shall not be construed against the
drafter thereof.
7.11 ARBITRATION. Except with respect to an action seeking specific
performance, any dispute arising relating to this Agreement, or a breach of this
Agreement, arising among the parties shall be settled by arbitration in
accordance with the commercial arbitration rules of the American Arbitration
Association ("AAA"). The arbitration proceeding, including the rendering of an
award, shall take place in Boston, Massachusetts and be administered by the AAA.
The decision of the arbitrators shall be final and binding on the parties hereto
and any judgment rendered by such arbitrators may be enforced by any court of
competent jurisdiction. Each party shall bear its own expenses in connection
with such arbitration unless otherwise ordered by such arbitrator.
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7.12 LANGUAGE. The official language of this document and all
documents produced in connection with the transactions contemplated by this
Agreement shall be English. Any translation into any other language shall be for
the convenience of the parties only and shall be of no force and effect
whatsoever.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written.
C.P. CLARE CORPORATION
By: ________________________
Jacqueline D. Arthur
Vice President and Chief
Financial Officer
TONGEREN MANUFACTURING
COMPANY
By: ________________________
Arthur Buckland
Director
By: ________________________
Jacqueline D. Arthur
Director
GUNTHER, GmbH
By: ________________________
Elson Nowell
Managing Director
W. GUNTHER, GmbH
With respect to Sections 2.2,
5.1, 5.2 (b), 5.2 (c), 5.2 (d),
5.4 and 7.1 - 7.12.
By: ________________________
Elson Nowell
Managing Director
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* Confidential Treatment Requested *
EXHIBIT A
SUMMARY OF SUPPLY AGREEMENT
(a) Simultaneously with the closing of the Acquisition, TMC and CP Clare or
its designated affiliate will enter into a Supply Agreement for three years
which shall provide that TMC shall provide a supply of mercury switches and/or
relays to CP Clare on a sole source basis. CP Clare or its designees shall agree
to purchase a total minimum annual revenue amount in the first calendar year
equal to [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION] (U.S.), in consideration for TMC not selling the
following products in any configuration to any third party during the term of
the Supply Agreement: [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]. The minimum annual revenue commitments
for the second and third calendar years shall be established by December 15 the
of preceding calendar year. The parties may agree to extend the Supply Agreement
beyond the three year term on a year to year basis. TMC shall be entitled to
manufacture and sell directly [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] of mercury wetted
switches per week if such production is transferred from another Gunther
facility. Any newly developed mercury wetted switches manufactured by TMC will
be distributed and sold solely through CP Clare. Any dry reed switches
manufactured by TMC will be subject to a royalty payment to CP Clare, which
shall be negotiated on a case by case basis The parties will agree in the
definitive supply agreement on the methods by which annual revenue targets shall
be achieved, which shall include but not be limited to purchases of products by
CP Clare or its affiliates, purchases of other products produced by TMC, and
purchases by buyers referred to TMC by CP Clare or its affiliates.
(b) The Supply Agreement will contain the following additional terms and
conditions:
(i) TMC shall maintain or obtain, as the case may be, ISO 9000 status
at the Tongeren plant.
(ii) An operating committee consisting of two representatives of each
of CP Clare and of TMC shall be created and maintained during the term of the
Supply Agreement. The powers and obligations of the operating committee shall be
set forth in the Supply Agreement but shall include general review of the
operations of TMC in connection with switch and relay sales.
(iii) CP Clare shall have the obligation prior to the expiration of
the Supply Agreement to purchase the identified dry reed relay and TAP
automation tooling, fixtures and equipment for a total purchase price of
[CONFIDENTIAL MATERIAL OMITTED
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* Confidential Treatment Requested *
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] (U.S.).
(iv) The parties will have reciprocal rights of first refusal
regarding (i) on the part of CP Clare, the sale by [CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] during
the period of the Supply Agreement of a majority or controlling interest of the
parent corporation of Gunther and the right of first refusal in the event of the
sale, liquidation or bankruptcy of the Company or the transfer by the Company of
any mercury switch or relay equipment, whether voluntarily or in connection with
a liquidation, forced sale or bankruptcy; and (ii) on the part of the Company,
the sale by CP Clare of any equipment related to the manufacture of mercury
switches or relays.
(v) In the event that TMC breaches its obligations under the Supply
Agreement CP Clare shall be entitled to produce mercury switches and relays
directly and / or to find an alternative source.
(vi) Gunther Augst and Gunther will make affirmative covenants that
TMC will not be voluntarily liquidated or sold within the period of the Supply
Agreement.
(vii) [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] will retain majority ownership and control
of the ultimate parent company of Gunther during the term of the Supply
Agreement, unless otherwise agreed.
(viii) In order to assure performance under the Supply Agreement, at
the Closing TMC will place $1.25 million into escrow which amount shall be
payable to CP Clare in the event of default under the Supply Agreement, on such
terms as the parties may agree. The escrow will be released over the first three
years of the Supply Agreement based on successful performance under the Supply
Agreement.
Nothing in the Supply Agreement shall be deemed to impose liability on Comus
International, Elson Nowell or Robert Romano.
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* Confidential Treatment Requested *
EXHIBIT B
Equipment
---------
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION].
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<PAGE> 1
EXHIBIT 10.70
SUPPLY AGREEMENT
This SUPPLY AGREEMENT ("Agreement") is made as of January 17, 1997, by and
among C.P. Clare Corporation, a Massachusetts corporation ("Buyer"), Tongeren
Manufacturing Company, a company organized under the laws of Belgium ("TMC"),
Gunther GmbH, a corporation organized under the laws of Switzerland ("Gunther"),
W. Gunther GmbH, a corporation organized under the laws of Germany and the
parent corporation of Gunther ("W. Gunther") and Robert P. Romano, a resident of
New Jersey.
WHEREAS, Buyer, TMC, Gunther and W. Gunther entered into a Stock Purchase
Agreement, dated as of December 19, 1996 (the "Stock Purchase Agreement"),
pursuant to which Gunther has agreed to purchase from C.P. Clare all of the
shares of TMC; and
WHEREAS, as a condition precedent to the closing of the transactions
contemplated by the Stock Purchase Agreement (the "Closing"), the parties shall
have entered into a Supply Agreement; and
WHEREAS, TMC has the capability to manufacture certain mercury switches and
mercury relays for Buyer, and Buyer desires that TMC manufacture such mercury
switches and mercury relays for use and sale by Buyer pursuant to the terms
hereof.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties agree as follows:
1. SUPPLY AND DISTRIBUTION OF MERCURY SWITCHES AND MERCURY RELAYS.
Subject to the terms and conditions set forth in this Agreement, Buyer
(including its subsidiaries and affiliates) agrees to purchase from TMC all of
its requirements for certain mercury switches and mercury relays, as described
on EXHIBIT A attached hereto (the "Switches and Relays"), and TMC hereby agrees
to supply to Buyer all of Buyer's requirements for the Switches and Relays. TMC
shall manufacture the Switches and Relays at the TMC facility in Tongeren,
Belgium in accordance with the product formulations, processes and packaging
specifications which it currently uses for the Switches and Relays. Buyer will
provide TMC with purchase orders for its requirements for the Switches and
Relays and such orders shall be filled in accordance with the procedures set
forth in such purchase orders. All orders shall specify in writing the delivery
location and means of transportation of the Switches and Relays. All shipments
of Switches and Relays will be FOB Tongeren, Belgium. In the event that the
terms and conditions set forth in such purchase orders conflict with the terms
and conditions of this Agreement, the terms and conditions of this Agreement
will govern.
<PAGE> 2
*CONFIDENTIAL TREATMENT*
2. EXCLUSIVITY.
(a) TMC shall not sell the mercury products identified on Exhibit A,
nor any other products under configuration control (i.e., mercury switch and
mercury relay products having a drawing package) at TMC on the date of the
Closing, in any configuration to any other party during the Term of this
Agreement.
(b) Notwithstanding (a) above, TMC may manufacture and sell directly
to any party an aggregate of up to[CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] mercury wetted reed
switches per week [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] if such switches were previously
manufactured by W. Gunther, or an affiliate, at a Gunther facility and the
manufacture of such switches is transferred to the TMC facility in Tongeren,
Belgium. Any such mercury wetted reed switches in excess of [CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] per week sold by TMC shall bear a royalty and be subject to a
Royalty Addendum as described in Section 3(b) hereof. Nothing contained herein
shall hinder, restrict or in any other fashion prohibit TMC from manufacturing
other mercury or non mercury products not covered by paragraph (a) or (b) of
this Section, provided that such products may be covered by Section 3 herein.
(c) TMC acknowledges and agrees that for a period of three years, or
the term of this Agreement, whichever is longer, neither it, nor any of its
affiliates will compete directly or indirectly with Buyer with respect to any
the manufacture or sale of dry reed switches or molded DIP & SIP and LSR series
relays under development or manufactured by TMC prior to the date of this
Agreement. The parties hereto agree that the dry reed switches and dry reed
relays are sold by C.P. Clare on a worldwide basis and that the scope of this
non-compete agreement shall be the entire world. The parties agree that the
molded DIP and molded SIP products described in the Gunther catalog attached
hereto as Exhibit 1, all dry reed switches currently manufactured by Gunther
using a plating method and potted relays manufactured using Gunther / Comus
parts and/or described in the Gunther catalog shall not be included in the terms
of this Section 2 (c).
(d) Gunther and W. Gunther agree that for a period of one year from
the date hereof they will not use any information which becomes available to
such companys due to or following the consummation of the transactions
contemplated by the Stock Purchase Agreement, in order to allow Gunther, W.
Gunther , or any other company affiliated with TMC, including Comus
International, to make technical or process improvements to such company's
molded DIP and SIP products that compete with or are functionally compatible
with such Clare products.
(e) [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION].
3. NEW PRODUCTS.
(a) Mercury Switches; Mercury Wetted Relays. In the event that TMC
develops or manufactures any mercury wetted switches or mercury wetted relays
not discussed in
2
<PAGE> 3
*CONFIDENTIAL TREATMENT*
Sections 2(a) and 2(b) hereof, any such mercury wetted switches or mercury
wetted relays shall be distributed and sold on a worldwide basis solely through
Buyer and its direct and indirect salespersons, representatives and
distributors. The mercury wetted switches and mercury wetted relays to be
governed by the terms of this Section 3(a) shall include all mercury wetted
switches and mercury wetted relays developed by TMC, whether or not such mercury
wetted switches and mercury wetted relays are produced at TMC and all mercury
wetted switches and mercury wetted relays developed within or acquired by
Gunther, W. Gunther or any of its affiliates, including, but not limited to,
Comus International and Gunther America, which are manufactured or designed in
whole or in part at TMC. Any such sales shall be made under the name of Buyer
and governed by the terms of a Buy/Resell Agreement which shall specify the
terms and conditions of such resales, including the price and delivery terms and
conditions.
(b) DRY REED SWITCHES; DRY REED RELAYS. In the event that TMC
develops or manufactures any dry reed switches or dry reed relays not currently
being sold by Gunther or Buyer, any such dry reed switches or dry reed relays
that are sold by TMC, Gunther or any affiliate thereof, including, but not
limited to, Comus International and Gunther America, shall bear a royalty
payable to Buyer. The dry reed switches and dry reed relays to be governed by
the terms of this Section 3(b) shall include all dry reed switches and relays
developed by TMC, whether or not such dry reed switches or dry reed relays are
produced at TMC and all dry reed switches and dry reed relays developed within
or acquired by Gunther, W. Gunther or any of its affiliates which are
manufactured at TMC. The royalty rate with respect to such products will be
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION]. The relationship between the parties with respect to each
product subject to this Section 3(b) shall be governed by a Royalty Addendum, a
form of which is attached hereto as Exhibit B, which shall be executed by the
parties and shall be deemed to be an addendum to this Agreement. In the event
that this Agreement is no longer in force or effect, the parties agree to
execute, prior to such termination, a Royalty Agreement that will incorporate
the terms and conditions of each Royalty Addendum executed between the parties.
(c) At the time that any mercury or dry reed switch or mercury or dry
reed relay described in Sections 3(a) or 3(b) is developed by TMC or its
affiliated parties or the manufacturing of any such product is moved into TMC,
TMC shall give prompt written notice to Buyer.
4. PRICING AND ANNUAL MINIMUM. During the Term of the Agreement, TMC
shall sell to Buyer Switches and Relays required by Buyer at such prices (in
U.S. dollars) as set forth on PRELIMINARY EXHIBIT C hereto [CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION]; PROVIDED, HOWEVER, that within six weeks of the date hereof, TMC
and Buyer shall work together to produce a definitive Exhibit C . This
definitive EXHIBIT C shall reflect [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]. Prices paid during the
first six weeks will be based on the Preliminary Exhibit C and will be reduced
to [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION] by a credit at the end of the six week period. Following
the establishment of the definitive EXHIBIT C
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<PAGE> 4
* Confidential Treatment Requested *
the Buyer and TMC may renegotiate individual prices with respect to certain
additional business. Both such parties agree that in the event of any price
reduction negotiations, the parties will factor in the selling costs incurred by
Buyer. Buyer shall purchase from TMC the number of Switches and Relays at such
prices which in total equal or exceed the minimum annual revenue amount (the
"Annual Minimum") as follows:
(a) In the first calendar year of this Agreement (ending January 17,
1998) the Annual Minimum shall be [CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION], at the Belgian franc
conversion rate existing on the date of this Agreement.
(b) The Annual Minimum for each year subsequent to the first year
shall be negotiated by the parties hereto at a number intended to reasonably
approximate Buyer's anticipated needs for Switches and Relays for that year and
shall be agreed to by the parties on or prior to December 15 of the preceding
calendar year. No party shall have any liability for the failure of the parties
to mutually agree upon such Annual Minimum after the first year.
In satisfying the Annual Minimum, Buyer shall be permitted to include, but
shall not be limited to, purchases of Switches and Relays by Buyer or its
affiliates, purchases by Buyer or its affiliates of other products produced by
TMC, and purchases of any product manufactured or sold by TMC to any party,
related or unrelated to Buyer, which is referred to TMC by Buyer or its
affiliates. With the consent of TMC, the Annual Minimum may also be satisfied by
purchases by Buyer or its affiliates of products produced by affiliates of
Seller, including W. Gunther or Comus International. No later than the 20th day
following each calendar quarter, Buyer shall provide to TMC a written report
setting forth a summary of the Switches and Relays purchased as of the last day
of the preceding calendar quarter that shall be included in the Annual Minimum.
Upon receipt of such report, TMC shall have 30 calendar days in which to dispute
the information contained in such report and, if no notice of any such dispute
is received by Buyer by such 30th day, the information contained in Buyer's
report to TMC shall be deemed to be final and conclusive. In the event that TMC
disputes the information contained in the Buyer's report, TMC shall notify Buyer
and the parties shall work together to resolve such disputes. The Switches and
Relays shall meet all established quality and reliability standards as exist at
the date hereof and as may be subsequently modified or amended by the parties.
5. PURCHASE OF EQUIPMENT.
(a) Prior to the expiration of the Term (as such term may be extended
pursuant to Section 10) of this Agreement, Buyer shall purchase from TMC the dry
reed relay and TAP automation tooling, fixtures and equipment set forth in
EXHIBIT D (the "Equipment"). In consideration for the Equipment, Buyer shall pay
to TMC an aggregate purchase price in the amount of [CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]. The
parties hereto agree that Exhibit D may be modified or amended following the
date hereof following a physical review of the equipment by Buyer. Such
purchases shall be made from time to time in the discretion of the Buyer, and
payment for such equipment shall only be made upon delivery of the Equipment in
satisfactory working condition to Buyer. Prior to the time that the Equipment is
purchased
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<PAGE> 5
* Confidential Treatment Requested *
pursuant to the terms of this Agreement, TMC will use its best efforts to
protect and maintain such equipment in a good and workmanlike manner and shall
use its best efforts to protect such Equipment from any loss or damage of any
type or nature and shall cause the Equipment to be covered under the TMC all
risk insurance policy. Buyer will be named as loss payer and additional insured,
as their interests may appear.
(b) Pursuant to the terms of a Service Agreement to be entered into
by the parties, TMC will continue to produce certain products and continue
certain development work on behalf of Buyer. In the event that the parties
performing services pursuant to the Service Agreement need the equipment
purchased hereunder to perform their services, Buyer shall at its sole
discretion, allow certain of the Equipment to remain at the TMC location in
Tongeren Belgium to be used for such purposes. In the event that Equipment
purchased by Buyer remains at the TMC location, TMC shall be responsible for and
shall indemnify Buyer against any loss in the Equipment located at the TMC
facility, whether such loss is due to theft, vandalism, deterioration or
otherwise. TMC agrees to insure all such Equipment while it is on TMC premises
to the same extent that it would insure its own products, equipment and
machinery on the premises. In that regard, TMC will arrange for all-risk
insurance coverage sufficient to cover at all times the full value of all
Equipment located at the TMC facility. TMC shall add Buyer as a named loss payee
and additional insured with regard to such Equipment on all TMC insurance
policies, up to a value of [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION], which amount may vary annually.
Buyer may carry any such excess insurance that it deems necessary.
6. RIGHTS OF FIRST REFUSAL
(a) RIGHTS OF BUYER.
(i) Buyer shall, in accordance with the procedures set forth in
Section 6(c), have a right of first refusal to acquire a majority or controlling
interest of W. Gunther, the parent corporation of Gunther, in the event that any
shares or equity interest that would constitute a majority or controlling
interest are offered for sale or proposed to be sold by [CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION].
(ii) Buyer shall, in accordance with the procedures set forth in
Section 6(c), have a right of first refusal to purchase any mercury switch or
mercury relay equipment owned by TMC in the event that TMC offers or proposes to
sell or transfer such items, whether voluntarily or in connection with the
liquidation, merger, split-up, forced sale or bankruptcy of TMC or the
contribution in kind of the assets of TMC whether in connection with the sale of
the entire business or parts thereof. This provision shall include, but not be
limited to, transfers by TMC of such equipment to W. Gunther, Gunther or any
affiliated entity.
(b) RIGHT OF TMC. TMC shall, in accordance with the procedures set
forth in Section 6(c), have a right of first refusal to acquire any equipment
owned by Buyer and related to the manufacture of mercury switches or mercury
relays in the event such items are offered for sale by Buyer.
(c) OPERATION OF RIGHTS OF FIRST REFUSAL. In the event either party
to this
5
<PAGE> 6
Agreement proposes to take any action related to which, pursuant to this Section
6, the other party has a right of first refusal, the party proposing to take
such action shall provide 30 days' prior written notice to the other party which
sets forth the terms on which such action is proposed to be taken. The party
receiving a notice pursuant to this Section 6 shall have the right, exerciseable
upon written notice to the other party within 30 days' of receipt of such
notice, to purchase the property subject to the right of first refusal on the
same terms that have been offered to the party proposing to take any such
action. If a party determines not to exercise its right of first refusal
pursuant to this Section 6, the other party may take the proposed action upon
the terms set forth in the notice at any time within 60 days after the
expiration of the 30 day period after which time no action may be taken without
renewed compliance with this Section 6. The rights of first refusal set forth in
this Section 6 shall remain in full force and effect during the term of this
Supply Agreement, as such term may be extended from time to time.
(iii) Buyer shall have the option to purchase the assets of TMC
in the event of any of the following circumstances, A) TMC does not pay its
debts as such debts become due, B) the revocation of credit lines by any bank or
other lending institution, C) the filing of a writ against TMC to begin
bankruptcy proceedings or D) TMC becomes subject to a "depistage" pursuant to
the relevant provisions of Belgian law. In the event of any such event, TMC will
provide immediate notice to Buyer in order to allow Buyer to purchase such
assets or in some other way avoid the existence of such circumstance; provided,
however that TMC shall have up to 14 days (less if the circumstances require) to
cure any such event.
7. Program Management Review. Buyer and TMC agree to participate in
regularly scheduled Program Management Reviews in order to monitor the progress
of the products being sold pursuant to this Agreement. Each party will designate
two representatives to participate in such reviews.
8. COVENANTS OF THE PARTIES.
(a) COVENANTS OF TMC.
(i) ISO 9000 STATUS. TMC shall prior to April 30, 1997 obtain ISO
9000 status and TMC's plant located in Tongeren, Belgium or at any other plant
owned or operated by TMC or its affiliates that is supplying existing products
to Buyer.
(ii) DELIVERY OF EQUIPMENT. Upon request of Buyer, TMC shall
promptly deliver to Buyer's designated shipping agent, the Equipment that has
been purchased by Buyer pursuant to Section 5 hereof.
(b) COVENANTS OF W. GUNTHER AND GUNTHER.
(i) CONTINUATION OF BUSINESS. During the Term of this Agreement,
W. Gunther and Gunther shall not voluntarily cause the merger, consolidation,
liquidation, or dissolution of TMC and shall not sell or otherwise transfer any
majority or controlling interest in TMC.
6
<PAGE> 7
* Confidential Treatment Requested *
(ii) MANAGING DIRECTOR. Gunther shall insure that Mr. Elson
Nowell is appointed as the Managing Director of TMC immediately following the
closing and remains so during the term of this Agreement, for so long as he
shall be employed by Gunther or any of its subsidiaries or affiliates. In the
event that TMC wishes to replace Mr. Nowell as Managing Director, the Buyer will
have the right and authority to consent prior to the appointment of such
replacement Managing Director.
(iii) LEGAL COUNSEL. Gunther covenants and agrees following the
Closing to cause TMC to continue to retain Stibbe Simont Monahan Duhot as
designated legal counsel to assist in the social restructuring begun prior to
the Closing and that Stibbe Simont Monahan Duhot shall participate in the
negotiations regarding such social restructuring. Any legal fees incurred
following the date hereof relating directly or indirectly to the social
restructuring shall be the responsibility of TMC and Gunther, provided that
Buyer will pay legal fees it incurs.
(c) [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.]
9. DEFAULT BY TMC.
(a) LIQUIDATED DAMAGES. Simultaneously with the Closing, the parties
hereto, and The First National Bank of Boston, as Escrow Agent, shall execute an
Escrow Agreement (the "Escrow Agreement) in the form attached hereto as Exhibit
E and the amount of one million two hundred fifty thousand U.S. dollars
($1,250,000) (the "Escrow Amount"), including any additions to or earnings on
the same, shall be placed in escrow. In the event that Gunther, W. Gunther, TMC
or Robert P. Romano shall default on any of its or his obligations under this
Agreement, the Escrow Amount, including any additions to or earnings on the
same, shall be paid to Buyer as liquidated damages; provided, however, that if
the Escrow Amount shall have been reduced pursuant to the terms of the Escrow
Agreement, the amount to be paid to Buyer as liquidated damages shall be the
Escrow Amount, so reduced.
(b) SWITCHES AND RELAYS. In addition to any liquidated damages to be
paid to Buyer pursuant to Section 9(a), in the event that Gunther, W. Gunther,
TMC or Robert P. Romano shall default on any of its or his obligations under
this Agreement, Buyer shall be entitled to manufacture Switches and Relays
and/or shall also be entitled to purchase Switches and Relays from a third
party.
(c) PERSONAL LIABILITY. Nothing in this Agreement shall be deemed to
impose any liability on Comus International, Elson Nowell or Robert P. Romano.
The remedies set forth in Section 9(a) and 9(b) shall be exclusive remedies for
breaches by Robert P. Romano, Gunther, W. Gunther or the Company hereunder;
provided, however, that damages relating to product liability claims arising
from product sold by TMC or its affiliates shall not be so limited.
10. TERM OF AGREEMENT. This Agreement will have an initial term of three
(3) years
7
<PAGE> 8
(the "Initial Term"). Within 90 days' of the end of the Initial Term or within
90 days' of the end of any additional term agreed to pursuant to this Section
9(a), the parties may, by mutual agreement, extend the term of this Agreement
for an additional one (1) year period (including the Initial Term, the "Term").
Notwithstanding termination of this Agreement, the provisions of Section 11
shall continue in force and effect.
11. DEFECTIVE PRODUCTS
(a) Upon discovery of defects in the Switches and Relays and
notwithstanding the payment therefor by Buyer, Buyer shall have the right to
return such defective Switches and Relays to TMC. Buyer shall submit to TMC a
written inventory of all defective Switches and Relays manufactured by TMC and
shipped to Buyer on a timely basis following inspection of such products, which
shall include the cause for rejection of such products. If so authorized by TMC
within fourteen (14) days of TMC's receipt of such notification, Buyer shall
return, and TMC shall accept, such defective Switches and Relays for, at Buyer's
direction, replacement, credit or refund, inclusive of all related handling,
shipping, and duty charges incurred by Buyer. No replacement of defective
Switches and Relays returned to TMC shall be made unless authorized by Buyer
and, if so authorized, such replacement shall be made by TMC at its expense upon
receipt of new shipping instructions from Buyer. If TMC does not authorize the
return of defective Switches and Relays within fourteen (14) days of its receipt
of the inventory from Buyer, Buyer shall have the right, in its discretion, to
destroy or otherwise dispose of such defective Switches and Relays and demand a
credit or a refund from TMC for the same. Any such demands for a credit or a
refund shall be submitted by Buyer to TMC on a quarterly basis and shall be due
and payable by TMC within thirty (30) days after receipt. Any shipment of
defective Switches and Relays shall be credited in full against the Annual
Minimum irrespective of whether such defective goods are ultimately replaced,
credited or destroyed in accordance with this Section 11(a).
(b) At specified times or upon demand by Buyer, TMC shall prepare and
submit to Buyer a written inventory of all out of specification Switches and
Relays manufactured by TMC pursuant to a purchase order but not shipped to
Buyer. Buyer shall have the option, but not the obligation, to purchase such
Switches and Relays at a discount.
(c) TMC shall destroy or dispose of all out of specification Switches
and Relays , not purchased pursuant to Paragraph (b) hereof in the manner
requested by Buyer, in accordance with applicable law.
(d) The remedies of Buyer set forth in this Section with respect to
defective Switches and Relays shall not be exclusive, and Buyer may hold TMC
liable for any and all damages arising from such defective Switches and Relays.
8
<PAGE> 9
12. GENERAL PROVISIONS.
(a) ASSIGNMENT. This Agreement is binding upon the parties hereto and
their respective successors in interest, provided, however, that none of the
parties to this Agreement may assign any of its rights or obligations under this
Agreement without the prior written consent of the other parties hereto.
(b) GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by and construed in accordance with the internal laws of the
Commonwealth of Massachusetts, USA, without regard to its conflict of laws
provisions. Subject to the provisions of Section 12 (l) hereof, the parties
hereby consent to personal jurisdiction, service of process and venue in the
federal or state courts of Massachusetts USA or Belgium for any claim, suit or
proceeding arising under this Agreement.
(c) WAIVER. The failure of either party to enforce at any time or for
any period of time the provisions hereof or of a purchase order in accordance
with their terms will not be construed to be a waiver of such provisions or of
the right of such party thereafter to enforce each and every such provision.
(d) ENTIRE AGREEMENT. This Agreement (together with all purchase
orders submitted in accordance herewith) supersedes all prior agreements, oral
or written, among the parties hereto relating to the subject matter covered
herein, and sets forth the entire agreement and understanding among the parties
as to the subject matter of this Agreement, and none of the parties shall be
bound by any conditions, definitions, warranties, or representations with
respect to the subject matter of this Agreement, other than as expressly
provided in this Agreement or as duly set forth on or subsequent to the date
hereof in writing and signed by a proper and duly authorized representative of
the party to be bound thereby.
(e) NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been given when
received, if personally delivered or sent by facsimile transmission, or fourteen
(14) days after deposited in the mails for delivery by registered or certified
mail, return receipt requested, postage prepaid, addressed as set forth below or
if sent by facsimile to the numbers set forth below:
9
<PAGE> 10
To Buyer: with a copy to:
--------- ---------------
C.P. Clare Corporation C.P. Clare Corporation
78 Cherry Hill Drive 78 Cherry Hill Drive
Beverly, MA 01915 Beverly, MA 01915
Attn: Michael Ferrantino Attn: Jacqueline D. Arthur
Facsimile: (508) 524-4747 Facsimile: (508) 524-5769
--------------------------------------------------------------
TO TMC: with a copy to:
Tongeren Manufacturing Company W. Gunther GmbH
Overhaamlaan 40 Virnsberger Strasse 51
3700 Tongeren Belgium Nurnberg D. 90431
Attn: Elson Nowell Germany
Attn: Elson Nowell
TO GUNTHER OR W. GUNTHER: with a copy to:
------------------------- ---------------
Gunther GmbH W. Gunther GmbH
St. Jacobs - Strasse 7 Virnsberger Strasse 51
4052 Basel, Switzerland Nurnberg D. 90431
Attn: Dr. Beat Schultheiss Germany
Attn: Elson Nowell
Facsimile: 011-49-9-11-6552-239
To: Robert P. Romano: with a copy to:
Comus International Mr. Robert P. Romano
263 Hillside Avenue 260 Watching Avenue
Nutley, NJ 07110 Glen Ridge, NJ 07028
Attn: Robert P. Romano
Facsimile: 201-667-6837
(f) INDEPENDENT CONTRACTOR. TMC shall act hereunder in all respects
as an independent contractor and it shall do business at its own risk and for
its own profit and nothing contained in this Agreement shall constitute a
partnership or agency relationship between TMC, Gunther, W Gunther, Robert P.
Romano and Buyer nor authorize TMC to incur any liability on behalf of Buyer or
to make any representation on behalf of or in any way to bind Buyer to any
obligation of any kind, express or implied, to any third party.
10
<PAGE> 11
(g) HEADINGS. The headings, titles and subtitles of the Sections of
this Agreement are for convenience only and shall not be considered as being
part of this Agreement and are of no legal effect.
(h) AUTHORITY. Each party represents and warrants to the other that
it has full power and authority to enter into this Agreement and to perform its
obligations hereunder.
(i) NOTIFICATION. The parties agree to cooperate in order to file any
requests for authorization or notification to the appropriate governmental
authorities as any party may deem advisable.
(j) COOPERATION. The parties agree to cooperate with each other to
the fullest possible extent with respect to all aspects of their rights and
obligations under this Agreement.
(k) SEVERABILITY. Should any provision of this Agreement now or later
conflict with any applicable law or administrative regulation with the force of
law, whether national or supranational, said provision(s) shall be considered as
not written and of no effect and all other provisions of this Agreement shall
remain in full force and effect.
(1) ARBITRATION. Except with respect to an action seeking specific
performance, any dispute arising relating to this Agreement, or a breach of this
Agreement, arising among the parties shall be settled by arbitration in
accordance with the commercial arbitration rules of the American Arbitration
Association ("AAA"). The arbitration proceeding, including the rendering of an
award, shall take place in Boston, Massachusetts and be administered by the AAA.
The decision of the arbitrators shall be final and binding on the parties hereto
and any judgment rendered by such arbitrators may be enforced by any court of
competent jurisdiction. Each party shall bear its own expenses in connection
with such arbitration unless otherwise ordered by such arbitrator.
11
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
date and year first written above.
C.P. CLARE CORPORATION
By:___________________________________________________
Name:
Title:
TONGEREN MANUFACTURING COMPANY
By:___________________________________________________
Name:
Title:
GUNTHER GmbH
By:___________________________________________________
Name:
Title:
W. GUNTHER GmbH
with respect to Sections 2(c), 2(d), 2(e), 6(a), 6(c),
8(b), 9(a), 9(c), 10 and 12
By:___________________________________________________
Name:
Title:
______________________________________________________
Robert P. Romano
with respect to Sections, 2(e), 8(c), 9(a), 9(c), 10 and 12.
12
<PAGE> 13
* Confidential Treatment Requested *
EXHIBIT A
List of Restricted Products
---------------------------
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION].
13
<PAGE> 14
* Confidential Treatment Requested *
EXHIBIT B
Form of Royalty Addendum
------------------------
Name of Product:
Product Description:
Term of Royalty: 10 years from first commercial sale
- -----------------------------------------------------
ROYALTY RATE: [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION].
TERMS AND CONDITIONS: TMC shall pay to Buyer a quarterly royalty fee determined
by multiplying [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] by (ii) the amount of the Net Product Sales
of products covered by this Royalty Addendum during such quarter. The amount of
Net Product Sales shall equal the amount of gross sales of such products sold by
TMC for such period to be determined in accordance with the books and records of
TMC, which shall be maintained in accordance with generally accepted accounting
principles in Belgium. Each quarterly royalty fee shall be accompanied by a
statement setting forth the basis for such fee and detailing the number of
orders shipped by TMC, volume and customer on each order and the Net Product
Sales calculation. On reasonable notice, Buyer, at its own expense, shall have
the right to have an accountant inspect the books and records of TMC for the
sole purpose of determining the correctness of payments due under this Royalty
Addendum. Each quarterly royalty payment shall be payable in US dollars by wire
transfer to an account established by Buyer, within 30 days of each calendar
quarter.
14
<PAGE> 15
* Confidential Treatment Requested *
EXHIBIT C
Pricing and Annual Minimums
---------------------------
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION].
15
<PAGE> 16
* Confidential Treatment Requested *
EXHIBIT D
Equipment
---------
[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION].
16
<PAGE> 17
EXHIBIT E
ESCROW AGREEMENT
----------------
AGREEMENT made as of January ___, 1997 by and among C.P. Clare Corporation, a
Massachusetts corporation ("Seller"), Gunther GmbH, a corporation organized
under the laws of Switzerland ("Buyer") and The First National Bank of Boston a
national bank as escrow agent (the "Escrow Agent").
WHEREAS, pursuant to a Stock Purchase Agreement (the "Stock Purchase
Agreement") dated as of December 19, 1996 by and among Buyer, the Company and
the Seller which is the holder of all of the capital stock of Tongeren
Manufacturing Company, (the "Company"), Buyer is acquiring all of the
outstanding Company shares from the Seller; and
WHEREAS, pursuant to the terms of the Stock Purchase Agreement, Seller and
Buyer have entered into that certain Supply Agreement that contains certain
undertakings on the part of each party; and
WHEREAS, in order to assure performance by the Company under the Supply
Agreement, Buyer has agreed that ONE MILLION TWO HUNDRED AND FIFTY THOUSAND
DOLLARS ($1,250,000) is being deposited, pursuant to Section 9(a) of the Supply
Agreement, in escrow to be held as hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
of the parties herein contained, and other good and valuable consideration,
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. ESTABLISHMENT OF ESCROW; INVESTMENT. Tongeren Manufacturing Company has
herewith deposited with the Escrow Agent and the Escrow Agent acknowledges
receipt of ONE MILLION TWO HUNDRED AND FIFTY THOUSAND DOLLARS ($1,250,000 U.S.).
The consideration deposited hereunder, including any additions to or earnings on
the same, shall be referred to as the "Escrow Fund." The Escrow Fund shall be
held in escrow in the name of the Escrow Agent or its nominee, subject to the
terms and conditions set forth herein. Jacqueline Arthur or any other designated
Seller representative shall serve as the exclusive representative of the Seller
with respect to the Escrow Fund and this Agreement (the "Escrow
Representative"). Unless otherwise directed by the Escrow Representative and
Company, the Escrow Agent shall invest the cash held in the Escrow Fund in any
"sweep" fund of the Escrow Agent, U.S. Government obligations, time deposits
rated A or above, commercial paper rated A- or above, bank certificates of
deposit (up to the maximum insured amount of any such deposit) or repurchase
agreements secured by U.S. Government obligations, (individually, an
"Investment" and collectively, the "Investments"), and the Escrow Agent shall
not be responsible for any loss incurred upon any such investment made in
17
<PAGE> 18
good faith. Unless otherwise directed in writing by the Escrow Representative
and the Company, the Escrow Agent shall not invest all or any portion of the
Escrow Fund in any Investment if the maturity date of such Investment is later
than 30 days from the date of the Investment.
2. AMOUNTS EARNED ON ESCROW FUND. All amounts earned, paid or distributed
with respect to the Escrow Fund (whether interest, dividends or otherwise) shall
become a part of the Escrow Fund and shall be held hereunder upon the same terms
as the original Escrow Fund.
3. CLAIMS AGAINST ESCROW FUND; RELEASE. At any time or times prior to the
expiration of this Agreement, Seller may make claims against the Escrow Fund for
payment of the amount of the Escrow Fund due to defaults by the Buyer, Gunther,
the Company or Robert Romano under the terms of the Supply Agreement. Seller
shall notify the Buyer, Company, Escrow Representative and the Escrow Agent in
writing prior to the expiration of this Agreement of each such claim, including
a summary of the amount of and bases for such claim. If the Company shall
dispute such claim, the Company shall give written notice thereof to Seller and
to the Escrow Agent within (30) days after receipt of notice of Seller's claim,
in which case the Escrow Agent shall continue to hold the Escrow Fund in
accordance with the terms of this Agreement; otherwise, such claim shall be
deemed to have been acknowledged to be payable out of the Escrow Fund in the
full amount thereof and the Escrow Agent shall use its best efforts to pay such
claim in immediately available funds to Seller within three (3) business days
after expiration of said thirty day period or as soon thereafter as possible. If
the amount of the claim exceeds the value of the Escrow Fund, the Escrow Agent
shall have no liability or responsibility for any deficiency. The Escrow Fund
shall be released to the Company on the following dates, as long as no claim by
Seller against the Escrow Fund is pending: a) one-third on January 17, 1998, b)
one-third on January 17, 1999 and one third on January 17, 2000. In the event a
claim against the Escrow Fund is pending on any such date, such release shall
not be effective until such claim has been resolved. In the event of the
termination, cessation or liquidation of the business of the Company or, in the
event that the Company becomes insolvent or commits an act of bankruptcy or
applies for, consent to or acquiesces in the appointment of a liquidator or any
trustee or receiver for it or any of its property or such liquidator, trustee or
receiver is so appointed for the Company, then in such event the Escrow Fund
will be immediately released to the Seller.
4. Disputed Claims.
---------------
(a) If the Company shall dispute a claim of Seller as above provided,
the Escrow Agent shall set aside a portion of the Escrow Fund sufficient to pay
said claim in full (the "Set Aside Amount").
(b) If the disputed claim has not been resolved or compromised within
sixty (60) days after the Escrow Representative sends notice of dispute of the
same, or in the event of a third-party claim or suit, within fifteen (15) days
after its resolution or compromise, said indenmification claim shall be
referred to the American Arbitration Association, to be settled
18
<PAGE> 19
by arbitration in Boston, Massachusetts in accordance with the commercial
arbitration rules of the Association. The fees and expenses of the arbitrator
shall, as between the Seller and the Company, be borne by them in such
proportions as shall be determined by the arbitrator, or if there is no such
determination, then such fees and expenses shall be borne equally by the Seller
and the Company. In no event shall the Escrow Agent be responsible for any fee
or expense of any party to any arbitration proceeding. The determination of the
arbitrator as to the amount, if any, of the claim which is properly allowable
shall be conclusive and binding upon the parties hereto and judgment may be
entered thereon in any court having jurisdiction thereof, including, without
limitation, any Superior Court in the Commonwealth of Massachusetts. The Escrow
Agent shall use its best efforts to make payment of such claim, as and to the
extent allowed, to the Seller out of the Set Aside Amount (or if insufficient,
out of the Escrow Fund) within three (3) business days following said
determination or as soon thereafter as possible.
5. TERMINATION. This Agreement shall terminate on January 17, 2000 (the
"Termination Date") if there are no outstanding indemnification claims on the
Termination Date; otherwise this Agreement shall continue in effect until all
indemnification claims Seller has made pursuant to Section 3 hereof on or prior
to the Termination Date shall have been disposed of. As of the Termination Date,
an amount of the Escrow Fund adequate to cover all disputed and undisputed
claims made by Seller pursuant to Section 3 hereof will be held by the Escrow
Agent, and the Escrow Agent shall distribute on the Termination Date the
balance, if any, of the Escrow Fund to the Company. At such time as all
remaining claims hereunder have been resolved and the Escrow Agent has received
a written notice executed by the Company and the Escrow Representative to that
effect and any amounts to be distributed to Seller in connection therewith have
been so distributed, the Escrow Agent shall distribute the remaining Escrow
Fund, if any, to the Company.
6. THE ESCROW AGENT. Notwithstanding anything herein to the contrary, the
Escrow Agent shall promptly dispose of all or any part of the Escrow Fund as
directed by a writing signed by the Escrow Representative and the Company. The
reasonable fees and expenses of the Escrow Agent, including the fees and
disbursements of its counsel, if any, in connection with its performance of this
Agreement shall be paid from the income on the Escrow Fund and, if and to the
extent not so paid, shall be borne by the Company. The Escrow Agent may decline
to act and shall not be liable for failure to act if in doubt as to its duties
under this Agreement. The Escrow Agent may act upon any instrument or signature
believed by it to be genuine and may assume that any person purporting to give
any notice or instruction hereunder, reasonably believed by it to be authorized,
has been duly authorized to do so. The Escrow Agent's duties shall be determined
only with reference to this Escrow Agreement and applicable laws, and the Escrow
Agent is not charged with knowledge of or any duties or responsibilities in
connection with any other document or agreement.
The Escrow Agent shall have the right at any time to resign hereunder by
giving written notice of its resignation to the parties hereto, at the addresses
set forth herein or at such other address as the parties shall provide, at least
thirty (30) business days prior to the date specified for such resignation to
take effect. If the parties hereto do not designate a successor
19
<PAGE> 20
escrow agent within said thirty (30) business days, the Escrow Agent may appoint
a successor escrow agent. Upon the effective date of such resignation, all cash
and other payments and all other property then held by the Escrow Agent
hereunder shall be delivered by it to such successor escrow agent or as
otherwise shall be designated in writing by the parties hereto.
In the event that the Escrow Agent should at any time be confronted with
inconsistent or conflicting claims or demands by the parties hereto, the Escrow
Agent shall have the right to interplead said parties in any court of competent
jurisdiction and request that such court determine such respective rights of the
parties with respect to this Escrow Agreement, and upon doing so, the Escrow
Agent shall be released from any obligations or liability to either party as a
consequence of any such claims or demands.
The Escrow Agent may execute any of its powers or responsibilities
hereunder and exercise any rights hereunder, either directly or by or through
its agents or attorneys. The Escrow Agent shall not be responsible for and shall
not be under a duty to examine into or pass upon the validity, binding effect,
execution or sufficiency of this Escrow Agreement or of any agreement amendatory
or supplemental hereto.
7. MISCELLANEOUS. This Agreement shall be construed under and governed by
the laws of the Commonwealth of Massachusetts and shall inure to the benefit of
and be binding upon the successors, assigns, heirs and personal representatives
of the parties hereto.
8. COUNTERPARTS. This Escrow Agreement may be executed in one or more
counterparts, all of which documents shall be considered one and the same
document.
20
<PAGE> 21
9. NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been given when
received, if personally delivered or sent by facsimile transmission, or three
(3) days after deposited in the U.S. mails for delivery by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
TO SELLER: C.P. Clare Corporation
--------- 78 Cherry Hill Drive
Beverly, MA 01915
Attn: Jacquie Arthur, VP & Chief
Financial Officer
With a copy to: C.P. Clare Corporation
78 Cherry Hill Drive
Beverly, MA 01915
Attn: Lori M. Henderson, Corporate
Counsel
TO THE COMPANY: Tongeren Manufacturing Company
-------------- Overhaamlaan 40
3700 Tongeren, Belgium
Attn: Elson Nowell, Managing Director
TO THE BUYER: Gunther GmbH
------------ St. Jacobs - Strasse 7
4052 Basel, Switzerland
Attn: Dr. Beat Sehultheiss
With a copy to: W. Gunther GmbH
Virnsberger Strable 51
Nurnberg D. 90431
Germany
Attn: Elson Nowell, Managing Director
TO ESCROW AGENT: The First National Bank of Boston
--------------- 100 Federal Street, 4th Floor
Boston, MA 02110
Attn: James Bosland, Sr. Portfolio Mgr.
Addresses may be changed by written notice given pursuant to this Section.
Any notice given hereunder may be given on behalf of any party by its counsel or
other authorized representatives.
21
<PAGE> 22
IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be
executed by their duly authorized representatives, as of the date first written
above.
BUYER:
-----
GUNTHER GmbH
By:
-----------------------------------
Title:
--------------------------------
THE COMPANY:
-----------
TONGEREN MANUFACTURING
COMPANY
By:
-----------------------------------
Title:
--------------------------------
SELLER:
------
C.P. CLARE CORPORATION
By:
-----------------------------------
Title:
--------------------------------
ESCROW AGENT:
------------
The First National Bank of Boston
By:
-----------------------------------
Title:
--------------------------------
22
<PAGE> 1
EXHIBIT 11.1
<TABLE>
C.P. CLARE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME (LOSS) PER SHARE (1), (2)
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------------ ------------------------------------
December 29, 1996 December 31, 1995 December 29, 1996 December 31, 1995
<S> <C> <C> <C> <C>
Net income (loss) $ 1,193 $ 2,205 $ (8,454) $ 5,153
========== ========== ========== ==========
Weighted average common and common share equivalent:
Weighted average common shares outstanding during
the period 9,077,934 7,295,219 8,950,584 5,567,399
Weighted average common share equivalent 314,943 1,568,245 - 2,109,841
---------- ---------- ---------- ----------
9,392,877 8,863,464 8,950,584 7,677,240
========== ========== ========== ==========
Net income (loss) per common and common share
equivalent $ 0.13 $ 0.25 $ (0.94) $ 0.67
========== ========== ========== ==========
<FN>
(1) Fully diluted net income per share has not been separately provided, as the amounts would not be materially different.
(2) Net loss per common and common share equivalent are computed using the weighted average number of common shares outstanding
during each period.
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) C.P.
CLARE CONSOLIDATED CONDENSED BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FORM 10-Q FOR THE QUARTERLY
PERIOD ENDING DECEMBER 29, 1996.
</LEGEND>
<CIK>
<NAME> C.P. CLARE CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
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90
0
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</TABLE>
